Sunday, November 29, 2015

Why Bitcoin - Many Reasons To Do Bitcoin

People depending on their circunstance will have different reasons to do bitcoin. Before you even consider investing, please be sure in your own mind that this thing is not going to go "pooof". For myself  Bitcoin Is A Safe Bet. Make up your own mind. Bitcoin is an idea whose time have come.

Hedge Against Inflation

I got worried about my assets and savings when QE was introduced to save the economy. Everything shouts out at me that printing money can only lead to inflation and excessive money printing will lead to hyper-inflation like 1920's Germany.

However all we got was exploding Asset prices and not much inflation. An explaination as to why this is so can be found here. Banks have been mainly depositing their cash with the central banks. What happens when all that money finally gets into the real economy ? Scary. Banks are not lending because in a contracting economy there is little demand for productive investments. The only demand is for speculative investments in property and stocks. Would not surprise me if it turns out that banks are the biggest speculators.

I looked at Bitcoin after being introduced to it by my son. Studied it and felt that it was safe enough for me then and started buying a little each week. That was 2 years ago. My small investment in bitcoins have increased in value despite starting when the price of bitcoin was $600. As a hedge against inflation, the strategy has worked.

Bitcoin is guranteed to be limited to 21 million by maths. With increasing adoption by people all over the world its value can only go up, way up.

Planning For The Future

Most bitcoin early adopters are below 40. Saving for the future and bringing up a family is not easy. However for this generation bitcoin there is a once in a lifetime "bankable" option.

Consider possible future purchases by just saving 1 Btc today. Value $320

5 years   - Buy a car
10 Years - Pay for children's education
20 Years - Buy A house

Depending on how much the price of bitcoin increases over the next 20 years these are possible outcomes. If you just left $325 in the bank there is no chance that it can achieve any of this growth. There is however, a strong chance that you will be earning negative interest. Your savings will actually decrease over time!


500 billion a year. Why is it so difficult to make a dent in this market? I thnk that this is the classic chicken and egg problem. Not enough places to spend bitcoins especially in developing countries and not enough people willing to spend bitcoins anywhere. Currency is still king and it will be hard to change that state of affair.

Like all catch 22 situations, someone will break that egg to make the omelette. When that happens the floodgates will open and we should see a huge surge in demand. Until then we can only wait..

Banking The Unbanked

Bitcoin can bring these 2.5 billion adults into the global economy. In the last 20 years China's growth have fueled the global economy. and yet China still has a large proportion of their adult population unbanked or underbank. Imagine the economic growth explosion that will emerge when marginalised people all over the world join the global economy.

Again it is the chicken and egg problem but perhaps, just as well, as we have yet to grapple with the sustainability aspect of this major change.

Gambling, Porn, Drugs, Crime and Terrorism

The dark and sleazy side of bitcoin usage. Without a doubt growth of the inernet was accelerated by the porn industry. Should we care? Should we design bitcoin to exclude such anti social activities before they take root ?

If money cannot be used for gambling, porn, drugs and crime then it is not very good money. Bitcoin psuedonymous and soon to be annonymous nature is a feature and should be guarded and never compromised. The work of enforcement agencies may be harder but then that is what they are paid to do. On the bright side, finding solutions around this problem may mean more jobs, and perhaps, even a new growth segment for the security industry.

Morals aside the march towards bitcoin use in this darker economy is on the up. Many casinos now accept bitcoin. Online gambling is quick latching on and micropayment channels will soon work its way into online porn.

Online Gaming

Incorporating monetary tokens into social gaming brings on a new dimension to the game. A big difference to current token systems is that bitcoin tokens can be used in-game and off-game. Starting with Hyper, there are even more serious and well funded initiatives from companies like Everdream soft's Spells of Genesis and Voxelus's Voxel in 3D gaming.

Everdream soft will be the first to market and with its already huge user base of 250,000 Moonga gamers, Spells of Genesis is almost assured of success when it launches in Q1 2016. Spells of Genesis is built on the counterparty platform and uses the bitcoin blockchain. How this will expand the useage of bitcoin is yet to be seen but one thing for sure is that it will introduce bitcoin to a whole new generation of young gamers.

Online shopping

The info graph shows the spending per online shopper in each country. Multiply by number of shoppers and you get an idea of the size of the market. It is in the trillions of dollars.

