After all, they are two completely separate definitions.
We’ll explain further in just a moment.. Either way, if you’re reading this – then you’ve more than likely heard of Bitcoin/s.
At this point, Bitcoin is a fairly commonplace word.. it may not always be spoken of in high regards, and the words “tulip” or “bubble” are often not far behind, but there’s no denying that people are becoming exponentially more aware of the newly minted digital currency.
While Bitcoin isn’t quite mainstream yet – In just the short span of the past three months alone Bitcoin awareness has skyrocketed, landing Bitcoin directly in the world spotlight. From congressional hearings, to the spectacular crashes, Bitcoin has become quite the news darling as of late.
Below we’ve put together a brief Bitcoin primer that’ll hopefully help get you up to speed on what many consider to be “the next big thing”.. So, let’s start from the beginning.
- Who Is Satoshi Nakamoto?
- The Genesis Block.
- The Future of Commerce?
- What This Means For You and Your Dollars?
Who Is Satoshi Nakamoto?
Satoshi Nakamoto is the anonymous software developer accredited as the creator of Bitcoin.
It currently isn’t known whether Satoshi is an individual or a group of people, but many suspect that Bitcoin isn’t the work of just one man. Instead, bitcoins are the result of the collective efforts of a small group of software engineers and cryptographers. There’s been an ongoing attempt, mainly by online journalists, to reveal Satoshi Nakamoto’s identity for as long as the digital currency started making headlines.
One entirely fascintaing thing about Satoshi Nakamoto, is that he has recently become the world’s first ever anonymous billionaire. Impressive, to say the least.
Even more impressive? As Bitcoin grows, many predict that Satoshi will anonymously become the world’s richest man. The fact that this is even a possibility is mind-numbingly amazing and completely embodies the Bitcoin movement, in general. While many just view it as a speculative investment vehicle, or possibly even the next world currency, the existence of Bitcoin is largely politically motivated.
Satoshi’s Political Motivations.
With his now infamous white paper, Nakamoto defines the perceived problems with our current monetary system based on centralized fiat currencies, and then proceeds to lay out an ingenious solution to the problem combining cryptography and peer-2-peer computer technologies, with a dash of libertarian politics… and devised the world’s first fully digital cryptocurrency.
Regardless of Satoshi’s original political motivations, it remains to be seen if the advancement of the Bitcoin network actually furthers those ideologies, or just provides the world with an alternative to PayPal. Either way, it’s important to remember that financial reform may just be the tip of the iceberg when t comes to cryptocurrencies.
The Genesis Block.
At the core of the technological advancement that is Bitcoin you’ll find the blockchain. To understand Bitcoin you really need to understand what the blockchain is, how it works, and what it could mean for incorporating the Bitcoin network into our collective digital future.
How Transactions Work.
First of all, it may help to think of a Bitcoin transaction as being something like sending an email with a file attached.. You can send it to other Bitcoin addresses, encrypt it.. download the attached file and store it on your computer or encrypt it.
Now imagine that every time you either sent or received said email with attachment, that the transfer, the email addresses involved, and the size of the file were all recorded on a public website for everyone to look at (the Blockchain) whenever they wanted.
That’s kinda how Bitcoin transactions work. Of course, it gets entirely more technical than that, but that’s the layman’s version.
Potential Uses of the Blockchain.
This is where things could get really interesting. As anyone who’s done their homework on Bitcoin will tell you: It’s far more than just a form of “digital cash”.
It’s also the world’s first decentralized public ledger. An online transaction record that many predict will be used in unimaginable ways at this point. From accounting to law transcription, and many other public record keeping professions.. Could all be significantly impacted by the technological waves that Bitcoin makes as it’s rapidly reshaping the way in which our digital economy functions.
The many potential uses of the blockchain, some say, are more exciting than the currency aspect of Bitcoin. It will be interesting to watch ALL of the innovationsthat bith Bitcoin and other cryptocurrencies bring as they mature into the rest of this decade.
