Treasures of nerds

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin
Money Economy Finance MAXIM - February 2014
Text: Victor Fomin (wwww.bitnovosti.com)
It is possible that somewhere in the Internet underground is now committed a major economic revolution in history, the fault anything - a fundamentally new form of money. No, not triangular.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

When at the end of last year in the press raised the hype about Bitcoin, a Norwegian student Christopher Koch suddenly remembered that in 2010, he studied for cryptocurrency thesis and, much to the displeasure of his girlfriend, he spent 26 dollars to buy Bitcoins. With great difficulty deciphering and dug his long-forgotten wallet, Christopher, to his surprise, he found a 5000 Bitcoins, which are now worth more than $ 4 million! Do grumbling ceased Norwegian girl? I think so. (Although if a thing in Israel, she would begin to lament: "Why could not you buy Bitcoins at least 123 dollars, you idiot ?! Why do I suffer ?!")

The beauty of today's situation with Bitcoins is that nobody, not even the smartest people in the world can not predict what will happen next. A revolution that will change the world (as many believe)? Or Bitcoin quietly deflate and will remain a curiosity?

How it works

Bitcoin digital currency called experimental. To be more precise, Bitcoin - a technology, currency and payment system. His principles were published in 2008 under the pseudonym Satoshi Nakomoto. Who is behind them, unknown until now, which is very symbolic. One revolutionary aspect of Bitcoin - complete anonymity of all users. Over the next two years, these principles have been implemented disparate team of volunteer developers from around the world in the form of open source software. The system is open to all: anyone can at any time to connect to it, or to learn the code, without asking permission of anyone.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

The essence of Bitcoins is very simple: it is a digital cash. With all the ins and outs of cash. You hold the digital coins on your computer or smartphone. The program is called - Bitcoin wallet. You can quickly convert any amount of money to anyone, anywhere in the world, at any time, day or night, without leaving your computer or smartphone. It's as easy as sending someone e-mails. Like the cash payments, Bitcoin payments are anonymous and not linked to any information about the user - in this they differ from the usual payment credit cards or online banking. As with conventional calculations in cash, payments can not be undone as soon as you parted with the coin, it is no longer yours. And just as usual the cash in your wallet, this currency can be stolen digital pickpockets, if to handle it carelessly and did not take reasonable precautions.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

All program-wallets on users' computers around the world united together in a huge network of payment. By acting together and in strict accordance with known rules, these programs provide translation of digital coins from user to user without any control center or administrator. This fake Bitcoins or try to pay one coin will not work twice.

Bitcoins are not tied to the cost of any existing currency or real assets such as precious metals and real estate. Their price is determined solely by supply and demand on the online exchanges or direct dealings between buyer and seller.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

Bitcoin is not issued by any central bank or any other issuer. Instead, they enter into circulation in the course of a kind of lottery, where every member of the system has a small chance to get a certain amount of Bitcoins on average once every ten minutes. And this chance depends on the total number of participants in the network, and on the amount of computing resources, which provides the user. Once upon a time, four years ago, bitkoinery could generate hundreds of coins per day for most ordinary laptop. Now get coins only by powerful dedicated servers combined into large computing pools.

World News Bitcoin

Student poster rolled out, "Mom, come money!" At the US Collegiate League game, received a donation of 20 thousand dollars. The fact is that in addition to this call on the poster was painted sign Bitcoin and QR-code-student Bitcoin wallet. The poster fell under the lenses of cameras and compassionate bitkoinery by reading the QR-code directly from the screen, immediately began to send him a digital coin. The first payments began to arrive in just a second after a poster appeared on the screen, and just one day a student came Bitcoin donations, as much as 20 thousand dollars.

Bitcoin-stealing century occurred on December 7: customers Sheep Marketplace illegal online market Bitcoins were stolen more than $ 100 million. In this hidden site was sold a wide range of drugs, and its popularity has greatly increased since the closure of the pioneering online drug - site Silk Road.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin
Bitcoin is firmly established in American pop culture. It has become obvious to all that in the next release of the popular animated series The Simpsons Krusty the Clown businessman began to complain that "lost all his money playing on the Bitcoin market."

