What is Bitcoin? Sure—You know the history


What is Bitcoin? Sure—You know the history. As it spread from the geeky crypto community, Bitcoin sparked investor frenzy. Its “value” was driven by the confidence of early adopters that they hitched a ride on an early train, rather than commercial adoption. But, just like those zealous investors, you realize that it may ultimately reduce the costs of online commerce, if and when if it becomes widely accepted. But what is Bitcoin, really? To what class of instruments does it belong? • Ardent detractors see a sham: A pyramid scheme with no durable value; a house of cards waiting to tumble. This is the position of J. D, an IRS auditor who consults to The Cryptocurrency Standards Association. As devil’s advocate, he keeps us grounded.

• This week, MasterCard was only slightly less dour. They claim that the distributed nature of Bitcoin will ultimately

cause it to unravel. They want us to believe in the necessity of a trusted authority as broker/guarantor/arbiter. I get it! After all, the block chain is a serious threat to the legacy model for moving money • Many people recognize that it can be a useful transaction medium—similar to a prepaid gift card, but with a few added kicks: Decentralized, low cost and private. • Or is it an equity asset, traded by a community of speculative investors, and subject to bubble psychology? If so, do the wild swings in its exchange rate diminish its potential to be used as a payment mechanism? • Full-fledged ehthusiasts say that Bitcoin has the potential to be a full-fledged currency with a “real value” that floats based on supply and demand.

Can something that lacks intrinsic value or the backing of a bank or government replace national currency? Regardless of your opinion about Bitcoin, it does one thing that few pundits dispute: Sure, the exchange value fluctuates—but for those who don’t plan to retain holdings as an asset, it reduces transaction costs to —nearly zero. This characteristic, alone, is a dramatic breakthrough. Peering Into the Future? Removing friction is certainly what it is all about. As a transaction medium, Bitcoin achieves this, but so does any debit instrument, or any account in which a buyer has retained house “credit”.

Currently, there is a high bar to get money exchanged into and out of Bitcoin. It’s a mess: costly, time consuming and a big hassle. Seriously! Have you tried using an exchange? Even the most trusted one (Coinbase of San Francisco) makes it incredibly difficult to get money in and out of BTC, prior to establishing your account, identity and banking history.

Fortunately, this situation is gradually improving. Where Bitcoin really shines (or more accurately, when it will shine), occurs at the time when more vendors choose to leave revenues in BTC, pending their own purchases from suppliers,  shareholder payouts, or simply as retained savings. When this happens, all sorts of good things will follow… • A growing fraction of sellers leave their bitcoin in their wallets, realizing that they will need to spend it for their own labor and materials. • Gradually, wild exchange-rate gyrations diminish—not because fewer people are exchanging money, but because the Bitcoin supply/demand value is driven more by actual commerce than it is by speculation. • Sellers begin pricing merchandise in Bitcoin rather than national currencies—because they are less anxious to exchange out of BTC immediately after each sale. When sellers begin letting a fraction of bitcoin revenues ride—and as they begin pricing goods and services in BTC—a phenomenon will follow. I call it the tipping point… • If goods and services are priced in BTC, then everyone involved saves money and engages in transactions more efficiently.

• If goods and services are priced in BTC, then the public will begin to perceive exchange rate volatility as a changing dollar rather than a changing bitcoin.* • If buyers also begin to save their BTC (i. e. they do not worry about immediately moving it back to national currency), it means that Bitcoin is being perceived as a stored value—not just an exchange chit. That may seem to be a subtle footnote, but the ramifications are earth shaking. That earthquake is the world gradually moving away from centralized treasury-issued bank notes and toward a unified and currency that we can all trust. People, everywhere, will one day place their trust in a far more robust and trustworthy mechanism than paper promissory notes printed by regional governments.

AВ brilliantly crafted mechanism that is fully distributed, p2p, transaction verified (yet private), has aВ capped supply and is secure. What Then? O. K. So we believe that Bitcoin is the future of money and not just aВ replacement for credit cards. В But what does this really mean? Can the series of cause-and-effect be extrapolated beyond widespread user adoption?

 Absolutely!  … Adoption of Bitcoin as a stored value (that means as a currency) leads to the gradual realization among governments that Bitcoin is not a threat to sovereignty nor even to tax policy. Instead it presents unbounded opportunity: The opportunity to stabilize markets, eliminate inflation, reduce costs and restore public trust. In short, Bitcoin will ultimately level the playing field,  revive entire economies, transform the role of government, and save consumers and businesses billions of dollars each year.

Did I mention that Bitcoin is the future of commerce and a very possible successor to legacy currencies? Aristotle must be smiling. * We tend to think of the dollar as more ‘real’ than Bitcoin. It is not! It has only one advantage. At the end of the day, taxpayers must settle their debts in the currency demanded of their nation. But as Bitcoin adoption gains traction—even if only as a transmitting medium—fiat currencies will gradually become marginalized as play money.

