Decoding Bitcoin E-Book

Claude Kramer

• Herausgeber: BookThug
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 26

Veröffentlichungsjahr: 2015

Beschreibung

Bitcoin is the first successful attempt to a cryptocurrency. Will it surpass the dollar, yen and euro in the near future? It is difficult to foresee it, but perhaps the cryptocurrencies originated from a common agreement, without intervention from banks or states, will constitute the next revolution in the monetary system.

Leseprobe

The Currency of the Future?

Bitcoin is a system of peer-to-peer relationships that form a network and, using the Bitcoin software, create a new digital currency, the only currency not issued by any Central Bank. Unlike other systems, Bitcoin is a decentralized monetary system which is not governed by the laws of any public or government body.

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The Origin of Bitcoin

As an introduction, it is worth mentioning that this currency is created by a network of computers which must solve extremely complex algorithms to finally “find” bitcoins. Of course, not all computers can do it. Only those who have the most powerful processors manage to extract these assets from the virtual mine and enter them into the system. The discovery of a new bitcoin is automatically acknowledged by the system and registered by adding the data at the end of an extensive block chain. Below, we will explain how this sequence of events is limited to a certain amount established by the original design of the software. Therefore, there will be a time when the chances to get a new bitcoin will be close to zero.

The rest of the people or organizations can get bitcoins by buying them or exchanging them for goods or services.

It’s interesting to note that the creation of the Bitcoin protocol was attributed to Satoshi Nakamoto in 2009. (The first block was mined on January 3rd of the same year). Although there are pictures of the mythical Nakamoto on the Internet, his identity is unknown. In fact, it is uncertain whether he is real or not and some people believe that it is a group of people instead of one single person.

It is logical to assume that every invention is created to solve a problem or to fill a gap. So, looking for failures in the current global monetary and financial system can help us to understand this phenomenon and anticipate its function in the future. This is essential now, because it’s the time when anyone can decide to add this type of currency to their wallets.

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Similarities with Money

Money is a concept, but until recently it was necessarily associated with objects. These objects are what we all know as coins and bills. The funny thing is that it wasn’t always the case. When ancient societies managed to develop tools and settled in sedentary civilizations, an unprecedented phenomenon known as “surplus production” took place. Specializing in an activity with added value -- unlike harvesting or hunting, for example -- prepared people for certain tasks, giving rise to the social distribution of tasks. Young strong men were not only in charge of hunting to feed their families, but groups of people began to intensively dedicate to a certain task. Families or societies began to fulfill a function in the exchange of goods, depending on weather, geographic and cultural conditions.

The allocation of the surplus production by a certain group of people who intended to get other goods gave rise to barter, a system of exchange by which goods were exchanged personally. However, this system was inefficient because it was difficult to establish the value of the goods, which changed according to the needs, situations, seasons and weather.