Insights of Crypto-Currency
Bitcoin (i.e. crypto-currency) is the future of the world. No matter what attitudes you have towards it, you need to understand its concept and essence. We are proud to provide you the best learning resources and outstanding insights of crypto-currency, with everything built exquisite and elegant.
Ultimate Introduction to Crypto-Currency
- What is Crypto-currency? And what’s its characteristics and significance?
- How about its economy? Why would it probably dominate the world in the future?
- To what extent will Bitcoin change our life?
A quick glance and you’ll get profound understanding of Bitcoin in 10 mins.
Such concept. Much Ease. Wow
Let’s begin with -
Various historical data here, processed with professional tools and our unique vision.
A comprehensive review of Crypto-economy, including stock market, mining and merchants, etc.
Important things to know: The edge of change, development progress and risk alert.
See what events and incidents are happening recently.
The Complete History of Bitcoin. One day, We would come back here to see how this incredible thing changed world.
Head First Classes
A series of class including:
- Head First Mining
- Head First Bicoin Shopping
It’s widely known that Satoshi Nakamoto’s standing on the sidelines, but do you know he probably also catalysted the R&D of ASIC miners?
Breakdown: When you mention “Bitcoin” it can be either:
Bitcoin as a Network
The Bitcoin network is a peer-to-peer,innovative payment network that operates on a cryptographic protocol.
Bitcoin as a Protocol
The protocol contains technical specification and economic rules, creates unique pieces of digital property that can be transferred from one person to another.
Bitcoin as a Blockchain
All bitcoin transfers are recorded in a computer file that acts as a ledger called the block chain. It is a transaction database shared by all nodes participating in a system based on the Bitcoin protocol.
Bitcoin as a CurrencyThe only form of virtual money that is accepted by the Bitcoin network.
Though Bitcoin is often referred to as a currency, but it does not conform to the generally agreed on definition of money. It’s more used as a medium of exchange.
Frequently held misconceptions about Bitcoin:
- 1 bitcoin is so expensive that we cannot use it as money in daily life
- I've heard about mining. Bitcoin is definitely a fraud because how can someone create money by merely wasting electricity?
- The fact that It takes up to 30mins to get 3 confirmation for 1 transaction made it useless...e.g. for buying a coffee
- It's impossible using Bitcoin as money because it has an extremely volatile exchange rate
- Bitcoin is not issued by government and consequently it can not be currency or it is backed by nothing
- Bitcoin is illegal or it can be destroyed easily by the government
- Crypto-currency as virtual money is unsafe and easy to be hacked
- Just duplicate the digital wallet file and you can get more bitcoins!
- As you mentioned decentralization, there is no way to control inflation
- Crypto-currency is directly related to criminals, money laundry and few people are using it in daily life
Actually it’s not necessary to buy one entire Bitcoin, You can buy and sell any amount you wish, including denominations in the fractions of a cent. One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin system. The value of “1 BTC” represents 100,000,000 of these.
In other words, each is divisible by up to 10^8. As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller units, such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC). Saying Bitcoin is too expensive is like saying money is too expensive.
Nope. Categorically speaking, Mining is the process of spending computing power to:
- process transactions
- secure the network
- keep everyone in the system synchronized together
This process is referred to as “mining” as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.
Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of Bitcoin entails processing costs. Services necessary for the operation of currently widespread monetary systems, such as banks, credit cards, and armored vehicles, also use a lot of energy.
Bitcoin mining has been designed to become more optimized over time with specialized hardware consuming less energy, and the operating costs of mining should continue to be proportional to demand. Furthermore, all energy expended mining is eventually transformed into heat, and the most profitable miners will be those who have put this heat to good use.
Nope. It’s not necessary for merchants delivering goods of value that DO NOT significantly exceed the block reward, to wait for the confirmation.
Receiving a payment is almost instant with Bitcoin. However, there is a 10 minutes delay on average before the network begins to confirm your transaction by including it in a block and before you can spend the bitcoins you receive. A confirmation means that there is a consensus on the network that the bitcoins you received haven’t been sent to anyone else and are considered your property.
Once your transaction has been included in one block, it will continue to be buried under every block after it, which will exponentially consolidate this consensus and decrease the risk of a reversed transaction. Every user is free to determine at what point they consider a transaction confirmed, but 6 confirmations is often considered to be as safe as waiting 6 months on a credit card transaction.
Despite this, retailers can accept unconfirmed transactions with very little risk by simply ‘listening’ on the network for a double-spend transaction, or partnering with a company that provides this service. After a head start of merely several seconds, the original transaction would reach so much of the Bitcoin network that a fraudulent double-spend transaction would almost certainly be fruitless.
