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Coin world ledger
In recent weeks the incredible growth in the value of Bitcoin BTC has generated a vast amount of media coverage. Sadly, too much of what I have read, heard or seen has been poorly informed, incorrect, badly researched and misleading.
It is true to say that with the current level of volatility in the price of BTC, practically all owners are holding on to their coins in the expectation of rising value.
It has become more of a speculative asset than an alternative currency. In other words, do I choose to trust a global currency backed by technology or a currency backed by a National Government.
In a surprisingly large number of countries in the world today, that may not be a difficult question to answer. You need to be a miner to obtain Bitcoins. I have heard this on TV and read several articles that seem to suggest the only way you can obtain BTC is to become a bitcoin miner. That is rather like saying the only way you can acquire Gold is to buy a metal detector and head to the Outback, or to acquire UK pounds Sterling is to become the Royal Mint.
These reports are confusing the way new BTCs are created with the way practically all people acquire BTCs, which is, like any currency, through exchanges. Bitcoins have become too expensive to buy. Currently, a Satoshi is worth about 0. Bitcoin is not secure because it can be and has been hacked. The mechanism that creates Bitcoin, tracks ownership and exchanges value between owners called Blockchain has never been hacked since the first Bitcoin was mined in January It has proven to be just about the most secure piece of technology ever conceived.
However, some exchanges and digital wallets where the keys that control Bitcoin ownership are stored have been hacked. Anyone using Bitcoin needs to choose the exchanges and wallets they use carefully. Practically all the example calculations used by media are incorrect. Bitcoin is a bubble that will inevitably crash. This may, or may not, be true. But it is often said with such certainty, a confidence that cannot be justified.
There are plenty of examples of other asset classes that have continued to grow in value at a rapid pace over many years where no one seems to suggest they are a bubble — look at classic cars, rare coins or works of art.
They do have one thing in common though — limited supply. Bitcoin too has limited supply. There will only ever be 21 million Bitcoins.
Currently there are supposed to be 16,, Bitcoins in circulation. Obviously, Bitcoin cannot continue the current price trajectory ad infinitum. It will possibly crash tomorrow, next month, next year or three years from now. But it may also just become more settled at a certain value, experience a gradual decline in value or grow at a much slower pace. The value of Bitcoin is really all about Blockchain. This comment is based on a complete misunderstanding.
Bitcoin was the first application to both introduce and use the combination of technologies architectured into something called a Blockchain. The Blockchain as used by Bitcoin is an elegant piece of technology that creates peer-to-peer distributed digital trust. But it has flaws, quite a few as it happens.
Since the technology world began to appreciate the design of the Bitcoin Blockchain, many other new Blockchains and similar solutions have been created for different use-cases, many of which address some of the limitations found in the original Blockchain. It is true that Blockchain as a class of technology is finding increased acceptance across all manner of industries, especially within Financial Services, Supply Chain and Government. But this has nothing to do with the Blockchain as used by Bitcoin, except that the original Bitcoin Blockchain architecture acted as a catalyst and inspiration for a wave of innovation.
Almost none of the industry use-cases we read about every day for Blockchain use the Bitcoin Blockchain. Governments will soon step in and regulate Bitcoin. And how would they do this? The entire premise behind Bitcoin was to create a crypto-currency beyond the reach of National Governments. Every time a Government, such as China or Russia, try to clamp down on Bitcoin, it draws attention to the difficulties they have in doing so and has led to subsequent increased demand for BTC and raised prices.
Meanwhile, in many parts of the world, the exact opposite is happening. Investment vehicles based on Bitcoin are being approved by regulators, Central Banks float ideas around creating Bitcoin-backed digital currencies and various levels of Government start to accept Bitcoins as payment. I am sure there are many more examples of misconceptions and weak commentary.
But as a technologist who has experience with both Bitcoin and Blockchain I have been shocked at how poor the reporting of the Bitcoin phenomenon has been now that it is being more broadly covered. Here are at least eight examples: