here is another one you Nannee :)The Bitcoin Phenomenon part 1
December 9, 2017 / Marcus Curtis
If you have watched the news recently you may have heard about tremendous gains in bitcoin. You may have thought about investing in this cryptocurrency. If everyone is getting rich off of this investment why not invest and make money too. It seems like a sure thing right? People are dumping all kinds of money into this with the hope of getting rich quick. No one is being informed of the risks involved, and after investing in the dinar I am getting feelings of déjà vu. So allow me to give a brief overview and history of this investment. Let me explain some of the risks involved with this investment.
First it should be noted that unlike the dinar, investors have made money with bitcoin. Investors have also lost money. People have made money by mining bitcoin which is also known as earning. This cryptocurrency has even been used in commerce. Now let’s discuss the history and the risks.
The domain name “bitcoin.org” was registered on August 18th, 2008, In November of that same year a link to a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was posted to a cryptography mailing list. This paper was authored by Satoshi Nakamoto. The identity of Nakamoto remains unknown but he implemented the bitcoin software as open source code and released it in January of 2009.
A cryptocurrency is designed to work as a medium of exchange. It is a digital asset that uses cryptography to secure its transactions. Cryptography is also used to control the creation of additional units, and to verify the transfer of these digital assets. Cryptocurrencies are mainly classified as a subset of real digital currencies. They can also be classified as a subset of alternative currencies and are often referred to as virtual currencies.
In January 2009, the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain also known as the genesis block, a reward of 50 bitcoins was included on this genesis block. Embedded in the coinbase of this block was the following text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This text has been interpreted as both a timestamp of the genesis date and a cynical comment on the instability caused by fractional-reserve banking. Its launch was close to the 2008 meltdown.
For this reason bitcoin is the first decentralized cryptocurrency. The decentralized control is directly related to the use of bitcoin’s blockchain transaction database in the role of a distributed ledger. Cryptocurrencies use various time stamping schemes to avoid the need for a trusted third-party to timestamp transactions. These timestamps are added to the blockchain ledger. Bitcoin and currencies like it use decentralized control as opposed to centralized electronic money or central banking systems.
One of the first supporters of bitcoin was a guy by the name of Hal Finney. He was the receiver of the first bitcoin transaction. He was also a programmer and a contributor to bitcoin. Finney downloaded the bitcoin software the day it was released and he also received 10 bitcoins from Nakamoto in the world’s first bitcoin transaction. Some websites list other early supporters as well. They include Wei Dai, who was a creator of the bitcoin predecessor b-money, and Nick Szabo. He was the creator of the bitcoin predecessor bit gold.
In the early days, Nakamoto is estimated to have mined approximately 1 million bitcoins. In 2010, Nakamoto handed the network alert key and the control of the Bitcoin Core code repository over to Gavin Andresen. This man became the lead developer at the Bitcoin Foundation. Nakamoto removed himself from any involvement with bitcoin. Gavin Andresen stated that he wanted to decentralize control, saying: “As soon as Satoshi stepped back and threw the project onto my shoulders, one of the first things I did was trying to decentralize that. So, if I get hit by a bus, it would be clear that the project would go on.” This statement allowed speculation and controversy over the future development of bitcoin.
The value of the first bitcoin transactions were negotiated by individuals on the bitcointalk forums with one notable transaction of 10,000 BTC used to indirectly purchase two pizzas delivered by Papa John’s. Since then bitcoin has gained in value and popularity worldwide.
A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store a person’s bitcoins, because of the design of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is a digital system that will store the digital credentials for your bitcoin holdings. This wallet will allow you to access your bitcoin in order to spend them.
Jordan Kelley is the founder of Robocoin. On February 20th, 2014 Kelly launched the first bitcoin ATM in the United States. The kiosk was installed in Austin, Texas. It is similar to a bank ATM, but it also has scanners installed in order to read government-issued identification. This kiosk will scan a driver’s license or a passport. This is done in order to confirm a users’ identity. By September 2017 1574 bitcoin ATMs have been installed all around the world with an average fee of 9.05% per transaction.
In 2015, the number of merchants accepting bitcoin exceeded 100,000. Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees between 0% to 2%. Firms that accepted payments in bitcoin as of December 2014 included Dell, Newegg, PayPal, and Microsoft. More local Businesses also started excepting bitcoin.
Since the introduction of bitcoin many other cryptocurrencies have been released. The success of bitcoin has created a whole bunch of bitcoin wanna-bees. Everyone seems to believe that if Satoshi Nakamoto can do it, they can too. Numerous cryptocurrencies have been created. These are frequently called alt-coins. They serve as a blend of bitcoin alternatives. Today there are hundreds of cryptocurrencies out there and they are all trying to be the next bitcoin.
Most cryptocurrencies are designed to gradually decrease production of currency as more is mined. The purpose of this is to place an ultimate cap on the total amount of currency that will ever be in circulation thus mimicking precious metals. However, people still mine for bitcoin today.
The Risks and Dangers With Cryptocurrencies
Now that you have a brief history on bitcoin and other cryptocurrencies let’s discuss some of the risks and problems associated with them. There is a lot of hype involved and as a result, there is a currency out there for almost everything. There is even a Ron Paul cryptocurrency.
