Bitcoin- a well known and often discussed trend, which is an innovative currency, physically not existent and has enriched investors multiple times. Despite its incremental popularity, the majority is still unfamiliar with bitcoins and the cryptographic system.
Are you one of those unlucky, yet inquisitive people, who don’t know what is going on? Don’t worry - we got you! This website is the ultimate guide to cryptocurrencies. You will be introduced to the topic, that was once a complex labyrinth, but will feel like a no-brainer after reading through our thorough elaborations.
Picture resource: https://apparatus.si/092apg/
The Basics
What is cryptocurrency?
Cryptocurrency, bitcoin being one of them, is a virtual medium of exchange. Each transaction made with cryptocurrencies is confirmed and stored by the public ledger, “blockchain”¹, through the use of cryptography² via an operation, called mining. Mining is basically the process in which the so called “miners” solve complex mathematical problems, thereby making transactions work and generate new units of a cryptocurrency. Since cryptocurrency works through a peer-to-peer network², the digital currency is decentralised. This meaning that, as opposed to fiat money, it is independent from any centric, modulatory authority, like the government or the central bank.
¹ Is every cryptocurrency based on blockchain?
There are only very few cryptocurrencies that do not use blockchain e.g. IOTA
² What is Cryptography?
Cryptography (crypto=concealed) refers to encryption techniques involving complex algorithms. Those are used for storing and transmitting data, so that the normal, legible data is transformed into an inscrutable form. It can only be deciphered for the intended receiver.
³ What is a peer-to-peer network?
A peer-to-peer, or short P2P, network refers to two or more computer systems, the “peers”, being directly connected via the internet. This means that the data can be transmitted between them without involving any separate central server.
Other terms you might come across
-altcoin = an altcoin basically is any other cryptocurrency than bitcoin. Alt coins intend to improve, update, compete with and offer an alternative to bitcoin (as they have all been launched after bitcoin). -cryptocoin = different to a cryptocurrency having its own, independent blockhain, crypto coins are digital assest based on already existing blockchains.
The terms bitcoin or cryptocurrencies have caused many controversial discussions - while some claim that cryptocurrencies fill the room for improvement our current money systems leaves....
“Bitcoin has built its reputation and structured its virtual currency around being both anti-government and anti-establishment.”
Picture resource: https://www.depauw.edu/news-media/latest-news/details/31294/
Mercedes Kelley Tunstall: Chambers USA-noted consumer finance regulatory and former bank in-house counsel and FTC lawyer | Picture resource
“For many reasons the crypto-assets in your digital wallets are unlikely to be the future of money [...] But that is not meant to dismiss them. Their core technology is already having an impact. Bringing crypto-assets into the regulatory tent could potentially catalyze innovations to serve the public better.”
Picture resource: https://www.bankofengland.co.uk/about/people/mark-carney/biography
Mark Carney: Governor, The Bank of England
“An exchange based on trading kiddy cards does not seem like a sound foundation for a monetary system.”
Picture resource: https://digitalchamber.org/dc-blockchain-summit-2018/james-j-angel/
James J. Angel: Professor in finance at McDonough School of Business at Georgetown University
"[Bitcoin is]certainly something more than just a fad [...] The concept of anonymous currency is a very interesting concept -- interesting for the privacy protections it gives people, interesting because what it says to the central-banking system about controlling that.”
Picture resource: https://www.ced.org/people/single/james-p.-gorman
James Gorman: Chief executive officer, Morgan Stanley
On bitcoin interceders: “The most paranoid class of investors. They’re hoarding it to ward off what they believe is hyper inflation. They don’t trust the Fed. They don’t trust the government. They don’t trust central banks.”
Picture resources: https://www.umass.edu/newsoffice/article/nobel-prize-winning-economist-and-new-york
Paul Krugman: New York Times writer
“We need better cross-border payments [...] because it’s good for development, it’s good for financial inclusion, [...] So Bitcoin can help us, it can pay us a service by forcing us to upgrade our systems. That’s a positive lesson. [The international community still needs to understand and] control these gateways between the shadow-currency universe and the regular financial system.”
Picture resource: https://www.ecb.europa.eu/ecb/orga/decisions/html/cvcoeure.en.html
Benoit Coeure: Executive board member, European Central Bank
“People get excited from big price movements, and Wall Street accommodates [… ]. You can’t value Bitcoin because it’s not a value-producing asset. [It is a] real bubble.”
Picture resource: http://cafef.vn/warren-buffett-se-lam-gi-khi-thi-truong-lao-doc-20180209115019802.chn
Warren Buffett: Chief executive officer, Berkshire Hathaway Inc. and billionaire investor:
“I believe there is still a nontrivial chance Bitcoin goes to zero, but each day it does not, that chance declines as more venture capital flows into the Bitcoin ecosystem and more people become familiar with Bitcoin and buy it.”
Picture rescue: https://hub.jhu.edu/2018/01/16/bill-miller-hopkins-philosophy-gift/
Bill Miller: Founder, Miller Value Partners
"[Bitcoin is the] biggest bubble in human history [and the] mother of all bubbles”.
Picture rescue: http://content.time.com/time/specials/packages/article/0,28804,2058946_2059124_2059122,00.html
Nouriel Roubini: Professor of economics at New York University, who predicted the global financial crisis of 2008
“I tend to think of bitcoin as an experiment. It is an interesting experiment, but it’s not a permanent feature of our lives […] We are over-emphasising bitcoin, we should expand it out to blockchain, which will have other applications.”
Picture resource: https://www.fordfoundation.org/ford-forum/robert-shiller-bio.html
Read the english transcript of a very interesitng interview with a cryptocurrency miner (which was sadly held in German) and gain new insights into mining and cryptocurrencies!