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Archive for the ‘bitcoin’ tag: Page 4

Feb 25, 2018

ICOs & Altcoins rise and fall—yet, Bitcoin endures

Posted by in categories: bitcoin, cryptocurrencies, economics, government

At the end of 2017 and the first months of 2018, we witnessed a surge of interest in Initial Coin Offerings or ICOs. Perhaps the word “interest” gives too much credit to ICOs. Most are scams. ICOs are pushed through by vendor hype, rather than pulled through by investor research. They are almost all pump-and-dump schemes.

But what about Bitcoin? It is not a scam, but questions remain about regulation, intrinsic value* and its likelihood to be superseded by something better. Bitcoin skeptics point to two facts: (1) Bitcoin is open source, and so anyone can create an equally good altcoin. (2) Newer coins incorporate improvements that overcome governance and scaling issues: cost, transaction speed, the burgeoning electric needs of miners, or whatever…

While both statements are true, they miss the point. This is not a VHS-vs-Beta scenario. Bitcoin has achieved a 2-sided network and it is free to fold in every vetted improvement that comes along. For Bitcoin, all those other coins are simply beta tests.

Even the functional tokens will unwittingly feed their “improvements” into Bitcoin. For this reason, it is a safe bet that Bitcoin will reign supreme for years to come—perhaps even long enough for the dominos to fall.

Continue reading “ICOs & Altcoins rise and fall—yet, Bitcoin endures” »

Feb 22, 2018

Would an ethical government surrender control of monetary policy?

Posted by in categories: bitcoin, cryptocurrencies, economics, government, internet

Godfrey Bloom is a member of the British Parliament. His in-your-face style of educating and shocking his peers has made him a controversial politician. He has occasionally been escorted out of the assembled parliament because of his rowdy rhetoric.

Consider the video below. Bloom offers a critical, but simple and clear explanation of the Fractional Reserve banking system used in the US and Europe. This gets to the heart of the matter! [continue below video]…

Conclusion (mine, and not Mr. Bloom’s): It is in the interest of governments to use a form of money that they cannot manipulate, print, spend, hide or lend without first earning, taxing or legitimately borrowing — and then balancing the books, openly.

Continue reading “Would an ethical government surrender control of monetary policy?” »

Jan 16, 2018

Cryptocurency: Thoughts on a “Korea Krash”

Posted by in categories: bitcoin, cryptocurrencies, economics

If you are reading this on January 16, 2018, then you are aware that Bitcoin (and the exchange rate of most other coins) fell by 20% today. Whenever I encounter a panic sell-off, the first thing that I do is try to ascertain if the fear that sparked the drop is rational.

But what is rational fear? How can you tell if this is the beginning of the end, or simply a transient dip? In my book, rational fears are fundamental facts like these:

  • A new technical flaw is discovered in the math or mining
  • A very major hack or theft has undermined confidence
  • The potential for applications that are fast, fluid and ubiquitous
    has dropped, based on new information*

Conspicuously missing from this list is “government bans” or any regulation that is unenforceable, because it fails to account for the design of what it attempts to regulate. Taxes, accounting guidelines, reporting regulations are all fine! These can be enforced. But banning something that cannot be banned is not a valid reason for instilling fear in those who have a stake in a new product, process, or technology.

Continue reading “Cryptocurency: Thoughts on a ‘Korea Krash’” »

Jan 14, 2018

Proof-of-Work Alternatives: Massive electric consumption by cryptocurrency mining

Posted by in categories: bitcoin, cryptocurrencies, economics, energy, environmental

Some blogs and news outlets eschew long titles. Publishers want readers to scan a list of topics that fit on one-line each. But, a better title for this article would be:

“Massive electric consumption by cryptocurrency mining:
An unfortunate environmental nightmare will soon pass!
… Proof-of-Work alternatives are on the horizon”

A considerable amount of electricity is used in the process of mining Bitcoin and other cryptocurrencies. Miners are effectively distributed bookkeepers, and this use of resources is part of a system called “proof-of-work”. It keeps the books fair, honest, and without an ability for the miners to collude (In other words, they cannot ‘cook the books’).

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Jan 11, 2018

Is Cryptocurrency Good for Government?

Posted by in categories: bitcoin, cryptocurrencies, economics

Today, editors at Quora asked me to answer a seemingly simple question:

“Is cryptocurrency good for government?

This is a terrific question, and one that I write about frequently. The question gives me a chance to summarize the key facets of widely mistaken fears. But, here, in the Lifeboat Blog, there is room to elaborate a bit.

