Tag Archives: cryptocurrency

10 things you definitely didn’t know about bitcoin

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The news is ablaze with stories of bitcoin. Everyday I see something new, whether it’s wild volatility, to some fraudulent transaction or other.

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I’ve been digging into them myself of late, and learned a few surprising facts about them. Read on!

1. It’s disrupting banking itself

That’s right, it’s bitcoin is not just an experiment anymore. Cyptocurrencies (of which Bitcoin is just one example), are ruffling the feathers of the IMF. Managing Director Christine Lagarde predicts the end of banking. Now that’s pretty big.

Meanwhile Chris Skinner outlines the major use cases for blockchains. These are the scaffolding of digital currencies, the financial plumbing if you will. Among those uses include smart contracts & assets, digital identity, clearing & settlement & of course payments.

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2. There are many digital currencies

Although Bitcoin was the first, and the one you hear about in the news a lot, there are many more. Etherium is one. Take a look at this colorful map of all the current cryptocurrencies out there. There are hundreds!

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3. Banks are already using it

UBS-led 6 bank clearing house initiative
http://fortune.com/2017/08/31/banks-ubs-blockchain-settlements/

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4. You can mine them & spend them

Coins can be mined like gold in the real world, and of course spent using a digital wallet.

A. Mining: This requires either a physical device or a contract with a provider such as Genesis Mining. The more coins in the world that are mined, the harder it becomes to discover more. My early results show that, if the price remains stable, my contract will become profitable in about 18 months. In other words, I will have ‘made my money’ back on the original upfront price to get started. From then on it’s profit, but not stellar… about 20% per year. If the value of the coin itself goes up, it becomes more profitable, if the value of coin goes down, well then mining pauses, or ceases entirely.

B. Wallets: You get a website and a phone app, that allows you to pay/receive person-to-person. One thing I noticed is that there is a LOT of security, because they must be a target of a lot of hacking. My online bitcoin wallet, CoinBase provides not only 2-factor authentication (text to phone) but after your account reaches $1000 USD value you unlock a ‘vault’ in which you can store coins. You don’t earn any interest, instead you get extra security: you must verify your withdrawl/transfer request from TWO different email addresses.

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5. You can build your own

With Build a Coin project you can build your own currency. This isn’t building an app for Etherium or an API to some existing currency. This project helps you build the code to support your own virtual digital fiat currency!

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5 Things I learned about bitcoin from Chris Dixon, Balaji Srinivasan & a16z

I’ve avoided the bitcoin hype for long enough. I’ve watched a bit on the periphery, but recently been doing a bit more research. Then I bumped into the new Andreessen Horowitz podcast, and got a crash course on it!

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http://blog.pmarca.com/2014/01/22/why-bitcoin-matters/

1. Goldman Sacks has taken notice

Want proof that Bitcoin isn’t just for geeks? Goldman has released a report and they have real interest.

Specifically Goldman identified the potential for 210 billion dollars in savings in payments that Bitcoin could bring. That’s billion with a “B” and serious opportunity for disruption!

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2. Solves online trust problem

There are many who feel Bitcoin doesn’t have potential as a currency. But even those folks feel it’s underlying technology could solve a big problem with online payments, the general ledger problem.

When you want to send digital things, whether a signature, contract, keys or currency, you need a way to establish trust between people. Bitcoin solves this with it’s technical sounding “block chain” which serves as a sort of internet notary public. Anyone can check on this common general ledger the status of a transaction, without fear of compromise, double entries or theft.

For more in-depth discussion, check out Bitcoin & the Byzantine Generals problem. It explains the general ledger aka the block chain in a lot more detail.

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3. Better digital wallets

Although currently bitcoin wallets are banned on the iphone AppStore, the potential there is huge. Currently there still isn’t a good digital wallet solution, and bitcoin sits nicely in that space.

Bitcoin is more a platform, and a set of protocols, a new digital infrastructure that solves a lot of big problems online. As new apps are built on top of it, they abstract away the technical complexity, providing day-to-day

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4. Store of value for Greek & Cyprus

Citizens of distressed countries can face the fear of their savings eroding away. That can happen rather quickly as we’ve seen in Greece & Cyprus. Savings in Bitcoin presents an alternate currency within which one could place some of their savings. Since it’s not controlled by any government or power, it provides a hedge against such fears.

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5. Say goodbye to inflation

Fiat currency, as it’s known, is the currency we live with today. It’s the post gold standard currency, where the federal reserve controls the money supply. Quantitative easing, aka printing money, is the lever the fed uses to keep a small steady inflation on the money supply.

With the gold standard before it, and potentially through something like Bitcoin, you eliminate the government meddling, and inflation along with it. Some argue this would reduce or even eliminate the so-called moral hazard in the present system. With the gold standard, large & systemic firms cannot be bailed out, so they have a huge insensitive to behave prudently, or fail.

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