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Money is a strange phenomenon. Our modern notion of it mean that in essence it is intrinsically useless apart from as a medium of exchange. Our government, regulators, law and communities agree that phenomena whether a physical banknote or an electronic ledger such as a bank account have certain value, in certain units and certain denominations. From a cultural perspective however, things are not quite so clear.
As society advances technologically and socially we find that many things which were thought of as fiat can change. This is both a move of progression the expansion of culture and efficiency helping to communicate the zeitgeist more accurately. Crypto-currency is an interesting phenomenon. It is a system of exchange which exists as fiat in nature, but which also has security. Traditional currency is secured by the notional protection of the central bank from where it is issued- whilst crypto-currency is secured by the integrity of the system itself.
Subverting a traditional currency is made impossible due to the supranational power of the issuer, and subverting a crypto-currency is theoretically impossible due to the mathematics of breaking the encryption. To learn more, I spoke to two world experts. Campbell Harvey] Crypto-currency is a means by which people can exchange property in a secure way without the use of a central institution like a bank or the Federal Reserve.
The currency is digital and particular crypto-currencies like BitCoin go to extreme lengths so that you can only spend your digital currency once. Think of it this way. You can exactly make a copy of a picture or some music on the computer. It is a perfect counterfeit.
You can do the same with a currency code. Hence, it is very important to keep track of the codes so that you only spend it once. Unlike real money, they are decentralised and transactions are free; no bank in the middle taking their slice and nothing central to fail.
They are as real as real currency and can be used to purchase anything from Starbucks coffee through to Jaguar cars , many well known brands are starting to accept BitCoin payments.
Campbell Harvey] Digital currencies began in the s. However, they only really became popular when BitCoin was introduced in BitCoin solved a key problem it prevented people from spending the digital currency twice. Right now the market is very small. For comparison, the total size U. However, there are now thousands of crypto currencies with Litecoin the second most popular.
The main difference is based on the scrypt algorithm used to mine the coins. Aside from mining there is little to distinguish coins to the user. Campbell Harvey] Many people speculate in BitCoin. It is approximately 8 times more volatile than the stock market. However, that is not the primary use of BitCoin. BitCoin is designed to efficiently and securely aid in transactions.
There is no central clearing house. There is a central general ledger. People check the ledger to make sure you have the BitCoin to pay. After each transaction, the transactions go into a pool that will be eventually added to the general ledger.
Anybody connected to the BitCoin network can check the ledger. Excitingly, a new market has emerged where you can trade virtual company shares in exchange for crypto coins. It is remarkably secure. That seems completely infeasible. This is one of the big advantages of BitCoin — the ledger is practically unhackable. There are no technologies on the horizons that even come close, even including quantum computing.
Gox was a third party — a sort of bank. It was somewhat akin to a regular bank have their doors open, the vault open, no security, no employees, no cameras. The weak link in the security of your BitCoins tends to be where you store them — ie. Campbell Harvey] The block chain or general ledger could be a secure repository of private information, property ownership, and conditional contracts. For example, consider buying a car.
The dealership sells it to you and it goes into the block chain. You have a private code that identifies you as the owner. Only you can start the car with that code. Some believe it is possible to use coloured coins to make fully distinguishable security exchange. Such coloured BitCoins can be used for alternative currencies, commodity certificates, smart property, and other financial instruments such as stocks and bonds.
In my view, you would need to redesign some crypto currencies from the ground up. Campbell Harvey] BitCoin might not be the final model but it is definitely here to stay. Many have criticized BitCoin because it enables illegal transactions. I think the critique is lame. Cash is the problem. Indeed, with BitCoin there is a record of every transaction every made.
As above, Litecoin is the leading competitor to BitCoin. It also has a strong developer community and even its own association. Although cryptocoins are designed to be decentralised and thus somewhat anarchic, they can quite easily be traced. Anoncoin is a scrypt-based coin like Litecoin. Primecoin differs mainly in the way it is mined.
Mining Primecoins consists of finding ever-larger prime number chains. SHA and scrypt coin mining is a complete waste of power and computation by comparison. Change happens in waves. Innovations enter a culture, and are adopted with varying degrees of stickiness. In most cases, this creates [ often unexpected ] emergent phenomena which, over time, transform the way our world functions. Technology has transformed commerce into something which is almost unrecognisable from the markets of even 50 years ago.
High performance computing, connectivity and software innovation now mean that we now treat money as bits of information. Surely therefore it is only natural that bits of information should be treated as money? Could Crypto-currency Disrupt Money? The Language of Money Crypto-currency is an interesting phenomenon. So, could BitCoin disrupt money? What are the principles behind crypto-currency? What are the key forms of crypto-currency competing in the current market?
What has been the use of crypto-currency in the financial markets? What are the risks and challenges associated with crypto-currency? What are the alternative applications of crypto-currency? What do you see as the future of crypto-currency?
Useful, functional differences to BitCoin. A community of users and developers supporting it. Based on this, my top 4 cryptocoins which I think most likely to have a future are: The Future Change happens in waves. Their flagship TED conference, and global network of TEDx events have created hundreds of thousands of unique pieces of video content, watched billions We promise not to SPAM. Vikas Shah Interviews the world's leading thinkers, and the people shaping the century.