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Before we begin our discussion, we feel it imperative to define a few concepts. The first concept we would like to define is, "a medium of exchange. The second concept is "currency. What many know today as currency also comes with an "official" designation or decree, by some government agency, or in the US Dollar's case a private institution called the Federal Reserve.
The US dollar is a fiat currency because it isn't back by anything other than by decreewhich is where the term fiat comes from. Prior to the US Dollar was backed by gold and could be converted upon request. From the distinctions we just made, we can than make the following logical statement: Now we say "any", for the sake of this argument, but it will become clearer to the reader later, that yes indeed the US dollar can be exchanged for anything legal or illegalthat is the reality, we aren't cynical here.
This gives us a clean basis that defines our current state of currency and medium of exchange. We may get into the idea of store of wealth or a utility function, but for now let's stick with those two basics. It holds this title because we are the world's chicago fed letter bitcoin wallet debtor and thus, we have flooded the world with dollars and its reciprocating shadow, debt. For in this type of monetary system, the US Dollar and debt are one and the sameone cannot exist without the other, a little-known fact to many, but truth none the less.
Ok so the world has been chicago fed letter bitcoin wallet fiat currencies for around years now. The US Dollar has enjoyed reserve status for around years and now comes along an innovation, a disrupter if you will, called blockchain. Blockchain was a mathematical brainchild conceived in by an entity chicago fed letter bitcoin wallet only know as Satoshi Nakamoto.
Most in the industry consider the name a cipher, but no clear owner has come forward, only speculation. What we chicago fed letter bitcoin wallet is truly interesting is the motive behind this invention. The motive is clearly on display in the very first transaction or genesis block, which was embedded with this:.
Those familiar with my writing know how critical I am of any type of chicago fed letter bitcoin wallet in financial markets, being a follower of Austrian economics and a clear and utter disdain of anything Keynesian, you can see the excitement behind such a motivational beginning!
So, what is blockchain? Blockchain is a decentralized electronic ledger with duplicate copies nodes on thousands of computers around the world. You will often hear of it referred to as a distributed ledger that records transactions between two parties. Obviously, we are just touching upon broad strokes, we aren't getting into the mathematics behind it, we aren't getting into the cryptography either, but we will touch upon it being open source.
Open source simply means chicago fed letter bitcoin wallet collaborative and universal access as opposed to a license and fee based software model. I think out of all the characteristics, this is the largest disruptor, especially for governments. Decentralization is the basis for the chicago fed letter bitcoin wallet or our letter today and rightfully so, therefore we say it exists everywhere and nowhere.
We can utilize blockchain in a way that allows us to embed "trust" based upon a mathematical validation process, by which we no longer chicago fed letter bitcoin wallet intermediaries to provide that data. The protocol by means of validating all the transactions, then disseminating and openly broadcasting the transactions and then adding it to the blockchain, provides the "trust" that the data file is clean. This is revolutionary, and its possibilities are endless, its utility function is endless.
In fact, here is what Christian Catalini an MIT professor, expert in blockchain technologies and crypto currency recently said when asked what industries will this technology disrupt? Once again it is important for you the reader to understand that this explanation just covers the very broad strokes, please do your own due diligence and follow up chicago fed letter bitcoin wallet reading with further research and discovery to this subject.
Now that we have the basics of blockchain down, let's move to Bitcoin. Bitcoin is Cryptocurrency, or a form of digital payment system based on a peer to peer network. What is meant by peer to peer is that the transaction takes place between party A and party B without the intervention of an intermediary.
We suppose the word "direct" makes sense here. So, from the chart above, you can chicago fed letter bitcoin wallet where Bitcoin comes into play. At the point of validation, "miners" those utilizing computing power, mathematics and energy to solve the complex mathematical computations, which are required to validate the transactions and adding them to the blockchain are rewarded with Bitcoin.
This is how Bitcoin come into existence. They aren't created out of thin air think quantitative easing by central banksthey are created by the employment of energy generated by the miners in order to provide the validating service and adding transactions to the block chain.
This is the incentive for building the chain. I believe these miners provide the most essential function in that chicago fed letter bitcoin wallet in the original white paper by Nakamoto described is that, an electronic payment system must be based on cryptographic proof instead of trust. This validation solves the double spend problem, by validating current transaction which comes with all the data history hard coded.
Basically, the validation can only occur if all the data is clean and unaltered. One way to look at double spending is that party A cannot send to party B something it doesn't have. Another fantastic attribute of Bitcoin is that there is a critical limit or supply limit to the amount of bitcoin that can ever come into existence. The mathematics embedded into Bitcoin allow for a set amount of Bitcoin overtime with the supply to never exceed 21 million.
This supply acts as a constraint, but it also means that demand will ultimately drive the price and unlike fiat currencies, artificial devaluation is not possible. A recent Fed Primer paper talked about Bitcoin's " decentralized nature as both its most ambitious feature and its main vulnerability".
This is a vulnerability because the validation process takes time, maybe ten minutes or more. Rather, I would look at it as sacrificing time, for accuracy and validity. All too chicago fed letter bitcoin wallet I believe this fast-paced high frequency world forgets that quality sometimes takes time and not everything of value relies on speed.
Bitcoin can be acquired through a Bitcoin ATM if available. One can sign up to purchase Bitcoin on one of the various exchanges like Poloniex or Coinbase. Both follow strict AML laws and require complete ID and other various validations for before you can enter their exchange and purchase Bitcoin.
These exchanges allow you to store your Bitcoin and other crypto currencies directly in one of their in house wallets. You can also purchase your own digital wallet and put your Bitcoin's there and take them offline or what is known as cold storage. The first answer lies within a bet on the future of monetary transactions. With governments indebting themselves exponentially, one can see that the only way out is through inflation or its flipside, devaluation.
Bitcoin can be considered digital gold. Its supply is limited, and it cannot be devalued by stripping it down or adding more supply. By utilizing the blockchain for peer to peer payments, Bitcoin eliminates the need for intermediaries such as banks.
These intermediaries add an extra layer of costs fees to every transaction and it acts as a constraint to our current fiat monetary system. Its seamless, frictionless and can be decimalized, meaning one does not have to purchase an entire Bitcoin, it can buy.
Blockchain and Bitcoin are new innovations and the prospect of widespread disruption and adoption is far greater than what the masses currently are aware of. I like to think of it as a call option on the technology itself, perhaps view it as the internet in the early nineties. Bitcoin exists as an open source distributed, decentralized and anonymous electronic ledger. Society is moving toward digitalization in every aspect of life, the advance of Cryptocurrency as a medium of exchange is a part of chicago fed letter bitcoin wallet revolution.
Bitcoin unlike US Dollars have intrinsic value. They are created via the utilization of computational power, energy chicago fed letter bitcoin wallet time and this creates a valid, trusted, open system that benefits everyone, without exception. The fiat currency system exists as a construct of debt, which requires interest and inflation to maintain value, this system is archaic and its utility chicago fed letter bitcoin wallet a digital age as a medium of exchange is subpar.
Just to be clear, I think there is a definite use for compound interest and debt, but not as a medium of exchange. Bitcoin is convertible to any other currency crypto or fiat, or hard money.
My viewpoint takes a more passive longer-term approach to the technology and suggests that the owners of Bitcoin will hold rather than sell their stake in the system.
This constraint if you will, should figure into reducing, dramatically the available supply of Bitcoin outstanding, which should put upward pressure on its valuation. I don't think the question is valid, instead I would rather people stop valuing Bitcoin in terms of converting to US dollars or any other currency, but rather as a long-term investment on the future of a technology whose true applications may not yet be known.
I chicago fed letter bitcoin wallet think valuing vs the US Dollar makes much sense, in fact the construct of time is a deterministic factor for valuing any fiat currency, basically time eventually makes the US Dollar worthless. Whereas, I feel the Chicago fed letter bitcoin wallet price is directly proportional to the value of all global transactions, for me that single fact is scary and exciting in of itself. When you start to contemplate the future and the way it's being shaped, the more you realize all we have known, the way economics has existed, the way labor has been compensated for, is about to change like never before.
Will leave the valuation up to time, only time will provide us with an accurate assessment as to the worth of Blockchain and Bitcoin. What is the downside and what are the expectations? The adoption of Blockchain like any other new technology always comes with a bit of trepidation and skepticism. The focus upon Blockchain and Bitcoin early on was its use in funding illicit purchases on websites like Silkroad.
There was also an emphasis placed on the vulnerabilities at the exchange chicago fed letter bitcoin wallet. Gox one of the first exchanges based out of Japan ended up filing for bankruptcy. Chicago fed letter bitcoin wallet handled most of all Bitcoin transactions, but mismanagement and unconfirmed factors chicago fed letter bitcoin wallet to its demise. This led to volatility in its price, led to many investors losing everything and many to question the validity of the technology.
However, we would note that time and time again, the price has rebounded. In fact, bitcoin is a constantly updated never to be tampered digital ledger, meaning all transactions are traceable to the beginning of existence, the same cannot be said for cash transactions. Governments should be less focused upon controlling or regulating Bitcoin and more focused upon adopting the technology. There is no doubt that one of the downsides is this adjustment period during the technologies early adoption, but we feel weeding out bad actors chicago fed letter bitcoin wallet maintaining integrity is key to validating the technology and chicago fed letter bitcoin wallet propel its growth far into the future.
Finally, I am excited about the technology and where it will eventually take us. I think mankind has been hindered somewhat by the profit motive incentive, by the lack of trust between counterparties and this technology has the capability of changing all of that. I know that many industries are embarking on this blockchain technology and chicago fed letter bitcoin wallet its adoption will continue to grow.
I understand the threatening nature of a decentralized, open source protocol and governments will try to adopt regulation, assert authority and even come up with their own Cryptocurrencies. I also know their private key blockchain technologies will not be immutable, will not be unhackable because of their private key nature, so it will not be the same. We know many industries will be transformed, many will perish, but new ones will spring up.
No matter what, this technology has the capacity to revolutionize the way we do everything, the way we look at everything and the way we view and shape the world to come. Bitcoin and its mysterious inventor". Archived from the original on 1 November