What is the big deal with Open Bazaar and how will it threaten the incumbents in this industry? Well Open Bazaar uses only bitcoin for it's payment system. In addition there are no buyer or seller fees, It is a platform, on which many entreprueners, companies and startups will be offering aggregation services much like Google with search. When the whole world offer products and services on this giant uncensorable platform we need the tools to find what we are looking for.

The important point is that bitcoin is the currency that drives this economy. It is the only way that a shoemaker in Zimbabwe can sell to a customer in Mongolia.

Trading and Speculation

Big movements in prices have been link to price speculations mostly emanating from China. The chinese are particularly disposed to risk taking. Just walk into any casino where the chinese form a minority of the population. They will be overrepresented as a proportion of the clientele. Only a very small amount of the chinese population in China have any exposure to bitcoin. This will change and with it price volatility trending upwards.

For those interested in trading their way to a fortune, be prepared for the wild wild west of 24/7 unregulated trading. Many exchanges have come and gone taking with them their clientele's money and bitcoins.

International Travel

Many travel companies will accept bitcoin for travel bookings. The biggest and one of the earliest is Expedia. Today there are also many companies offering bitcoin debit cards including Xapo and E-coin. Goes without saying that you first have to purchase your bitcoins.

Investing in Bitcoin startups

Because of the difficulty in assessing capital for bitcoin startups many were crowdfunded using bitcoins. Though angel investors have moved in of late, many startups still find that crowdfunding is the only way for them to gain access to capital.

The Next Generation

Every generation has it's breakout industry. We have the industrial revolution, the automotive, the computer, the internet and now fintech. Each new industry destroys jobs in the old and creates new ones in its place. There will be a rush to learn cryptography and blockchain technology just as there was a rush to learn computer science that many years ago, because, thats where the jobs are.

The young of today, will grow up with crypto currencies as second nature. They will be their own bank even before they can open a bank account. Their generation will grow up never needing the banking services that we now take for granted.

An industry that cannot keep itself relevant with its customer base is a sunset industry. Banking is on the decline. Brick and motar branches are being replaced with online apps. Backroom operations will be using blochchain technology to reduce staff numbers. The day will come when all the banking conglomerates will be replaced with names like CoinbaseFactomStorj.

A financial crisis of enormous proportion is on the way. Our debt based economy have racked up so much debt that it is hard to anticipate how it will all unravel smoothly. More here.

Bitcoin Price Will Make Quantum Jumps

Bitcoin prices have always made quantum leaps every 2 years. I predict that the next price leap is to $600 early 2016. In part tied to the halving and huge rollout of apps and startups activity. I could be conservative.

Bitcoin Could Become A Defacto Reserve Currency

Bitcoin does not need to be officially nominted and adopted by IMF and the world bank. Just individual central banks holding some bitcoins will make it a defacto reserve currency. If this happens few individuals will be able to afford 1 whole bitcoin.
Econotimes : Study shows bitcoin may be a reserve currency

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Saturday, November 21, 2015

Bitcoin - It's A Safe Bet

Most people are unsure about this new technology and like any new disruptive technology seeds of fear and distrust are sowed by the incumbent players. Up to now the prudent advise is not to invest more than 5% of your portfolio, as one bitcoin may have the potential to be worth a million dollars or it can go to ZERO. Over the two years that I have been immersed in this technology, I have come to the conclusion that the chance of it going to zero is nil.

New disruptive technologies tend to come from the left field and Bitcoin is no exception. Born out of the domain of geeks and cyberphunks it has grown from nothing to a market capitalisation of 4.8 billion. These are some of the arguements against the survival of Bitcoin.

Governments Will Ban It.

By all counts any form of money will not be tolerated and allowed to take root because it threatens the monopoly of governments to control money. That it has survived and thrived is testament that Bitcoin is an idea whose time have come, and the incumbent forces are unable to squash it.

Previous forms of digital money have been shut down and the developers prosecuted as there was a central authority they could target as soon as it appears likely to succeed. Like bit torrent which evolved from the shut down of Napster and similar file sharing sites, Bitcoin evolved from the shutting down of digital curriencies like Egold and Liberty Dollars. It is built on a decentralised platform with no central point of failure. Governments are unable shut it down, short of shutting down the internet.