Consider all the variables to make this work. A tremendous amount of effort must be expended to create an alt-coin. There is the cryptocurrency itself and the electronic wallet that all possessors of a coin must have on whatever electronic device they may be using. This also means that the program must work on a wide range of computers and smart-phone platforms. There is also a marketing expense to get some people to start speculating in it. There is the process of setting up the mining operation so that the virtual miners of the world can start “earning” the coin so that they can sell it on an exchange. There are literally hundreds of these currencies out there and one estimate has the number of alt-coins around 1,100.
These alt-currencies are all attempting to duplicate Bitcoin’s success. The Majority of Bitcoin users are acquiring bitcoins not in order to buy goods and services but to speculate. The main source of bitcoins function and cryptocurrencies like it is that they are seen as an investment.
From our experience as dinar investors we should know that’s a bad investment decision, and it also hurts bitcoin’s prospects. The problem with having the bitcoin economy dominated by speculators is that it gives people an incentive to hoard their bitcoins rather than spend them. This happens to be the opposite of what you need people to do in order to make a currency successful. Successful currencies are used to transact day-to-day business and lubricate commerce. But if your reason for buying bitcoins is hoping that their value will skyrocket, as any investor would, you’re not going to be interested in exchanging those bitcoins for goods, This is because you will lose when the value of bitcoins rises. Instead, you’re going to hold onto them and wait until you can cash out.
Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant and then converts it to the local currency! These bitcoin services will send the obtained amount to the merchant’s bank account. They charge a fee in return for the service. We are led to believe that merchants except bitcoin and then later on use it in other transactions, but this is not the case! Merchants around the world who accept bitcoin will get a government currency immediately deposited in their account during the course of the transaction.
There are pump and dump schemes that artificially drive the price up on cryptocurrencies for a short period of time. Pump and dump schemes are where people colluded to buy a small cryptocurrency at the same time and thus push up the price by artificially inflating demand. Those involved collect a quick profit by selling to new investors who are attracted by the rising price. People involved in this make up large groups that will pour millions of dollars into a cryptocurrency at one time. These people view the currency like a stock. Once new investors are in they sell off the currency for a huge profit. (check the link below)Pump and Dump Schemes
The big question then is this. Has bitcoin ever been involved with pump and dump schemes? There are wild price swings in bitcoin’s history. The price of bitcoin has gone through many cycles of appreciation and depreciation. Many people refer to this as bubbles and busts. Here are a few notable examples. In 2011, the value of one bitcoin rapidly rose from $0.30 USD to $32.00 USD and then it fell to $2.00 USD. In the second half of 2012 , the bitcoin price began to soar once again on April 10th, 2013 it reached a high of $266.00 USD. Then it came crashing down to around $50.00 USD. This event is known as the 2012–13 Cypriot Financial Crisis. On November 29th, 2013, the cost of one bitcoin rose to a peak of $1,242.00 USD. Then in 2014, the price sharply fell creating heavy loses with investors. As of April of that same year the price of bitcoin remained depressed. It was little more than half of 2013 prices. As of August 2014 it was under $600.00 USD
As of 2014, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the US dollar. This is the analysis of Mark T. Williams. However, Forbes claims that there are some uses where volatility does not matter, such as online gambling, tipping, and international remittances.
According to an article in The Wall Street Journal, as of April 19th, 2016, bitcoin had been more stable than gold for the preceding 24 days. The article seemed to suggest that its value might be more stable in the future. On March 3rd, 2017, the price of a bitcoin surpassed the market value of an ounce of gold for the first time in history as its price surged to an all-time high of $1,268.00 USD.
Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system. A study in Electronic Commerce Research and Applications, going back through the network’s historical data, revealed the value of the bitcoin network as measured by the price of bitcoins, to be roughly proportional to the square of the number of daily unique users participating on the network. In other words, the bitcoin network is well modeled by the Metcalfe’s law.
So what is driving up the cost of bitcoin now? It is really a number of things. First, as the price continues to go up more speculators are jumping on board driving up demand. Second, the same Global Currency Reset nonsense that is used to sell precious metals and foreign currencies from third world countries is being used to hype the bitcoin as a viable investment, and the GCR propaganda is also attracting new investors. Third, Cboe, the options and derivatives exchange, is launching the first-ever regulated futures exchange for bitcoins on Sunday December 10, at 6 p.m. CME Group is scheduled to launch its exchange on Dec. 17, and Nasdaq will start trading the futures in 2018. This has caused wild speculation for the cryptocurrency. The coming futures exchanges has caused the price to skyrocket but some investors jumped out on Friday. (See link below)Bitcoin Sell Off
Yes there are people making money with bitcoin, but there are many people who had big losses in the past. As of this writing, bitcoin remains super volatile. Many more long term investors may jump ship before the exchanges take place. This investment is an extremely high risk gamble. You need to be careful with the amount you are willing to invest because it must also be an amount you are willing to lose.
Thanks to: https://iraqcurrencywatch.com