Imagine a world where cars drive themselves, deliveries are made by drones, legal problems are solved by algorithms and human interaction for standard services is virtually eliminated. What used to be flights of fantasy have now become a reality. As technology continues to rocket us forward the “Rise of the Machines” is no longer just a good movie plot.
The Rise of Bitcoin
We recently posted an article where we had talked about ransomware and how we had to pay ransomware with $800 worth of bitcoin. If bitcoin was the currency of choice for those holding data for ransom. Those $800 in bitcoins are now worth thousands. Talk about a payday.
Who Created Bitcoin?
According to cnet.com… Bitcoin was invented in 2009 by a person (or group) who called himself Satoshi Nakamoto. His stated goal was to create “a new electronic cash system” that was “completely decentralized with no server or central authority.” After cultivating the concept and technology, in 2011, Nakamoto turned over the source code and domains to others in the Bitcoin community, and subsequently vanished. (Check out the New Yorker’s great profile of Nakamoto from 2011.) Satoshi went through great lengths to hide his identity and no one knows who he is. I find this fascinating, why would he want to keep his identity secret?
The idea behind bitcoin was to create money whose value couldn’t be manipulated by a central authority. It is the first currency of the Internet and somewhat like digital gold.
How is Bitcoin Created?
The process for obtaining bitcoin is done through “mining”. People mine bitcoin by using computational power. When I first heard this it didn’t make much sense to me, but then I remembered when a friend told me about how he made money playing World of Warcraft. The coins he earned by completing tasks in the game could be sold to other players to use for in-game purchases. Over time the value of that in-game currency became more valuable than the actual Venezuelan currency called – the bolivar. Since bitcoin is a digital currency it’s value is based on whatever people are willing to pay for it. And, if some services are only available via bitcoin, then the demand for bitcoin could increase based on the demand for those goods or services. Speaking of World of Warcraft, have you read Ready Player One? The movie is coming out soon and the entire book is about gamers who live their entire lives inside of a game called “Oasis”. Purchasing goods and services within a game with digital currency, the fact that most people rarely use paper or coin currency, it seems that in a sense we are already using a form of digital currency, we just believe it is tied to gold or something that makes it valuable. The value of money, however, is determined by the demand for it.
Ready Player One Official Trailer
What is Blockchain Technology?
According to blockgeeks.com, “By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology.” There are multiple uses for blockchain, but mostly it is a digital accounting record that is shared instantaneously with all the other computers within the chain. Instead of data being held in one location, data is at every source and the transactions become permanent and unalterable. This reminds me recently of how I kept updating my address book on my phone. For some reason the cloud kept correcting my address and overwriting my changes with what it thought was the correct data. This is what would happen with the editing of a blockchain. With this peer-to-peer accounting there is no central authority.
So imagine if you have a self-driving car and it gets in an accident with another car, an algorithm would determine who was at fault. Instead of involving insurance agencies, damage would be assessed immediately and based on the owner of the car, an account would automatically pay the other car owner a set amount of money. The transaction would happen automatically and you would be on your way. Nasdaq.com has put together a list of seven powerful uses for blockchain technology and my favorite is called Chronicled which tracks legal documents and their updates. The idea of improving legal transactions and digitizing all paperwork is exciting to me. I want all tasks that are mundane and repetitive to be replaced by robots or automated, but that’s just a personal desire. I don’t want to lose jobs, but if we can automate jobs that suck the life out of people, then I’m all for that. Maybe new technology will give people the opportunity to do things they love and still make a decent living.
Should I invest in CryptoCurrencies?
Who doesn’t want to get rich quick? When I heard the price of Bitcoin was nearing $20,000 I couldn’t believe it. I had to do some research and figure out how to purchase some Ethereum or Bitcoin, but as I started down this road I realized there are other CryptoCurrencies and I had been living under a rock when it came to this information. Other than bitcoin there are six other cryptocurrencies that Investopedia deems important, but some people believe that Bitcoin has failed as a currency and instead has become an asset to be traded.
According to this article on engadget.com:
In the past 12 months, the value of bitcoin has risen from a low of $777.91 up to a high of $17,178. The currency has always been volatile, but for a while its ceiling was around the thousand-dollar mark. Prices began to surge in the second half of this year, and TechCrunch’s John Biggs believes that this new surge was entirely due to the investment community. On Dec. 10th, CBOE Global Markets began offering investors the chance to bet on the future health of bitcoin in the same way they can for any other futures market.
This surge in interest from the investment world is helping to elbow out any hope that bitcoin will mature into a method of exchange. Currencies need to remain broadly stable in their valuation to ensure that commerce can take place. Sure, there will be some shift in the value of the coins in your pocket — it’s why foreign exchange trading is a thing — but put simply, a dollar should buy you the same thing on Monday as it does the following Friday.