If Bitcoin was just money it could still be demonised and outlawed to slow it's progress but Bitcoin is also a platform. It is a platform for recording and moving value instantly and cheaply, of which money is only one asset of value. Many interesting uses of the blockchain and it's technlogies are being rolled out and will hit the market soon. Over 1 billion dollars was invested in these technologies in 2015 and many of these startups will roll out products in 2016.

These startups means jobs, investments, GDP growth and enlightened governments are loathe to see them move to other shores. It is hard to be the first to welcome them but all governments want to be second. A speech by a head of state of a global financial center extolling the virtues of bitcoin and the blockchain is a watershed event for bitcoin, and there is no going back. The genie is out of the bottle. The apex court of the European Union have decided that bitcoin is a currency and therefore not subjected to Value Added Tax.

The blockchain is an immutable ledger of the truth. When people make the connection, they will demand this of their governments to use and adopt to root out corruption and nepotism leading the way to good governance. Without corrupt governments there will be no wars.

There can't be money that is not legal tender and backed by government.

That is a myth. Money is a social contract between individuals who wants to transact. What form of exchange they choose to contract in, is their perogative. If enough people choose one asset then it becomes money for that group.

Bitcoin has the added advantage of being accepted globally. It can be moved instantly and cheaply in any quantity. It is programmable and you can conduct micro commerce with it. Machines can own it and transact with other machines without human intervention. It is money for the inernet, and is superior money in every sense of the word.

Government can force payment of taxes in legal tender in which case an exchange market will develop to facilitate the conversion, but in the end, most governments will choose to make it easier for the citizens they represent.

Bitcoin Is A Software and All Software Can Be Hacked.

Over the last six years many have tried. Wences Cesares paid a hacker thousands to break bitcoin before he invested millions in the technology. Government have all the resources they need to make the attempt and we can be sure that they did. Banks are directly threatened and it is a sure bet that they have also tried.

Bitcoin survived and grows stronger each day. The only conclusion we can draw is that a decentralised system whose code is  based on the proof of work consensus is unbreakable. The smartest and brightest brains in cryptography and programming are expanding the breath, reach and use of the bitcoin protocol software. The latest is checklocktimeverify-BIP65.

If anything it is the centralised software of banks and governments that have been hacked and billions worth of value and information stolen.

Another coin with superior properties will replace Bitcoin.

Netscape is the first to market but was soon replaced by Explorer and Firefox. Bitcoin would suffer the same fate. Not so, Bitcoin has achieve enough scale to enjoy the network effect. From this point on the more people use it the more people will want to use it. It would be difficult for another alt coin based on it's code to surplant it.

The closest that can come to doing this is Ethereum which is a complete rewrite and exploits Bitcoin's weakness in not supporting a turing complete language facilitating smart contracts. Ethereum is still in Alpha and have not been tested in the field. If Chris Odom is right, the proof of work consensus is still the best and bitcoin has the biggest infrastructure and investment for proof of work consensus in the world. Ethereum's consensus system have not been tested and it may very well be that Ethereum have to shelter behind Bitcoin's security.

In any case i is quite likely that a turing complete language will be incorporated into Bitcoin in the future either as an Op Code or sidechain. There are enough smart people to make this happen.

Banks will kill it

It goes without saying that any industry that is threatened by a new technology will do everything it can to kill it. We have seen the demise of the horse and carriage, photos and the recording media industry. They failed because the incumbent technology was way too superior to the outdated industry that they have invested in tried to hold on to.

Similarly bitcoin is way superior to the banking systems of today. The banks are rushing to build private blockchains without bitcoin trumpeting the virtues of the blockchain technology while demonising bitcoin. Private blockchains are limited in scope and also less secure. When trillions of dollars are at stake you will want the best security. Not second best. It's just not good marketing.

Oh it is so volatile nobody will use it.

One bitcoin is actually only worth one bitcoin. It's volatility is zero. National curriencies are volatile in terms of bitcoin with value depreciating every year from printing too much of it.

Bitcoin's value on the other hand increases every year because it's supply is limited to 21 million and the last coin will be issued in the year 2140. Because of it's appreciating nature most people will rather save it and use depreciating curriencies, unless the benefits or incentives for using it exceeds the gain from saving it.

