Blockchain for the Surplus of Us – Tradecraft – Medium
B itcoin and its underlying technology blockchain are spel switching technologies that are reshaping and revolutionizing the world economy. (1)
Often hidden behind the headlines of Bitcoin’s meteoric rise ter market value and blockchain’s technological promise is a basic understanding of what thesis two technologies are and where they come from.
This epistel article examines the digital currencies Bitcoin and Ethereum, and introduces Blockchain, the technology that facilitates the digital transfer of value and much more.
“I think the internet is going to be one of the major coerces for reducing the role of government. The one thing that’s missing but that will soon be developed, is a reliable e-cash.” — Milton Friedman ‘99’
Te 2008, a person or group of people acting under the pseudonym, Satoshi Nakamoto, published a white paper titled Bitcoin” A Peer-to-Peer Electronic Specie System. The paper introduced a solution to two puzzling issues.
The very first, wasgoed our inability to transfer money digitally inbetween willing participants without the need of a trusted third party. The 2nd, a function needed to transfer money digitally, wasgoed the capability to establish the order of transactions to avoid dual spending.
Nakamoto proposed two solutions:
1. A peer-to-peer currency capable of maintaining its value without a central authority.
Two. A decentralized digital ledger capable of establishing the order of transactions.
The ledger would operate much the same spil any other, except that the recorded transactions would be distributed to computers around the world.
Te 2009 the capability to transfer value digitally wasgoed born te what is widely known spil Bitcoin. However, it is the 2nd capacity, now known spil blockchain that is proving to be of far greater significance.
Albeit blockchain has scarcely found its way into mainstream thinking and discourse, it is spil mentioned, revolutionizing the world economy.
Since inception, Bitcoin has captured the attention of an ever-growing, and yet relatively puny number of investors, enthusiasts, companies, and others around the globe.
Spil it has grown it has served the dual function of acting spil proof of concept for a “peer-to-peer version of electronic cash”, and at the same time providing rise to thousands of other digital currencies.
The most well known of thesis currencies by market value are Bitcoin and Ethereum. Bitcoin’s current market value is $37 Billion USD, while Ethereum’s is $16 Billion USD.
Any attempt however to compare the two cannot be accurately described spil an apples to apples comparison. More about this zometeen. Very first, lets look at what Bitcoin actually is.
Bitcoin is a decentralized peer to peer electronic version of contant that maintains its value without backing or inherent value. It permits the transference of money digitally without going through a trusted third party such spil a bankgebouw or credit card. (Three)
The very first standardized value of Bitcoin wasgoed set on October 5th 2009 at $.0008, calculated using $1USD equals 1309.03 Bitcoin (BTC). It presently trades at more than $2300 USD. This represents Two.9 million x its initial value. (Four)
According to the Washington Postbode, if you had purchased $100 te Bitcoin 7 years ago, those coins would be worth more than $73 million USD today. To waterput this into perspective, if you had invested $100 into Amazon.com when it went public ter 1997, your investment would be worth just under $64,000. It is worth noting however, that digital currencies are significantly more speculative than stocks like Amazon. (Five) (6)
Spil the price of Bitcoin goes higher, one question that naturally comes to mind is where do Bitcoins come from?
Where do Bitcoins come from if by definition they are not backed by any central authority? Bitcoins are actually “mined” into existence by Bitcoin miners.
The easiest way to think about this is to consider gold miners. Gold miners work to mine gold from the earth. Spil it is mined, it then comes in the economy. Conceptually, Bitcoin is the same.
Fresh Bitcoins are generated through a competitive process called mining. Miners are given Bitcoins spil prizes for their services processing transactions and securing the network using very specialized hardware.(7)
Investopedia offers a more in-depth explanation of the process of mining.
After Bitcoins are mined into existence, how are they used and what are they used for?
Bitcoins are traded on exchanges like stocks, bonds, and currencies, and are also used spil currency ter the exchange of goods and services.
The number of vendors and merchants accepting Bitcoins for the exchange of goods and services is expected to grow from the 1000’s to the 100,000`s now that Japan is accepting Bitcoins spil currency.
Japan is the very first nation to officially accept Bitcoin for payments. More than 300,000 merchants will start accepting Bitcoin payments te that country alone. (8)
Here is a list of 100 major US based retailers presently accepting Bitcoin.
Bitcoin however, is not the only digital currency growing te value and capturing global attention. Ethereum shares many of thesis characteristics with Bitcoin while also possessing several unique qualities.
While Bitcoin wasgoed very first to market and has drawn most of the media attention, many believe that the Ethereum blockchain and its currency Ether, is a much more powerful device.
“I would say Ethereum boasts features and opportunities to things Bitcoin doesn’t. It’s like telling a telephone can ritme an orange.” — V. Buterin 2014 (9)
Ter 2013, then Nineteen year old, Vitalik Buterin proposed Ethereum ter a white paper titled “Ethereum White Paper: A Next Generation Brainy Contract and Decentralized Application Toneelpodium.”