So what should you do? Personally, I feel that Bitcoin is too volatile to make a large investment if you didn’t already have some lying around. However, as new uses for bitcoin, blockchain and other cryptocurrencies surface, it doesn’t take a genius to realize that cryptocurrencies should not be totally dismissed and may be a lucrative investment if technology continues to morph and change – as it always does.
JP Sears On Bitcoin
If you haven’t taken a moment to check out JP Sears’ videos, then you should. He is hilarious. The fact that he is creating a spoof on bitcoin only shows how popular it has become in pop culture.
The 6 Most Important CryptoCurrencies According to Investopedia
First of all, before writing this article I had only heard of one cryptocurrency and that was bitcoin. Maybe I’ve been living under a Netflix rock watching too many episodes of Stranger Things, but, I now I am all caught up on CryptoCurrency and can speak to it like a pro at parties. Haha! I’m never at a party where people are talking about CryptoCurrencies, we are still talking about the lack of having regular currency. But, if you have some extra dollars, you may want to grab some of these. Who knows which one will be the next big thang? My money is on Ethereum because it has the coolest name and sounds futuristic, like something out of Avatar or Altered Carbon. (Altered Carbon is a new series coming out on Netflix and it looks super cool!)
The content below via Investopedia
1) Litecoin (LTC)
Litecoin, launched in the year 2011, was among the initial cryptocurrencies following bitcoin and was often referred to as ‘silver to Bitcoin’s gold.’ It was created by Charlie Lee, a MIT graduate and former Google engineer. Litecoin is based on an open source global payment network that is not controlled by any central authority and uses “scrypt” as a proof of work, which can be decoded with the help of CPUs of consumer grade. Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and hence offers a faster transaction confirmation. Other than developers, there are a growing number of merchants who accept Litecoin.
2) Ethereum (ETH)
Launched in 2015, Ethereum is a decentralized software platform that enables Smart Contracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control or interference from a third party. During 2014, Ethereum had launched a pre-sale for ether which had received an overwhelming response. The applications on Ethereum are run on its platform-specific cryptographic token, ether. Ether is like a vehicle for moving around on the Ethereum platform, and is sought by mostly developers looking to develop and run applications inside Ethereum. According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.” Following the attack on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC). Ethereum (ETH) has a market capitalization of $41.4 billion, second after Bitcoin among all cryptocurrencies. (Related reading: The First-Ever Ethereum IRA is a Game-Changer)
3) Zcash (ZEC)
Zcash, a decentralized and open-source cryptocurrency launched in the latter part of 2016, looks promising. “If Bitcoin is like http for money, Zcash is https,” is how Zcash defines itself. Zcash offers privacy and selective transparency of transactions. Thus, like https, Zcash claims to provide extra security or privacy where all transactions are recorded and published on a blockchain, but details such as the sender, recipient, and amount remain private. Zcash offers its users the choice of ‘shielded’ transactions, which allow for content to be encrypted using advanced cryptographic technique or zero-knowledge proof construction called a zk-SNARK developed by its team. (Related reading, see: What Is Zcash?)
Dash (originally known as Darkcoin) is a more secretive version of Bitcoin. Dash offers more anonymity as it works on a decentralized mastercode network that makes transactions almost untraceably. Launched in January 2014, Dash experienced an increasing fan following in a short span of time. This cryptocurrency was created and developed by Evan Duffield and can be mined using a CPU or GPU. In March 2015, ‘Darkcoin’ was rebranded to Dash, which stands for Digital Cash and operates under the ticker – DASH. The rebranding didn’t change any of its technological features such as Darksend, InstantX. (Related reading, see: Top Alternative Investments for Retirement)
5) Ripple (XRP)
Ripple is a real-time global settlement network that offers instant, certain and low-cost international payments. Ripple “enables banks to settle cross-border payments in real time, with end-to-end transparency, and at lower costs.” Released in 2012, Ripple currency has a market capitalization of $1.26 billion. Ripple’s consensus ledger — its method of conformation — doesn’t need mining, a feature that deviates from bitcoin and altcoins. Since Ripple’s structure doesn’t require mining, it reduces the usage of computing power, and minimizes network latency. Ripple believes that ‘distributing value is a powerful way to incentivize certain behaviors’ and thus currently plans to distribute XRP primarily “through business development deals, incentives to liquidity providers who offer tighter spreads for payments, and selling XRP to institutional buyers interested in investing in XRP.”
6) Monero (XMR)
Monero is a secure, private and untraceable currency. This open source cryptocurrency was launched in April 2014 and soon spiked great interest among the cryptography community and enthusiasts. The development of this cryptocurrency is completely donation-based and community-driven. Monero has been launched with a strong focus on decentralization and scalability, and enables complete privacy by using a special technique called ‘ring signatures.’ With this technique, there appears a group of cryptographic signatures including at least one real participant – but since they all appear valid, the real one cannot be isolated.