An attacker could work around the necessity of sending out a second fraudulent transaction to the Bitcoin network by attempting to solo-mine an attack block containing the attack transaction himself – temporarily withholding the block with the rest of the network – and then execute the fraudulent purchase within seconds, or minutes at most, of mining the attack block, before broadcasting the attack block. However, the cost of such an activity would dramatically outweigh the value of anything typically offered without a confirmation wait.
Nope. When you refer to “use as money to buy goods”, I assume you mean one specific functionality of currency: medium of exchange. Actually, numerous people have experienced using Bitcoin to buy goods. Let’s clarify this from two sides.
The assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper’s back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices sticky. Future volatility is expected to decrease, as the size and depth of the market grows.
In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.
It’s widely acknowledged that holding Bitcoin is risky because when you spend it, you would probably sustain the loss by its depreciation since when you bought the Bitcoin (or sometimes the price of Bitcoin is driven up, which does not always happen though you decided to hold Bitcoin in expectation of that). The longer you hold it, the more risks you undertake.
However, you could always perceive Bitcoin as the medium of exchange (not value-based investments) without taking the volatile rate into consideration. What you need to do is buy certain amount of Bitcoins according to the fixed rate set by merchants(possible additional loss due to price margin) and pay via Bitcoin network. Here, Bitcoin is a bridge currency with low friction, which extends traditional transaction and catalysts international purchase. Specific service providers(e.g. BitPay) has made this process increasingly faster and safer.
It’s heavily debated whether bitcoins have intrinsic value outside of their use as a medium of exchange. Sure, if society came to a screeching halt, the decentralized currency not backed by the government or pegged to any commodity likely won’t have any value. But there are also arguments to be made about the value of Bitcoin as a global network of exchanges and merchants. At the end of the day, value is determined by supply and demand. If usage grows and this currency becomes a mainstay, then its value will increase as well.
Bitcoins have value because they are useful as a form of money. Bitcoin has the characteristics of money (durability, portability, fungibility, scarcity, divisibility, and recognizability) based on the properties of mathematics rather than relying on physical properties (like gold and silver) or trust in central authorities (like fiat currencies). In short, Bitcoin is backed by mathematics. With these attributes, all that is required for a form of money to hold value is trust and adoption. In the case of Bitcoin, this can be measured by its growing base of users, merchants, and startups. As with all currency, bitcoin’s value comes only and directly from people willing to accept them as payment.
Moreover, the subjective theory of value is a theory of value which advances the idea that the value of a good is not determined by any inherent property of the good, nor by the amount of labor required to produce the good, but instead value is determined by the importance an acting individual places on a good for the achievement of their desired ends.The subjective theory of value supports the inference that all voluntary trade is mutually beneficial. An individual purchases a thing because he values it more than he values what he offers in trade; otherwise he would not make the trade, but would keep the thing he values more highly. Likewise, the seller agrees to trade only if he values his good less than the price or good he receives. In a free market, both parties therefore enter the exchange in the belief that they will both receive more value than they give up.
Bitcoins have properties resulting from the system’s design that allows them to be subjectively valued by individuals. This valuation is demonstrated when individuals freely exchange for or with bitcoins.
To the best of our knowledge, Bitcoin has not been made illegal by legislation in most jurisdictions. However, some jurisdictions (such as Argentina and Russia) severely restrict or ban foreign currencies. Other jurisdictions (such as Thailand) may limit the licensing of certain entities such as Bitcoin exchanges.
Regulators from various jurisdictions are taking steps to provide individuals and businesses with rules on how to integrate this new technology with the formal, regulated financial system. For example, the Financial Crimes Enforcement Network (FinCEN), a bureau in the United States Treasury Department, issued non-binding guidance on how it characterizes certain activities involving virtual currencies.
In March 2013, the U.S. Financial Crimes Enforcement Network issues a new set of guidelines on “de-centralized virtual currency”, clearly targeting Bitcoin. Under the new guidelines, “a user of virtual currency is not a Money Services Businesses (MSB) under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations.” Miners, when mining bitcoins for their own personal use, aren’t required to register as a MSB or Money Transmitter.
In general, there are a number of currencies in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, BerkShares, game currencies like WoW gold, or Linden dollars, is not illegal.
Simultaneously, when governments try to destroy some kind of tradtional digital currency they will:
Find out the controllers for (forced)cooperation
Attack the central point of control, which easily destroy the entire ecosystem of that currency
However, Bitcoin is decentralized and completely different from traditional digital currency. There are NO small group of people as controllers, and the entire Bitcoin network is a P2P network – that means there are NO central point of control. It’s built adequate to have solved all these issues. It’s almost impossible for any government to destroy it with ease.
Nope. Let’s take Bitcoin Network as an example, it’s safe.
The rules of the protocol and the cryptography used for Bitcoin are still working years after its inception, which is a good indication that the concept is well designed. However, security flaws have been found and fixed over time in various software implementations. Like any other form of software, the security of Bitcoin software depends on the speed with which problems are found and fixed. The more such issues are discovered, the more Bitcoin is gaining maturity.