Comprehensive Overview Of Bitcoin Ecosystem December 2015

Billionaires Are Investing In Bitcoin

Still want more ? Kyle Drake of IamSatoshi 

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Friday, November 20, 2015

The Bitcoin Blockchain - Chain to rule all Chains.

Bitcoin will remain the dominant coin amomg all coins.

Proof of Work is the most secure

The most important reason is that Proof Of Work is the most secure consensus system ever invented. This according to Chris Odam.

Chris Odom of Open Transactions at 13.30

He believes that all other systems have some niggly problems at the edge and when you peel at it you come back to proof of work.

At this stage Ethereum seems like the most likely candidate to take over Bitcoin mantle especially with the rush to adoption by banks, however if Chris is right, then for security it will also have to seek refuge behind Bitcoin's proof of work consensus system. And it is confirmed here.

Other proof of work coins dont have and will never have the huge infrastructure of Asic mining hardware and miners securing the network.

Most people learning about cryptocurriencies will have heard about bitcoin first. Most Bitcoin 2,0 applications are built on the bitcoin network.

Turing Complete Can and will be added to bitcoin

Ethereum was developed by Vitalik Buterin on the premise that bitcoin should have a turing complete language for handling smart contracts. However it may be possible in future to add turing complere op code into the bitcoin blockchain or include it as a sidechain.

At 19.20 Joseph Perling alluded to Jeff Garzic commenting that a new Op Code could be implemented so that calls can be made to a turing complete language from within bitcoin. It does not exist yet but it could be implemented.

Another implementation Rootstock uses sidechain to integrate the turing complete capabilities of Ethereum. In essense whatever that can be done on an Altcoin can be implemented on the Bitciin blockchain and because bitcoin has the largest user base it will be. There is money in it.

Bitcoin community
The size and contribution of the community matters,and bitcoin is the largest and has the most number of contributors. Just this week (WE 10/12/2015) major developments for upcoming upgrades to the bitcoin protocol were announced at scaling bitcoin in Hong Kong.
1) Segregated Witness - Effectively lossless compression of the blockchain
2) IBLT - Speed enhancement

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Bitcoin Price - Its Value Is In The Network

Value the network by taking the number of transactions and working out the PE
At 7.23 Charles Morris editor at Atlas Pulse values the network at 382 dollars

He based his calculations on weekly Market Cap to Fee Ratio CFR
At CFR of 7 he calculates the price at around $382

As the number of transactions increase, the value of the network increases.
Below an infographic on the possible growth of the network.

What is not considered is the value of off-chain transactions.

I can agree that the value of bitcoin is related to the value of the network but measuring that is a little problematic. At best it is a guide and we should see the price of bitcoin increase as it's adoption increases.

On my analysis the current price floor is Here.

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Wednesday, November 18, 2015

Bitcoin Will Be Ready When The Next Credit Crisis Hits - Get Some

Take a look at this video for a glimpse at what's in store when the next credit crisis hits.

This credit cycle started in the 1970's when Paul Volker put interbank inerest rate up to 21% to reign in inflation. Since then interest rate have dropped until it is at zero and trending negative. Many countries of the developed world already have negative interest rates. This is because central banks have not allowed the system to correct itself. Negative interest rates are unnatural and sends the wrong signals to the market. The time will come when it will correct. We have to be prepared.

Look at German bond rates at the last bond auction 18 November 2015

Two year and five year bonds have negative yields. This means that investors are expecting that rates in the next five years will go negative further. That is if the politicians will let this state of affairs continue. What happens if central banks decides that enough is enough and allow bond markets to correct ?

Look at this next graph which shows the monetary base go nuts from quantative easing.

The reason why QE never resulted in inflation is because that money never made it to the general economy. All it did was shored up bank balance sheets, kept deflation at bay and inflation just above zero. Interest rates were kept low to negative. This led to distortions in the economy and runaway assets prices. We now have huge asset bubles in stocks, housing and collectibles, except precious metals. Zero interest rates in the US also led to that money finding it's way into developing economies in a carry trade looking for positive returns. This is economics in the twilight zone. We are in Lala land!

So why is gold and silver exempt from this asset bubble. Why has it gone down from a high of $1900 in 2011 to $1070 today.