In the first phase of cryptocurrency adoption (we are in the midst of this now), there is an abundance of skepticism: Misunderstanding, mistrust, historical comparisons that aren’t comparable, government bans & regulatory proposals—and a lot of questions about intrinsic value, lack of a redemption guaranty, risky open source platforms, tax treatment, etc, etc.

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Jan 11, 2018

Say it again, Bitcoin Investors: “Bad News is Good News”

Posted by in categories: bitcoin, cryptocurrencies, economics, government, policy

By now, every interested news-junkie is aware that Bitcoin plummeted from $15,000 to $13,000 (USD exchange rate) on January 11, 2018. This morning, every news outlet and armchair analyst attributes the drop to the Korean government signaling that it will ban Bitcoin trading among its citizens.

With Donald Trump and Kim Jong Un butting heads over nuclear missile tests and the upcoming Winter Olympics, you would think that South Korea has other priorities than banning Bitcoin.

As with all news—except accidents—the Korean plans were known by a few insiders (in this case, government bureaucrats), and so the influence on value was bigger than the drop that occurred after the news story. In the days before this “event”, it was probably responsible for a drop of about $4500 in exchange value.

Listen up Wild Ducks! We have heard this before. On Sept 11, China announced the exact same thing. I wrote about it in the most popular article of my 7 years as Blogger: Bad News is Good News for Bitcoin Investors.

Continue reading “Say it again, Bitcoin Investors: ‘Bad News is Good News’” »

Jan 9, 2018

What if you Send Bitcoin to a Non-Existent Address?

Posted by in categories: bitcoin, cryptocurrencies, economics

I get this question a lot. Today, I answered it at Quora.com. But, here, in the Lifeboat Blog, I have more bandwidth to elaborate.

Question:

What if I make a typo when sending Bitcoin. The recipient address
may be invalid or it may belong to another individual. —But there
is a third possibility. Couldn’t it be a valid address, but without any
wallet that can receive it? I bet the blockchain catches these errors
—Right? Will I always get my money back?

The short answer:Don’t worry, it cannot happen. That won’t happen either. Sure, it’s possible. That’s wrong, and You’re screwed!

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Jan 7, 2018

Revenue Neutral model reduces altcoin investment risk

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, geopolitics, internet

Titles are chosen by editors and not journalists or experts. I fought my editor over the above title. Yes, I address the teaser—and I explain a solid altcoin investment model. But, that comes after the break. The first part of this article should be titled “Why would anyone quote cost or value in Bitcoin?”. The subjects are highly related, so bear with me…

Today, a reader asked this question:

Some financial sites discuss value in Bitcoin terms, rather
than dollars or Euros. Why would I calculate the value of a
new car, my rent or an investment in this way? It’s hard to
understand how much money I need!

Answer: Your right! It’s difficult to estimate the value of a car or your rent in terms of Bitcoin. You are paid in dollars or Euros—and your landlord quotes rent in the same currency.

Continue reading “Revenue Neutral model reduces altcoin investment risk” »

Jan 2, 2018

Why does anyone attribute value to Bitcoin?

Posted by in categories: bitcoin, cryptocurrencies, economics, internet

Oh, Cheez…We’re back to this question, again!

As a Bitcoin columnist, I get this question a lot. Today, an answer was requested at Quora.com, where I am the lead contributor on cryptocurrencies:

“Clearly, some people value Bitcoin. But How can
this be? There is nothing there to give it value!”

Many individuals, like the one who asked this question, suspect that Bitcoin was pulled out of thin air—and that it is not backed by gold, a government, or an authoritative redemption guaranty. After all, it is just open source code. What stops me from creating an ElleryCoin using the same code?!

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Jan 1, 2018

How does the Blockchain ‘know’ you have printed a paper wallet?

Posted by in categories: bitcoin, cryptocurrencies, economics, internet

Let’s say that you no longer trust your currency exchange to host your Bitcoin wallet and you don’t trust a Trezor or Nano hardware wallet. You don’t trust your memory and you don’t trust your kids. And you certainly know better than to keep your wealth in your PC or phone. That would be downright crazy—right? What can you do?!

A growing number of people are printing paper wallets. It is the ultimate form of security. Some individuals even delete their cloud wallet, leaving everything to a string of hex characters or a QR code printed onto a slip of paper. (NB. You had better be certain that you and a few trusted individuals know how to find that piece of paper!)

But here’s an interesting mystery. If you print the paper wallet off-line and delete your other wallets, then how can the blockchain ‘know’ that you have changed wallets? The short answer: It doesn’t and you haven’t!

Let’s explore a bit deeper…

Continue reading “How does the Blockchain ‘know’ you have printed a paper wallet?” »

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