That’s becauseВ they are susceptible to inflation, politics and manipulation. Bitcoin is held to aВ higher standard. It is governed by pure math. Despite high-profile news of the day, Bitcoin will even become more resistant to loss and theft than dollars, once tools and practices become well established. Contributor/Editor Bios Blogroll Michael Graham Richard Next Big Future Plausible Futures Contributors SingularityHUB WIRED Tag Cloud AI CERN colonization Cortese Franco culture education Einstein existential risks extinction Fermi Paradox future futurism Gravity Modification Harry J. Bentham health humanity interstellar propulsion Interstellar Travel Life extension nuclear politics research risks singularity space sustainability technology Terrorism The Kline Directive transhumanism Categories Categories 3D printing aging alien life architecture asteroid/comet impacts astronomy augmented reality automation bees big data biological bionic bioprinting biotech/medical bitcoin business chemistry climatology complex systems computing cosmology counterterrorism cryptocurrencies cybercrime/malcode cyborg defense disruptive technology DNA driverless cars drones economics education electronics employment encryption energy engineering entertainment environmental ethics events existential risks exoskeleton finance first contact food fun futurism general relativity genetics geopolitics governance government gravity habitats hacking hardware health human trajectories humor information science innovation internet journalism law law enforcement life extension lifeboat materials media & arts military mobile phones moore’s law nanotechnology neuroscience nuclear nuclear energy open access open source particle physics philosophy physics policy polls posthumanism privacy quantum physics rants robotics/AI science scientific freedom security sex singularity Singularity University Skynet software solar power space space travel strategy supercomputing surveillance sustainability thought controlled time travel transhumanism transparency transportation treaties Uncategorized virtual reality water AUTHORS Andres Agostini Kemal Akman Athena Andreadis Amara Angelica Michael Anissimov Dustin Ashley Yasemin B. Lawrence Baines Klaus Baldauf Jason Batt Danny Belkin Harry J. Bentham Daniel Berleant Johnny Boston Phil Bowermaster Ryan Calo Alexandra Carmichael Jamais Cascio John Cassel Rob Chamberlain Dennis Chamberland Gary Michael Church Darnell Clayton Seth Cochran JosГ© Cordeiro Nick Cordingly Franco Cortese Keith Curtis Schwann Cybershaman DataPacRat Jim Davidson Scott Davis Clyde DeSouza Leif DeVaney Michael Dickey Lucas Dimoveo James Doehring James Dunn Amnon H. Eden Odd Edges Chris Evans Dylan Evans Woody Evans Dan Faggella Durwin Foster Bob Freeman Steve Fuller Matt Funk Ole Peter Galaasen Bryan Gatton Markus Goritschnig Lily Graca Richard Graf M. A. Greenstein Odette Gregory Chris K. Haley Stuart Hameroff Jacob Haqq-Misra Stevan Harnad Maciamo Hay Ciaran Healy Orenda Urbano HernГЎndez Denise Herzing Martin Higgins Karlyn Hixson Jeffrey Dean Hochderffer John Hunt Eric Hunting Peer Infinity Zoltan Istvan Ruth Itzhaki Joseph Jackson Naveen Jain Summer Johnson Roderick Jones Stu Kauffman James Felton Keith Samuel H. Kenyon Tom Kerwick Farooq Khan Bruce Klein Eric Klien Randal A. Koene Maria Konovalenko William Kraemer LHC Kritik Bob Krone Dan Kummer Ray Kurzweil Marios Kyriazis Brandon Larson Cadell Last Michael Lee Jeremy Lichtman Ivan Lovric Alexander MacRae Donald Maclean Jake Mann John Mardlin Lori Marino Clark Matthews Frankie May Tom McCabe Paul McGlothin Matt McGuirl Josh Mitteldorf B. J. Murphy Ramez Naam Mark Nall Steve Nerlich David Nordfors Nikki Olson David Orban Steven Palter Emanuel Yi Pastreich Travis Patron Ian D. Pearson George Perry Jim Pinkerton Federico Pistono Thomas M. Powers Walter Putnam Joseph Rampolla Daniel W. Rasmus Philip Raymond Michael Graham Richard RichardKanePA Martine Rothblatt Roy Asim Roy Otto E. RГ¶ssler Rosalind Sanders Roland Schiefer Seb Brandon Seifert Daniel Shafrir Amalie Sinclair Rick Smyre Benjamin T. Solomon Oliver Starr Frank Sudia Reno J. Tibke Tihamer "Tee" Toth-Fejel Alexei Turchin Zachary Urbina ClГ©ment Vidal Frans van Wamel Brian Wang J. R. Willett Meta RSS Log in