The fact is pysical gold is hard to come by. Any offer of minted gold coins are quickly snapped up. What is left is paper gold. This is not the real metal just a promise to deliver the real metal. Gold and silver markets are manipulated with paper gold because if gold prices were to go up, the public will percieve that the economy is in trouble. Economics is all about perception and herd mentality.

So what will the next credit crisis look like ?

No economic text, courses or diplomas can prepare us for what is happening now and tell us what will happen next. Nobody knows. Perhaps we can look at what happened in 2008.

Basically overnight, the assets in the bank books were not what it says. When the bank makes a loan the entry is :

Debit : Loan Owed By Customer ( Asset, backed by Property )
Credit : Customer Current Account. ( Liability, Just a Book Entry )

The amount of liability (money) it can create is limited by the reserve ratio and the amount of cash it must keep with the central bank. Now if the value of the property it holds is less than the loan owed, the bank is technically insolvent. It must make up the reserve ratio and can no longer make any new loans. If the bank must 'Mark To Market', it is bankrupt. If all the banks face this same problem, the whole financial system is frozen. The economy as we know it, is dead. Only cash works.

In 2008 the reserve bank printed the money in the form of QE and gave it to the bank to shore up it's balance sheet. This rescued the banks from being insolvent. MAGIC. It is the same as your father giving you the cash to make up the negative balance when your housing loan exceeds the value of your house.

How did the bank repay it's loan to the reserve bank? They sold all the underperforming loans to the reserve bank and waited for the housing market to pick up. Of course you and I do not have this luxury. Our houses will be foreclose in a mortgagee sale, and we will be thrown out on the streets.

So when the next credit crisis hits, asset prices will go south. The trigger will be interest rates going up. People can no longer afford the huge mortgage on very low interest rates. Everyone will try to sell their properties that they can no longer afford to service, at the same time. The carry trade will go in reverse. This is why the reserve bank will find it very difficult to increse interest rates. Even a little bit.

Will this ever happen? Will the government let it? Problem is that interest rates are already zero and they can't reduce it further, as long as we have cash. Negative interest rates will not work if cash is an alternative, people will just keep their cash out of the banks. Banks will limit the amount you can withdraw like in Greece recently. This is why there is a push to outlaw cash and Sweden is now the first cashless economy. Others will follow.

What Can We Do ?

Life will still go on. Unemployment will increase and will hit the young hard. Business confidence will be low and most businesses will have to cut cost to conserve cashflows. House prices will be down so will the stock market.

Your bank account may be frozen and access to cash withdrawal will be curtail. This will be hard for businesses as they will be unable to pay their creditors especially for overseas purchases. However if they have access to bitcoins they can circumvent such difficulties.

Bargains are to be had if you have CASH or BITCOIN. Bitcoin is the first truly global currency.
The price of bitcoins will go 'to the moon' as the demand for it will come from all over the world as a hedge against currency devaluations.

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Tuesday, November 17, 2015

Central banks need to hold bitcoins to prevent "A Bitcoin Speculative Attack"

What is a Bitcoin Speculative Attack?

Take for instance there is a rush to purchase bitcoins in Venezuela. This increase in demand will result in a premium for bitcoin in venezuela say $100 above the US market. The result will be speculators rushing in to sell the Bolivars for US dollars to purchase bitcoins. This selloff of the Bolivar will need a response from the government to defend the currency by increasing the interest rate, capital controls or worse.

To fight such speculation the government could sell bitcoins in the market to drive the price down but this would neccessitate the government having access to bitcoins in the first place. The IMF have already discuss contingencies if this scenario should ever eventuate.

At the bottom of it, bitcoin is just Perfect Money. It is accepted all over the world and it can move between borders effortlessly and cheaply. It is a good store of value and over time it's value will always increase secured by the hard limit of 21 million bitcoin to ever exist.

As good money it will always drive out bad. If for any reason the citizens of a country suddenly lose confidence in heir currency perhaps because of hyperinflation through excess money printing, we may get a rush to purchase bicoins to preserve purchasing value.