Hard disk with 7500 Bitcoin is to dump the English city of Newport. These coins were produced in 2009 IT-specialist James Howell, and their present value - about $ 6 million. Hard disk with digital coin was thrown out by James in the ordinary course of clearing the "digital junk", and only a month later, he realized how much he lohanulsya. Backup purse disconsolate James did not bother to do so now, he assembles a team of "hunters" armed excavator to search through a huge dump and retrieve lost digital treasures from under the debris of two-meter layer.

Bitcoin will change the world?

At first glance, Bitcoin - it's just another electronic payment system such as PayPal or WebMoney, but still operating with obscure virtual currency, the value of which besides constantly jumping. But his fans believe that Bitcoin will lead to a complete rethink of international finance, will destroy the economic barriers between countries and free up money from the state control. They argue that Bitcoin - a revolution that will change the life of each of us, as it did before the Internet.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

To say that Bitcoin - it's just digital money is like saying "The Internet - is a feature-rich phone." This is true on some level, because the Internet is also used to transmit information.

So, Bitcoin has three aspects: technology, currency and payment network. Let us examine each of these aspects in more detail.

Bitcoin as a currency

Central banks of the world are able to print currency in unlimited amount, guided by some their views or political expediency. And all the currencies of the world are gradually depreciate - some quickly, some slowly.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

The amount put into circulation Bitcoin rigidly fixed rules and halved every four years. Total for 2140 they will be issued 21 million. Coins little, the number of users grows, so the cost of one Bitcoin is also growing, which leads to a paradoxical situation for the modern world: Bitcoin as the currency in principle, subject to no deflation. Despite the short-course racing, in the long term, this currency, in theory, should not only maintain but also increase their purchasing power. Even after a number of users on the system stops its growth, the value of the coin will slowly increase due to the growth of Bitcoin-economy. Deflation could be a problem, but fortunately, Bitcoin can be divided virtually unlimited, and his thousandth or a millionth part of pay is no more difficult than the whole coin.

Bitcoin as a payment network

No less revolutionary potential lies in the organization of the payment network Bitcoin. It is independent of banks and intermediaries. She does not notice national boundaries and is beyond the control of governments. Nobody can forbid you send Bitcoins to anyone - even the needy Negro in Africa, although a prostitute, even though the policy.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

At the same time for the Bitcoin network is absolutely indifferent, it is about the transfer of millions of dollars on the other side of the world or of small payments for drunk a cup of coffee. Payment anywhere and on any sort of amount will cost only a few cents, if you are in a hurry, or even free of charge, if willing to wait a little longer. Bank charges in 0.5-2% of the payment amount, or 25-50 dollars for the international transfer of look on this background that exists robbery.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

Payments Bitcoin network is open to the whole world. Especially for those who, for whatever reason, does not have a bank account. And there are actually even quite a lot: from the 7.5 billion world population with banking services only covered 1 billion. However, of the two billion people who currently have no access to banks, however there is a connection to the Internet - mainly via the mobile network.

Now the connection to the international payment network for those billions just a matter of downloading and installing Bitcoin client. In much of the developing world's people have never had never seen a wired phone, but everyone has a cell phone. These billions of people will participate in the international trade and financial flows, never knowing what the bank.

Bitcoin as technology

Finally, technology. Decentralized computer network approves the transaction, without any need for administrators who manage the center, or the supreme arbiter. This is the revolution. But decentralized digital currency - this is just the first application of this technology. With the same success it is possible to build a decentralized system of accounting and transfer of ownership of any movable or immovable property or, for example, registration and notarization of documents without state registration and notary offices. And even a system completely honest secret ballot. If the Internet - it is primarily a protocol on the exchange of information, Bitcoin - a protocol on the exchange of all, anything.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

Perhaps the technological aspect of Bitcoin is the most interesting of the three. After all, even if something happens to the currency Bitcoin, or Bitcoin-network, this is not the end of Bitcoin. Bitcoin technology is known to all - anyone can take open source code, eliminate deficiencies and to release a new version. Digital currency will not disappear: the genie out of the bottle and drive it back will not be possible. What we see today can be compared with a complex, black and white, ugly interface and brake the end of the Internet 80. The potential of all the possible applications of these technologies is far discovered, "Amazon", "Google" and "Facebook" of the world Bitcoin has not yet appeared.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

Bitcoin in figures

120 ekzaflopsov - total power distributed Bitcoin network, making it the most powerful computing network in the history of mankind. A total computing power of the top 500 supercomputers in the world gives Bitcoin network about a thousand times.