The development of the protocol wasgoed crowdsold te 2014, raising overheen $150 million USD. The system itself wasgoed eventually launched on July 30, 2015.
Ethereum is an open source blockchain toneel and its fundamental contention is this, that blockchains can be used for more than just the transfer of money.
Extra use cases include currencies, financial instruments, property, domain names, along with more sophisticated cases like exchanges, derivatives, peer to peer gambling, and identity and reputation systems.(Ten)
“Smart contracts” are one of Ethereum’s most significant contributions to the rapidly expanding universe of digital currencies and blockchains.
They can be thought of spil a digital means of facilitating the exchange of anything of value ter a way that is see-through and eliminates middlemen such spil lawyers, notaries, and others. Clever contracts perform this function by carrying out the terms of the digital contract itself. (11)
Another of Ethereum’s unique characteristics is its digital currency Ether.
Ethereum, like Bitcoin is a digital currency. However, unlike Bitcoin, it is also a blockchain podium. Ethereum’s currency, Ether is used primarily to access the Ethereum network.
The Ethereum Foundation defines Ether spil a fuel or a form of payment that is used by clients of the Ethereum toneelpodium to pay for the machines that are executing the requested operations. (12)
Unlike Bitcoin, Ethereum has two digital currencies trading te the market. The very first is Ethereum which trades under the symbol — ETH. While the other, known spil Ether Classic, trades under the symbol ETC.
Te June 2016 a large scandal rocked the Ethereum community. A still unknown hacker attempted to steal more than $50 million dollars due to a software bug. The end result wasgoed the creation of a 2nd Ether trading currency.
If it is of greater rente here are two articles that explain the hack te more detail Article 1 &, Article Two. For a more technical explanation read this article by Maria Paola Gelvez Gomez, former head of Coinbase ter Latin America.
Where Does Ether Come From and What is it Used For –
Similar to Bitcoin, Ethereum is also mined. Groups of “miners” work to validate and store the transactions taking place on the Ethereum toneel. The Huffington Postbode introduced a clear and samenhangend article on Ethereum mining.
While Bitcoin and other digital currencies can be used to purchase goods and services, spil mentioned, Ether is primarily used for transactions associated with accessing the Ethereum network and trading.
What is most significant to reminisce about Ethereum is that it is not only a digital currency, it is also blockchain based verhoging with clever contracts, and it permits for the building of apps, of which digital currencies are but one expression.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” D &, A Tapscott (13)
Nakamoto Satoshi’s initial description of the framework needed to facilitate the movement of online payments inbetween two willing participants without an intermediary has become known spil blockchain.
Ter its most plain form blockchain is a decentralized ledger. The implications of blockchain however, are far greater than the plainness its name implies.
Blockchain facilitates the digital transference of value itself. Sally Rivers, Financial Times technology writer describes the relationship inbetween blockchain and digital currencies like Bitcoin.
“[Blockchain] is to Bitcoin, what the internet is to email.”
Ter the same way the internet facilitates the digital transfer of information, Blockchain facilitates the digital transfer of value.
Industries ter which blockchain technology is being rapidly explored and deployed include the capital markets, financial services, payments and remittances, derivatives, identity and reputation management, governance, sharing economy, supply chain, auditing, stock trading, internet of things, insurance, healthcare, and others.
Digital currencies and Blockchain technology are truly reshaping the world economy. Wij may however, be too close to their inception to accurately assess their importance or ultimate influence.
A few key thoughts from this postbode:
- Bitcoin wasgoed founded ter 2008 and launched ter 2009. Bringing with it digital currencies and the underlying technology, blockchain.
- There are 1000’s of fresh digital currencies of which Bitcoin ($30bil) and Ethereum ($16bil) are the largest te terms of market value.
- Thesis currencies are created through a process of digital mining akin to mining for gold.
- Many of thesis currencies are traded on exchanges like stocks, and used for the purchase of good and services.
- Ethereum recognized blockchains can be used for more than digital currencies, and introduced clever contracts.
- Blockchain is to Bitcoin, spil the internet is to email.
One of the best and most insightful presentations on Blockchain is a 30 minute movie created by Farzam Ehsani, Blockchain Lead at the Zoom Merchant Canap te South Africa. I very recommend it to everyone.
Referring to the unfoldment of this fresh technological development, te a polite and slightly prophetic tone Mr. Ehsani collective ter his closing statement, “We are on that journey, and there’s no turning back.”
It is indeed true. Wij are on a fresh digital journey, and no — there is no turning back!
If you have any comments or suggestions about interesting topics related to blockchain technology leave them below ter the comments section and reach out to mij on Twitter!