IMF 'unable' to supply the currency needed to counter speculative attack using bitcoin
Bitcoin Speculative Attack

Central Bank Of Barbados Advised To Holds Bitcoins (Updated 29/11/2015)

Economist Dr Winstone Moore and Jeremy Stephens have produced a report for the Central Bank of Barbados advising the central bank to holds a small amount of bitcoin in their reserve portfolio. Precisely against speculative attacks and mitigate against depreciation of other reserve currencies such as the USD and Euro in their portfolio.

This is an indication of the current climate of thinking all round the world. There is only going to be 21 million bitcoins, ever. If only some of these small nation acted on such advise bitcoin price will escalate exponentially. Only a matter of time when some will make the move.

Singapore's prime minister advises banks and regulators to heed bitcoin and blockchain technology.

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Where Bitcoin - Global Bitcoin Adoption

Current Price Floor (21/11/2015) : $320

The importance of understanding the price floor is to help with investment into the bitcoin space.

Bitcoin price is underpined by it's adoption.
A : Initially 2009 - 2010 it was only the developers like Satoshi where it did not have any value.
B : 2010 - 2011 a small community developed and value was established over forums price of bitcoin was less than a dollar.
C : 2011 - 2012 Mt Gox the first exchange established and the community grew around libetarians and anarchist. Price increased to a few dollars.
D : 2012 - 2013 Silk Road was a unique use case for bitcoin and value exploded to around $30
E : 2013 - Nov 2014 New users and speculators started coming into the space. Mining exploded in popularity and the mining arms race was on. Price increased to around $200.
F : 2014 - July 2015 Bitcoin price went to $1200 but I believe that this was pure speculation and due to events around Mt Gox and should be discounted. Price floor should reasonably be around $230.
G : July 2015 - Nov 2015 MMM Ponzi scheme took off in East Asia new price floor of $300

Awaiting more use case for bitcoin to bring in more users and adopters, which will establish higher price floor for bitcoin.

Bitcoin Embassies Around The World

Physical Businesses Accepting Bitcoins

Infographic of the Bitcoin Ecosystem

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Saturday, November 14, 2015

A Watershed Moment For Bitcoin - Singapore Leads The Way

Transcript : "... there are other technologies like Blockchains which is used for bitcoins, but can also be use for many other applications like, Real Gross Time Settlement and Trade Finance Verification. So our banks and our regulators MAS must keep up to date and up to scratch with these developments..."

Real Time Gross Settlement : "Gross settlement" means the transaction is settled on one to one basis without bundling or netting with any other transaction. RTGS systems are typically used for high-value transactions that require immediate clearing, usually by a country's central bank.


Trade Finance Verification : Same-day affirmation (SDA) also known as T0 refers to completing the entire trade verification process on the same day that the actual trade took place.

He refers to Blockchains (plural), He points out that there are many type of blockchains and only one of which is bitcoin. This actually sidesteps the previously negative image attributed to bitcoin.

It shows a clear understanding of what blockchain technology is all about. Furthermore he directs that their banks and regulators keep up to date with developments. Singapore have always maintained a level headed approach towards bitcoin. It was the first country to clearly define the legal position of bitcoin. Here regulators treat bitcoin for tax purposes it the way it is used, either as a commodity or currency. This has allowed many innovative bitcoin companies to setup and thrive in Singapore.

In his speech he praised the banking industry for it's success but also points out that there are other banks that are better in other areas of the finance and banking, such as mobile payments. This is reinforcing Singapore's model of always wanting to be the best in areas of industry that they target. Being a financial hub have been part of the plan since the founding of Singapore as an independent state.

I would argue that this is a watershed moment for bitcoin and blockchain technologies in general. The community have always hoped for a country to "adopt" bitcoin. This endorsement from the leader of a major developed nation and a global financial hub comes close.  It is a good bet that a good many leaders have been taken by surprise and are "scrambling for the exits" so to speak.

Update 24/11/2015 : Banks Urged To Take Digital Currencies Seriously

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Thursday, November 12, 2015

People In Bitcoin - Movers and Shakers of the Bitcoin World

IN THE BEGINNING...... Satoshi Nakamoto

Image result for satoshi nakamoto

Everyone who has ever indulge in bitcoin have wondered who this mysterious person is. On 31 August 2008 the bitcoin white paper was published followed by code in January 2009. Satoshi used the internet and an email address to publish, maintain and communicate with the early core developers until his exit in May 2011 when he passed on the mantle of core maintainer to Gavin Andresen. If we step back alittle, it is obvious that this process of introducing and exiting without a trace was planned right from the begining. Otherwise there would have been a slip over the 2 years and there would be a trail to follow towards his discovery.