42% know that Bitcoin - a digital currency, according to the survey agency Bloomberg, conducted in November 2013. At the same time, 6% of respondents believe Bitcoin game for the Xbox, and 7% - a new app for the iPhone. The remaining honestly admitted that they have no idea what to ask them.

21000000 - the maximum number of digital coins that can ever be produced. Calculations show that this limit can be reached only in 2140.

$ 6 billion - turnover of illegal online marketplace Silk Road, the FBI closed in October 2013. Drugs, guns and false documents on this site are sold exclusively for Bitcoins. Site Operator - anarchist Ross Ulbricht for two years pocketed more than $ 80 million commission.

4847% - annual yield "Bitcoin-Fund" company Exante, who took first place in the ranking compiled by Bloomberg. Traditional investment funds, who took second and third place, showed an annual yield of 34% and 25%.

73% - as the price of Bitcoin has lost from its peak of $ 266 in just a week of trading in April of 2013. Experts called it the collapse, from which the Bitcoin no longer recover. However, the coin price set a new record price in six months.

280 000 - Bitcoin as many new users every month are recorded only in one of the online wallets blockchain.info. Growth rates have risen significantly since the beginning of this year when the service grows only 30-40 thousand new users per month.

$ 312,000 - this is the minimum price per Bitcoin, if cryptocurrency can completely replace gold as a tool for conservation. The cost of all the world's gold reserves estimated at 6.5 trillion dollars.

5 cents - so much for giving one digital coin in July 2010 on Mt.Gox Exchange.

927 people in the world possess half of all existing Bitcoins, estimated businessinsider.com.

Why Bitcoin could fail

However, Bitcoin-skeptics also have a lot of arguments. Chief among them - is the lack of any private or fundamental value of the coin. Bitcoin - it's just a handful of bytes. How can he do anything to cost? Unlike gold, with whom he is sometimes compared, it is absolutely useless for anything but to be money.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

A little about GirlsGoneBitcoin
Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin
Anonymous digital in cash? What is needed for online striptease! The pioneer of this type of business has become a group GirlsGoneBitcoin on Reddit site, where you can find more than 4.5 thousands of visitors. The business model of "undress for Bitcoins" has become so successful and profitable, it is now all over the Internet have appeared dozens of sites-imitators - for every taste.

Someone believes that Bitcoin - a new type of pyramid scheme. For those who are ahead of others learned about Bitcoin, could buy them cheaper. Now they make a profit at the expense of newcomers who have to pay. As with any pyramid, Bitcoin expect a sad end, skeptics predict. Once dry up the number of those wishing to invest in it, Bitcoin exchange rate will fall to zero.

The instability of the course Digital Currency does not allow to take it seriously, skeptics complain. In fact, today Bitcoin is worth 700 dollars, tomorrow - 800, the next day - 500. wearied hourly outweigh the price tags.

Yes, and security problems can alienate the masses. Indeed, right now it is not easy to preserve and protect their digital treasures, especially the ordinary people. Digital coins stolen by hackers, computers, Bitcoin wallets broken and lost. Recover lost the coin can not be - it's a digital cash.

Deflationary essence Bitcoins can also cause problems. Since its value is constantly increasing, will only save rather than spend. As a result, prices in Bitcoins at all will constantly decrease and the economy, Bitcoin fall into the deadly deflationary spiral.

Treasures of nerds: everything that is important to know about the currency of the future - Bitcoin

Finally, one of the most serious arguments against the coming triumph of digital currency is the resistance of state agencies. In the context of strong competition from non-inflationary currency States could not freely print their currency to devalue and manipulate money markets. The lack of income from the printing press, coupled with the increasing complexity of taxation and taxes on transactions in an anonymous state cryptocurrency make much cringe to fire millions of civil servants and turn many of the economic and social programs. Bitcoin skeptics do from this perspective the conclusion that the state would never allow a serious competition of its monetary monopoly and Bitcoin will soon undergo a massive persecutions and prohibitions.