Bitcoin - Decoding The Cryptocurrency

by Nick Breeze

 

Many people who consider themselves financially savvy have touted the wisdom of buying up gold with their extra cash to insure against any looming financial catastrophe. The inevitability of another crisis means that some sort of wealth refuge acting as insurance against currency or stock market shocks, is simply prudence in excelsis.

 

Bitcoin article UK
 

Enter stage-left, amid the chatter in the global village, the biggest of all the “cryptocurrencies”, Bitcoin (BTC). Bitcoins appear nothing more than an encrypted sequence of numbers representing a certain amount of an anonymous, digital currency, created by techies and constrained by a complex algorithm, with no need for a central bank.

This virtual currency is mathematically generated based on a virtual “mining” process that can only go up to 21,000,000 BTC’s. With this limit to actual creation of BTC’s, inflation is kept in check because the intrinsic value of the coin is limited to the divisibility of the total known amount.
 

Bitcoin can also be traded between individuals face to face, or with those in far off foreign lands, using a digital wallet. The transfer of BTC’s from one wallet to another is relatively underwhelming but those who use it think differently. Exchanges are popping up everywhere allowing traditional currency purchases of BTC’s, either in large quantities or small fractions of a single coin.

bitcoin-transfers
 

So is it used as a real currency? There is a taxi driver in Hereford, pubs in London, online ecommerce stores, professional services, and now even Virgin Galactic will promise to take you to space in exchange for your BTC’s. Property agents are getting into it, as well as street market traders. The attraction might be anonymity for some but for the mainstream techno consumer, it is the long-term philosophical view that a decentralised monetary system offers more value and security than the central banking system.
 

Bitcoin accepted

 

Another question often asked is whether gold is about to be replaced by Bitcoins as the new store of wealth for contrarian investors? At a time when London buses have just stopped accepting cash and the bulk of our conceptual reality is relocating to the interconnected digital landscape, it does seem unlikely that we’d enter into another era of hoarding physical gold to manage our affairs.
 

Currencies function because we trust them. If we don’t trust them, we don’t want them. The abuse of the American dollar through quantitative easing to bail out careless bankers, leaves many people distrustful of the value attributed to such currencies.
 

In the case of the USD, it might take only a sea port refusal by China to accept payment for goods in anything but their own currency (or anything but dollars!). That could cause widespread belief that the greenback is worthless and lead to the exchange value of the dollar collapsing. This, so called, “reserve” currency would become the little brother to the big beast of inflationary failure, the Zimbabwean Dollar.
 

How much more sense does it make to implement a decentralised monetary system that is secure, democratic and, by design, finite, to avoid the temptations of bankers and policymakers to make bad judgements at the expense of the masses?
 

Right now, the most dated object I keep about my person is my leather wallet. My barcoded library card has relocated to my key ring, whilst my car key has relocated to an App on my phone. My smartphone is a powerful multi-use computer performing endless tasks combining, personal, professional and social. Strikingly, all my plastic cards from the Oyster to the credit and debit cards are still little changed from their prototypes that I recall from my childhood in the late 1970’s and early 80’s.

 

bitcoin-usd-2yr

 

So will it work? Will we transition? It seems from my research, that Bitcoin is already working and people are transitioning already. It’s value has risen compared to mainstream currencies. The emergence of new exchanges, directories of traders, service providers, and a vibrant idea sharing community of entrepreneurs, mean that this is a very exciting area that looks set to change our perception of money and value.
 

However, I doubt very much that there will be a day or a month where one currency fades and another becomes the norm. What we tend to see is the bell-curve effect where those that see the potential jump in early and lead the charge. Eventually the benefits and widespread use expand out to the herd, increasing confidence and reducing fear. Government legislation will form alongside, in what we hope will be a more durable, robust and fair monetary system.
 

Let’s watch and see.

Nick Breeze

@NickGBreeze 

More posts by Nick Breeze

Addressing a wine industry on the frontline of climate change, Former President Obama said: “We are speeding our car towards the cliff at a very fast rate”. The audience and former president were invited to the launch of this new initiative by 326yr old port company CEO, Adrian Bridge, who is calling for solutions, saying “what we need to do is stop talking and start doing!” Nick Breeze reports.

 

A three day hearing at the High Court is in process that will decide whether an injunction be granted, effectively preventing any campaigning that might negatively impact the economic interests of UKOG and their associated companies.

 

The Climate Change Act 10 years on: does it matter? Is it fit for purpose? Are our politicians fit for purpose? Chris Rapley speaks candidly about our preparedness for an ever-rising tide of climate impacts that are already having a disastrous effect on nearly all regions of the world.

 

The jet stream is responsible for what kind of weather we experience and it’s behaviour is changing. Dr Jennifer Francis, a research professor at Rutgers University's Institute of Marine and Coastal Sciences, explains how a combination of factors are going to drastically impact agricultural systems in Europe and Eurasia.

It is easy to look at the fires in southern Europe and think that “global warming” is a regional problem often on someone else doorstep. This misconception could not be further from the truth because the “global” bit refers only to global mean temperature. As scientists start to look at what is happening around the world, it becomes very clear that the interconnected global system is changing for all.

 

Dr. Saleemul Huq Director International Centre for Climate Change and Development (ICCCAD) at the Independent University, Bangladesh. In this short interview Dr Huq talks about his work and explains how those most vulnerable to the effects of manmade climate change are seeking recompense from the worlds greatest polluters.   

 

In 2014 Marks & Spencer became the only retailer in the world with carbon neutral operations. This huge undertaking across over 1400 stores has been rewarded with international recognition by the UNFCC winning Momentumn For Change award for carbon neutrality.