Can this man be the real Satoshi Nakamoto, Report Wired and Gizmodo

Image result for hal finney
Hal Finney  (Bitcoin & Me)
Image result for nick szabo
Nick Szabo
More likely it is more than 1 person and they would have had previous encounters with digital cash. Previous iteration of digital cash such as Digi Cash, Egold and Liberty dollars have all been shut down by the government. Likely candidates are Nick Szabo and Hal Finney, though Adam Back's hashcash algo was used in the bitcoin code. 


Gavin Andresen

Martti Malmi

Amir Taaki

The Bitcoin Foundation's original members included Gavin AndresenCharlie ShremMark Karpeles, Peter Vessenes, Roger Ver, and Patrick Murck. 

Smart Contracts - It Executes Itself

As a society we have developed laws and legal systems to govern ourselves. In the area of contract laws we have notaries, courts and judges to try and adjudicate contracts in disputes.

Then we have bitcoin and the blockchain and a whole new area of smart contracts is upon us. A smart contract is one that executes itself if all the conditions are met. Bitcoin is smart money. Within it's code Alice can send Bob a bitcoin if date is after XXYYZZ, and when that date arrives the bitcoin will appear in Bob's wallet. This is the simplest example of a smart contract. Contract law has been embedded into code and there is no ambiguity.

Bitcoin code can only handle very simple scripts and so Ethereum was invented to include turing complete languge.

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Wednesday, November 11, 2015

The Bitcoin Blockchain - Real Life Applications

Information stored on the blockchain is immutable and unchangeable.

1) Everledger. Recording information of valuable diamonds on the blockchain.
Every diamond has a unique ‘fingerprint’, consisting of 40 different parameters. Problems of conflict diamonds and authenticity of the diamonds are addressed by recording this information about each diamond on the blockchain. There are currently more than 300,000 diamonds already registered with Everledger. 

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Getting Your First Bitcoin - First Step Down The Rabbit Hole

OK you are finally convinced that bitcoin is here to stay and you are ready to make your first bitcoin investment. Now how do you get your first bitcoin?

It is actually not so easy. Banks are not too happy integrating with bitcoin businesses making it difficult to exchange between currency and bitcoin.

1) Bitcoin ATM
Image result for bitcoin atm

Bitcoin ATM's Worldwide

At first glance it seems easy but quite often these machines are not working or are in low traffic areas. Good if you can get someone to show you how to use the machine.

2) Local Bitcoin

Local Bitcoins Website

Next to exchanges local bitcoins are the best way to purchase some bitcoins. Find a dealer close to you and make your purchase in person with cash. Rates will be higher than those charged at the exhcanges. Once you have struck up a relationship future purchases would be easier.

3) Bitcoin Exchange

List Of Bitcoin Exchanges Worldwide

It is easy to open up an account with the exchange but difficult to connect your bank account with the exchange. However registering your credit card will be easier. You will often be ask for idenfication and details of residence.

4) Mycelium Wallet

You can download a Mycelium wallet for your phone and use it as your bitcoin wallet. Mycelium wallet has a feature showing you the nearest contacts for people wanting to sell and buy bitcoins.

5) Bitcoin Mining

Bitcoin mining is not for the non technically minded and quite often it is difficult to purchase. Currently only 2 companies are selling direct to the public. Bitmain and Spoondoolies.

Image result for s7 bitcoin miner

At a price of $1585 USD it will take quite some time to get a positive return on capital. However some people look at bitcoin as a long term investment and it's future value being greater than it's current value. Bitcoin mining produces diminishing returns but if the price of bitcoin keep increasing as expected then this may turn out to be a good investment.

6) Cloud Mining.

Surprisingly this may be the easiest way to get a stream of bitcoins. Genesis Mining is the best cloud mining operation. They are very professional and have been around for quite sometime. It is easy to make a purchase a mining contract with your credit card. They offer lifetime contract though how long this will last is unclear.

7) Offer products and services for bitcoin

Open Bazaar will soon launch and they have ambitions of becoming as big as Ebay.

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