The Difference Between “Bitcoin” and “bitcoins”?
Learning the difference between “Bitcoin” and “bitcoins” can hekp shed a lot of light on the subject when tryong to really wrap your mind around such a new concept..
“Bitcoin” is the actual network that has been set up by thousands of computers, that are all collectively forming the world’s largest supercomputer. These computers are all collectively “mining” using the Bitcoin software created by Satoshi Nakamoto. By mining, we mean they are using there collective supercomputer to solve increasingly difficult computer generated algorithms/equations. When an equation is solved.. “bitcoins” are birthed to be used on the “Bitcoin” network.
Confusing, we know, but it’s kinda one of those subjects that may require an “aha!” moment.. Just keep reading, your moment is surely awaiting.
The Future of Commerce?
The stratospheric rise in the price of bitcoins is merely a representation of the collective emotions of investors, and speculators.. and emotions are running high, to say the least, but they may just be getting started. People are placing their bets on the future, and it’s becoming increasingly more clear that a decentralized, digital currency may very well play a very significant role in that future. As more and more people come to that realization, who knows where this is going? It’s anyone’s guess at this point.
If such change does come to pass, rest assured that there will those that lose out big. An entire antiquated, pre-internet financial system is starting to feel the heat that is Bitcoin and peer-2-peer cryptocurrency. Such industries have thrived on transaction and handling fees for more than a century now, and have no intentions of handing that market share over easily… rest assured – there will be fireworks to see.
As the world makes it’s transition to digital software based cash, only one thing can be said for certain: With great change comes great opportunity. And it’s all happening in cyberspace, which means it’ll happen quicker than most anticipate.
Strictly for eCommerce?
This is a pivotal question for Bitcoin and will determine exactly how far a completely virtual currency can reach. Many think that Bitcoin is simply going to become the cash or gold of the internet. That you will likely buy things on the internet with Bitcoin, but you probably won’t being buying your gas with BTC anytime soon.
The problem with this is that lines between the “real world” and the virtual one will blur even further as technology progresses at an ever increasing rate. The idea that our internet transactions would completely separate themselves from out real life transactions, seems rather unlikely.
If anything, Bitcoin stands to stand right alongside other standard payment options that you would find while checking out at your local grocery store.
Asset or Currency?
Another important question for Bitcoin.
The answer to which is a key differentiator that will determine the outcome of future legislation that is sure to be imposed on Bitcoin and the entire Cryptocurrency markets. If the powers that be deem to classify Bitcoin as a currency, it will mean a far different and perhaps more stringent set of rules and regulations for the Bitcoin economy to abide by.
While, any smart investor, should keep an eye on capitol hill – This is especially true for those interested in Bitcoin. While, at this point, it seems rather unlikely that the establishment will attempt to (bc it’d be futile) stamp out Bitcoin, the regulatory decisions that are made and announced, are known to massively affect the trading price of Bitcoin.
Maybe nothing, but maybe everything, but like most things in the cryptocurrency world – All anyone can really do at this point is speculate.
And there’s certainly no shortage of people willing to do that. Bitcoin is shaping up to be the single best investment vehicle in the world for five years running, in 2014. Pretty staggering when you think about it, really. The point that many people are trying to make is that there may become a point where it’s not that Bitcoin is increasing in value, it’s that the U.S. Dollar is decreasing in value.
The economic forecasts range from normal inflation to zombie apocalypse, but either way, you don’t have to be a doomsday prepper to fear the ravages inflation incur on a monetary currency. After all, that’s the whole point of Bitcoin in the first place.
While nobody can say for sure what the future holds for Bitcoin and the rest of the crypto-currency market, it seems more and more evident that they aren’t going away anytime soon.. If ever.
So, while some will tell you this is the birth of the next great asset bubble – not unlike the tech stock boom of the nineties, or the gold boom that we’re currently in the midst of (end?) – And others will tell you that it’s just a fad to be ignored. Nothing more than tulip bulbs..
Pull up a seat.. The next two years are going to be very interesting indeed.