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Bitcoin, a wild internet experiment, the love child of cutting-edge technology and economic theory, and is something that hardly anybody fully understands, yet it captured the imagination in global consciousness. Bitcoin is an anchoring vision of cashless, eMoney society. With that, media created the Bitcoin buzz, riding a rollercoaster of speculation, now immensely trendy. Bill Gates called it a technological tour de force. Living in this day & age, only thing constant is change, change in thinking, living or doing all things that we do. Within that change realm, Bitcoin, requiring us to recalibrate ourselves to that change. It is free-market's response to central banks gone wild, yet it is not tied to any single nations economy, neither is it a contender in the race to replace any national currency, nor it is pegged to any outside barometer. Bitcoin has the potential separating money & states, parallel thinking like that of State & religion. It brought forth the fact that the bank depositors put their faith and trust in conventional currency, only to see that faith shattered and trust abused for savings are constantly losing its purchasing power. Right there Bitcoin embodies a new hope for the 21st century monetary zeitgeist, Uber-money.
Given its newness, novelty & volatility, bitcoins have passionate fans ( & critics) - high-end Techies, privacyenthusiasts, political anarchists & libertarians, autarchists and voluntaryists, even unsavory scammers, all flock to it with praise & adoration. They see for the first time in human history the people can gain true financial freedom even though it embodies many of the open and virtually ungoverned principles of the internet itself. Some feel Bitcoin will become the choice of tech-savvy new generation, for it is becoming too big to ban & jail for. Implied message: stop blindly sticking to Roman era money, for it is regressive, mothers milk to backwardness - embrace a 21st century upgrade. Then there are also a mega size critics in vested interest, who want Bitcoin to remain uncrack-able until all diseases are curable, for their money depends on their not understanding it. Bitcoin, (Sign: ; Code: BTC or XBT), is a revolutionary private, virtual currency, protocol (Software) meant for developing an open Economy. Bitcoin (singular with an upper case letter B) used to label the protocol, software, community & other things, while bitcoins (with a lower case b) to label units of the currency. Bitcoin is a global techno-financial construct, an open source software, a digital currency, a protocol, a distributed & verifiable public ledger, a peer-to-peer (P2P) payment processing network, a triple-entry accounting system, a store of wealth, a crypto-signature creation and verifiable device, a quasi-personal offshore bank account, a distributed timestamp server, a monetized network and at the end it is internet itself, monetized. With the cryptography; the state, or any protection firm, is largely obsoleteall activity that can be reduced to information transfer will be completely out of the government, or anyones hands, other than the parties involved. Wrapping all these ideas & technologies around a non-political currency, backed exclusively by code, made Bitcoin pregnant with expectations. Bitcoin being all these brings forth the question of where one aspect of it starts and where it ends, or what is overlapping & what is not? What is coders responsibility, what is Merchants or even consumers? Anyone developing a Bitcoin client cannot be held responsible for the uses
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Log: Address: 15VjRaDX9zpbA8LVnbrCAFzrVzN7ixHNsC. Evidently digital currency is complex number systems & keys (technical details are beyond the scope of this writing). Bitcoin is digital and that is all there to it; but there are symbolic physical bitcoins illustrating digitals, available for purchasing what they call Casascius coins, and they are sold by Mike Caldwell through his Web site, casascius.com. These coins contain a private key on a card embedded in the coin and sealed with a tamperevident hologram. Confused? You are not alone, the algorithms involved in Bitcoin production are far too complex for most noncrypto-nerds to grasp, it is kind of an odd combination of very advanced, PhD-level computer science, regarding encryption and record-keeping, wrapped around very basic level monetary understanding. Its capitalization/ nomenclature make it both a currency and a protocol. Its a new kind of money inbuilt within an innovative payment network that uses peer-to-peer technology to operate outside prying eyes of regulator or any central authority or banks; managing transactions and the issuing of bitcoins, all are carried out collectively by the network. Simply put, Bitcoin is an open source software, an algorithm-based mathematical constructa unit of measurement invented to quantify value. Its design is public, nobody owns it, and all users collectively control it rather than any central authority like a Bank or a government. That makes its integrity beyond reproach. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system. The way the basic bitcoin system works is both incredibly solid & sophisticated from a technical standpoint, yet inbuilt weakness in wrapping monetary dynamics may profoundly lower its scope &
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Currency stability factor: Bitcoin market price, withstanding its wild fluctuations, is showing promise: on Jan 1, 2013 single Bitcoin was worth about $13.5; in early April, 2013 at $200, and on Nov 22, 2013 it topped $730; 54-fold high. That highlights it as a unique Asset class or investment vehicle devoid of traditional currencies inflation risk. Then anybody who have the slightest sense of currency stability & broader acceptability recognize that there must be some sort of ancillary hedging mechanism in place for Bitcoin to succeed. Long before you know it, first Bitcoin Hedge-fund cropped-up in Malta. Predictious, the Dublin-based prediction market unveiled Bitcoin Option Spreads enabling both long- and short-positions to be constructed on this already extremely volatile 'asset'. Derivatives, Swaps, Future & Options, are now in better leveraged situation to stabilize long-term Bitcoin market by positioning relevant bullish & bearish competing interest. Limited utility of these sophisticated financial instruments still is not enough to make it anything other than speculative. Critics still believe, Bitcoin is destined to have a binary outcome all-or-nothing. In laymans terms, it is like lottery ticket, price you pay for it, is small risk, but its winning would have a sizable impact.
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This is it. Today this virtual money is going up & up; the first one ever to reach something like critical mass. Bitcoin enthusiasts are now across the globe, moving out from Techno-Geeky echo chamber to mainstream. A global equal opportunity Monetarist Anonymous, immune to transaction fees or any national borders. Unlike (US Fed Chairman) Bernankes quantitative easing, Bitcoin developer Satoshi is more into supply constraints.
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When future historians debate the chickens-n-eggs genealogy of the Bitcoin advent, one question is inevitable whether Technologists came to finance because of Economic devastation, or that financial crisis erupted because Technologist invaded the financial space. There should be no illusion that the digital currency system were of any superior quality than to all preceding currency system. That, I believe is an unnecessary & uncalled for argument, for civilization is a collective enrichment process. Again for those who were late to the party, or feel left out dont despair! Through mining individual just get rewarded with the money that clearly have value. At its peak bitcoins would max out at 21 million unit (by 2140), today less than 12 million is in circulation in a global economy that is 61 Trillion dollar strong & still growing. Scale of economy matters - 12 million bitcoins with about $7.5 billion capitalization for todays 7.5 billion people cant be consumer money in any sense of the word. Its built-in structure also inhibiting fluid economy or its given economic model, it is not enough to make big of a dent in that space however way you look at it. Then you are bit-loaded or not, in global perspective Bitcoin is just more than flickers. Optimists may say in ten years, Bitcoin would be spreading exponentially; conversely pessimists may term, Bitcoin is a joke, even with all those techno-usefulness, leave it where it belongs. The fact that no one knows which one it will be, is as good a sign as any that it could change the world. And now, here we are in a world of high technology, global business-street, main-street & mean-street, all are intrigued with the Bitcoin idea this technology bit requires new thinking, for old business model wont cut too long. And parallel could be drawn the same way that the pioneer providers of email did not correctly understand the service they were selling for many years; new thinking will emerge, so that it reaches its full potential and becomes ubiquitous. Politicians ought to be sensitive, power vested in them should not be used as a license stilling the technological pulse of the time. Bitcoin is a puzzle to solve, not an excuse to deny the reality for old monopoly currency doesnt cover all sins.
Russell M Baker
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