Bitcoin is secured by standard cryptographic functions. These functions have been peer reviewed by cryptography experts and are considered unlikely to be breakable in the foreseeable future.
There are often misconceptions about thefts and security breaches that happened on diverse exchanges and businesses. Although these events are unfortunate, none of them involve Bitcoin itself being hacked, nor imply inherent flaws in Bitcoin; just like a bank robbery doesn’t mean that the dollar is compromised. However, it is accurate to say that a complete set of good practices and intuitive security solutions is needed to give users better protection of their money, and to reduce the general risk of theft and loss.
Most bitcoin thefts are the result of inadequate wallet security. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as wallet encryption, support for multiple signatures, offline wallets, paper wallets, and hardware wallets. As these measures gain adoption by merchants and users, it is expected that the number of thefts will drop.
What you need pay attention to is some common practice to secure your wallet. This requires knowledge of protecting your wallets against loss and theft. Recommend reading: Securing your wallet
Your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file. If you give your bank details (or bitcoin wallet) to someone else, that doesn’t double the amount of money in your account. You can spend your money or they can spend your money, but not both.
Nope. Before talking about inflation, we need take into the consideration the fact that Bitcoin is regulated to a fixed, certain amount (21M) by unchangable algorithms. Unlike traditional digital currencies, arbitrary rules cannot be imposed upon users by the controllers (no central controllers at all when it comes to Bitcoin).
Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear.
Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million “hard” bitcoins are stored as reserves by banks. Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway.
The key point here is that Bitcoin as a currency can’t be inflated by any single person or entity, like a government, as there’s no way to increase supply past a certain amount.
Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes.
Nope. Criminal law differs between jurisdictions.
Bitcoin is money, and money has always been used both for legal and illegal purposes. Cash, credit cards and current banking systems widely surpass Bitcoin in terms of their use to finance crime. Bitcoin can bring significant innovation in payment systems and the benefits of such innovation are often considered to be far beyond their potential drawbacks.
Some concerns have been raised that Bitcoin could be more attractive to criminals because it can be used to make private and irreversible payments. However, these features already exist with cash and wire transfer, which are widely used and well-established: Visa, MasterCard, PayPal, and cash all serve as opportunities for criminals as well, but society keeps them around due to their recognized net benefit. Terrorists fly aircraft into buildings, but the governments have not yet abolished consumer air travel. Obviously the public good outweighs the possible bad in their opinion.
The use of Bitcoin will undoubtedly be subjected to similar regulations that are already in place inside existing financial systems, and Bitcoin is not likely to prevent criminal investigations from being conducted. In general, it is common for important breakthroughs to be perceived as being controversial before their benefits are well understood. The Internet is a good example among many others to illustrate this.
Bitcoin is designed to be a huge step forward in making money more secure and could also act as a significant protection against many forms of financial crime. For instance, bitcoins are completely impossible to counterfeit. Users are in full control of their payments and cannot receive unapproved charges such as with credit card fraud. Bitcoin transactions are irreversible and immune to fraudulent chargebacks. Bitcoin allows money to be secured against theft and loss using very strong and useful mechanisms such as backups, encryption, and multiple signatures.
What’s more, There is a growing number of businesses and individuals using Bitcoin. This includes brick and mortar businesses like restaurants, apartments, law firms, and popular online services such as Namecheap, WordPress, Reddit and Flattr. While Bitcoin remains a relatively new phenomenon, it is growing fast. At the end of August 2013, the value of all bitcoins in circulation exceeded US$ 1.5 billion with millions of dollars worth of bitcoins exchanged daily.
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It’s valued for its intrinsically valuable function
Gold and other precious metals are often said to be intrinsically valuable, but why? Because they’re nice and shiny? Because they’re a finite material and expensive to dig up? Sure, precious metals are used in jewelry but what practical use do these metals have aside from aesthetics? Comparatively, Bitcoin is measured by its own finite quantity and valued for its intrinsically valuable function. The Bitcoin protocol has immense intrinsic value as a self-regulating frictionless payment network affordable to almost anyone.
Bitcoin is a hybrid as well as enhancement of three things with which we’re all pretty familiar:
- Virtual Currency: Anonymous, Faster and cheaper to transfer 70%
- Equity: Predictable, Limited and Not debt-based 20%
- Social Network: Shared by peers, Not controlled by a central authority 10%
Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.
Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.
Caution! Bitcoin Trading is RISKY.
As a tech, Bitcoin could open up whole new vista; while as a economy, it’s merely online poker 2.0. The current crypto-currency market is full of Frauds, Insider Dealing and hypocrites. Nearly all prevalent platforms (especially in China) engaged in speculation and profiteering in association with amateur “media” or “sources”, trolling lambs while bloodsucking them. Retail investors must protect themselves.
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