What is Bitcoin and why all the fuss with Cryptocurrency?

Related image
Follow my blog with Bloglovin

 

Guess how many Cryptocurrencies are there at the moment.

 

Any ideas?

 

Over 1146. With new ones being created every week.

 

That means by the time you read this post, there may very well be close to 2000 new ones. That makes it kinda tough to determine the next promising Altcoin (alternative coin). But you have to, if you want to catch this modern age gold rush, that is.

 

I’ve never written about Cryptocurrencies or Bitcoin before despite coming across it 3 years ago. Back then I was too laser focused on building my publishing business. But there’s a reason why I want to start investing & writing about this now.

 

Here’s why I think cryptocurrencies are here to stay.

 

The  website CoinMarketCap lists a total market cap of $148,105,802,654. That may sound small compared to the $7.8 trillion notional value of the world’s gold. But the value of its circulation is already moving closer to the value of gold held by exchange-traded funds.

 

 

About 50% of the cryptocurrency have a cap of at least $100,000.

 

No wonder hundreds of thousands of people are trading it each day.

 

But 99% of Crytocurrencies you come across are just investment schemes and scams. They’re so rife right now because the market is in a mini-bubble.

 

In a world where the dollar bill holds value only because of the shared common belief that it does, cryptocurrencies are giving back power to the people, not governments and banks.

 

The Macintosh democratized computers; Google democratized information; and eBay did it with e-commerce. In the same way, Cryptocurrency is democratizing money.

 

I can tell you that I have come across many Bitcoin investments or Ponzi schemes that promises a fixed percentage in return every month and not only that, you usually get contacted by someone who offers to sell you some below the market price.

 

Although at the moment Bitcoin is a high-risk investment because of speculators and volatility, it solves a very fundamental need.

 

…. this opportunity is HERE TO STAY and there can be generational wealth to be made. While most would see this as a high risk investment or a fad, I discovered that the opportunity is immense. Think of the “internet” back in 1994, the people who started blogs and websites, and those that didn’t.

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. ~Winston Churchill

I’m not a financial adviser and this is just my opinion, but I still could see the underlying opportunity in the difficulty of cryptocurrencies being accepted by world organizations, governments and banks.

 

One problem is the engineering aspect of its infrastructure. “Forks” could happen. Just like Bitcoin cash (BCH) which solves the problem of transaction speed.

 

The other is the volatility, I could lose a lot of its value after purchasing Bitcoin. That’s how rapid they are.

 

If it goes up too much, people still don’t really know how to value it.

 

That doesn’t mean you should totally stay away from it. It also doesn’t mean you should invest all your money now. Many people got hurt before in bubbles like this.

 

Does it mean I should just buy Bitcoin? Is it the Winner?

 

No. It just means that the natural evolution of money and currency is already here and nothing can stop it. Its perpetual, self-driven, just like the arrival of the internet.

There are already over 24 countries doing research and development in implementing Blockchain technology. The technology that drives Bitcoin, Etherum, Litecoin and many others.

 

What they’re planning to do is to quickly move in to regulate digital currencies with the aim of protecting investors & preventing money laundering.

 

The Walk-through of how it works

Pros and Cons:

The encrypted system is entirely run by programming without the need for ANY HUMAN INTERVENTION.

Say when I need to buy Adam’s house, I need to trust the local bank, central banks, lawyers, governments, Adam’s bank, etc in order to approve this transaction in currency.

 

This is fine in an ideal world with no human agenda. But this is the real world and people subtly influence the price of currency one way or another. They could also disclose your information to unwanted third parties. Not to forget about INFLATION!

 

However, a Bitcoin transaction just require miners to validate the transaction.

 

Suffice to say the system will auto-correct itself and not allow any hackers or untrustworthy people to cheat. It can automatically dump the fraudulent transactions and ensure it is legit. (This process is extremely complicated, but its algorithm works, also i’m not the person to ask about Blockchain technology)

 

The WHOLE REASON for cryptocurrency is this; taking our governments and banks out of the picture (Decentralization). Removing man-made borders that incur more transactional costs and most importantly the high encrypted technology discourages fraudulent activities.

 

Imagine a world where we could just conduct trade with a single currency. No more banks, money changers, no more governments printing fiat currency to bail banks.

 

What about the whole story about terrorist and criminals using Bitcoin to hide?

Well Bitcoin can be traced via Blockchain.info so you can’t actually be ANONYMOUS, per se. But there are ways to hide your tracks, but you need to as smart as Julian Assange. Bitcoin is probably the most transparent payment network in the world while providing acceptable levels of privacy when used aptly.

 

If i’m a criminal, I’d do better sticking to cash.

 

If you study the history of money, you would understand that currency is just a way to store perceived value and transact without needing to barter.

 

We started with the land we own and the resources we had, then it was precious metals like Gold and Silver, but then it was hard to transport them.

 

So paper currency was introduced backed by gold initially. But later, the governments succumbed to the bankers and gave them the power to print more money. And so the worthless paper holds value in it simply because of the phrase “in God we trust.”

 

Electronic / digital currency. The ease of transferring currency this way gave us the best viable method with expensive fees and zero privacy.

 

Then Cryptocurrency came along and solve all those problems. While easily transferable, it also costs next to nothing and doesn’t involve anyone in between you and me.

 

As you can see, money evolves and like anything else, technology gave the people a better solution and eventually they’d all adopt the fastest, most secure and private mode of storing value.

 

At the end, Data-ism plays the final role in human evolution.

 

There will NOT be just ONE Cryptocurrency that WINS IT ALL.

 

We have dollars, Euros, Pounds, pesos… there will also be more than just one Cryptocurrency.

 

The difference in cryptocoins will be its usage.

 

For instance, Bitcoin Cash & Dash gives you faster transactions. Zcash gives you more anonymity, while Filecoin allows people to decentralized their storage.

 

As opposed to currency geographical borders, cryptocoins have specific functionality that distinguishes them from one another.

 

Time and more research will tell how well each cryptocoin will perform.

 

Traders vs. Hodlers

 

No that is not a typo. The word hodl was all because one forum poster misspelled the word and so it stuck and evolved into a bitcoin urban meme.

 

As you know, I’m playing the long term investing game, instead of just trying to make a quick buck from this.

 

It’s the same with building any business. Compounded interest is the most powerful force in the Universe, Albert Einstein said it. Some people are in to make a few bucks quickly, others are in for the long haul.

 

If you want to treat Bitcoin like a get-rich-quick scheme, you’ll probably end up doing day trading or speculating. And that probably is riskier. Unless you know what you’re doing.

 

Ultimately this approach results in more exposure to scammers and you need to monitor the fluctuations constantly.

 

Needless to say, you’ll only hear and see me writing about hodling cryptocoins.

 

Choose your side of the force wisely, young Padawan.

 

star wars

 

If you like this blog post and would like more on Cryptocurrencies you can let me know in the comments.

Are you an early adopter of Bitcoin? Care to share your take on this?

Share

Leave a Reply

Your email address will not be published. Required fields are marked *

Post comment

CommentLuv badge