You Asked About Bitcoin
Recently I had a friend ask me what I know about Bitcoin. It wasn’t the first time, and it won’t be the last, that I get asked on the topic. Below I share the high-level feedback that I provided to him on the topic. While it’s NOT super in-depth, it does give you a high-level perspective on the topic
I am NOT embarrassed to say that I am NOT a fan of cryptocurrencies. (I’ll elaborate more on that in the future.) However, I am a HUGE fan of the technology and innovation behind Bitcoin and other cryptocurrencies! These have expanded how, when, and where cryptography can be used.
Furthermore, I suspect that over time, these ideas will give rise to even better ideas that we will all benefit from in our lives. I guess, when I think about it, I AM a fan of Bitcoin when I view if through the lens of opening our eyes to new possibilities. Without further ado, here are my thoughts on Bitcoin:
What is a currency?
- Currencies are simply a “medium of exchange.” Over time, there have been LOTS of them, as there are currently (dollar, Euro, etc.).
- They are each valuable in so much as people have confidence in them—think “the full faith and credit of the US government.”
How and why did Bitcoin come into existence?
- Bitcoin came into existence as people didn’t want the government involved, AND they didn’t like the way governments did things (for example, printing a bunch of money to prop up the economy). As a result, they created a new currency.
- It’s very unique in that there will ever only be a FINITE number of bitcoins “mined.” A bitcoin comes into existence when someone solves a complex mathematical problem.
- The problem-solver is awarded the bitcoin for being the one to solve it. (This is what is meant by “mining bitcoins.”)
Will Bitcoin be around for the long haul?
- I’m not convinced that Bitcoin will continue to exist in the long term. There are multiple other cryptocurrencies that are emerging.
- Bitcoin was the first, so it has that. But not sure that it will “win.” It does help when folks like Elon Musk throw their support behind it.
What about cryptography and the blockchain?
- There is a whole set of technology BEHIND the scenes related to Bitcoin referred to “the blockchain.” This technology is related to cryptography and is incredibly useful/is transforming many back-office business processes.
- Blockchain technology is a great growth opportunity and I do think will be present (in current or future generations of its form) for a long, long time.
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