Bitcoin: within the Now and Future of Cryptocurrencies

Bitcoin: within the Now and Future of Cryptocurrencies

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Explain Bitcoin Like I’m Five is a post on Medium that came live in 2013. Its simplicity won over any other explanation out there at the time, and got the experts and the curious talking. It even became its own website.

The story on Medium goes from using examples with real apples to digital ones. It considers the double-spending problem, and trust in the Internet. It closes with this:

“Within the system, the exchange of a digital apple is now just like the exchange of a physical one. It’s now as good as seeing a physical apple leave my hand and drop into your pocket. And just like on the park bench, the exchange involved two people only. You and me — we didn’t need Uncle Tommy there to make it valid.

In other words, it behaves like a physical object.”

By now there’s a lot to cover related to not only Bitcoin, but cryptocurrencies in general– there are ongoing conversations related to potential uses, its relation to the deep web and decentralized networks,

To make things simple, we’ll stick to Bitcoin: what it is, what can be done with it, why it’s relevant, its now and its future.

 

WHAT IS BITCOIN?

Bitcoin is programmable money.

  1. It is unique because it is things: it’s a store of value (like gold), a currency (like the US dollar), and a technology (like email)

  2. It’s a way to transfer digital information without creating a copy

  3. Similar to how Bittorrent is a collaboration of users to transfer files, Bitcoin is a network to transfer money/value

  4. The Idea is not to acquire Bitcoins and “cash out”, but rather to build a truly global economy accessible to everyone, just like the Internet.

  5. The rules of Bitcoin are based on Math. Math remains the same no matter what.

 

WHAT CAN BE DONE WITH IT

“Anything you can do with old money, you can do with Bitcoin. It’s programmable money which means it can do many things old money cannot.”

  1. More and more merchants are accepting Bitcoin. Today you can spend them at places like Dell, Newegg, and Microsoft.

  2. Because Bitcoin is digital and programmable, it can be transferred via music, images, email, or any means of information.

  3. OpenBazaar is like eBay with Bitcoin and built-in Escrow.

  4. Micro transactions will work seamlessly on the web and create new models of revenue for content creators.

  5. You can transfer money instantly to anyone, very similar to Venmo.

  6. You can donate to organizations knowing they received the full amount, not a small percentage.

  7. Smart contracts are unbreakable. This eliminates the need of a notary or lawyer and enforces the deal.

 

RELEVANCE

“Bitcoin is scarce, useful, impossible to counterfeit, and enables innovation that was impossible before.”

Data:

  1. There are currently 13,825,950 Bitcoins in existence (this is constantly changing).

  2. There will only be 21 Million Bitcoins ever.

  3. Bitcoin can be sent instantly anywhere across the world just like email.

  4. Your funds are secured by military-grade encryption algorithms.

  5. Bitcoin can be spent/saved without Interference, your “account” can never be closed by anyone.

  6. Life would be a lot easier if the entire world used one currency.

  7. Bitcoins can easily be divided (a strong property of money).

  8. You can access your money from anywhere in the world without having to deal with a bank.

 

Bitcoin is extremely close to conversations on cryptocurrencies and to Society 3.0.

A cryptocurrency is a medium of exchange using cryptography to secure the transactions and to control the creation of new units. Cryptocurrencies are a subset of alternative currencies or specifically of digital currencies. Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created. Cryptocurrencies typically feature decentralized control (as opposed to a centralized electronic money system, such as PayPal) and a public ledger (such as bitcoin’s block chain) which records transactions. The alternative cryptocurrencies launched after the success of bitcoin are frequently called altcoins.

Society 3.0, by Ronald van den Hoff, speaks of the people we call global citizens; people who create value instead of growth. Hundreds of millions of people of the world moving around without restraints, unbounded, across borders. Sometimes they do this physically, but more often they do so digitally through the Internet. These people are no longer bound to old organizations. They have organized themselves in virtual social networks.

These ideas are linked because consumers stop being consumers, and become active participants of their economy. Cryptocurrencies are still part of economies.

 

NOW & FUTURE

There’s an annual Bitcoinference in Amsterdam “covering the business and scientific part of Bitcoin, currencies and their derivatives”. It happens in Amsterdam because that’s where early attempts to integrate cryptography with electronic money were made by David Chaum, inventor of many cryptographic protocols.

There’s more good news– if you’re just hearing about cryptocurrencies, or Bitcoin, or if you’re just getting interested in the topic, there’s much more information now than in 2013.

Here’s an article from Fortune on why bitcoin is poised for big momentum in 2015, and one from CoinDesk on the state of Bitcoin 2015.