Let’s Talk Straight – What is Bitcoin? 1 865

Unless you’ve been living in a cave lately, you’ve heard the B word uttered more than a few times. But what is all this talk of Bitcoin, and why is it causing so much hype? And while we’re on the subject… What is Bitcoin anyway?

Chances are, you’ve asked yourself or someone else that question on more than one occasion, but probably with unsatisfactory results. You know by now that it’s a currency, just like the dollar, except… nothing like the dollar.

You can’t physically hold Bitcoins, as they live only in cyberspace, and you probably wouldn’t be able to hold a handful of them anyway, since each Bitcoin is worth around $10,000.

If you keep hearing about people winning the cryptocurrency lottery and turning a few cents into millions of dollars, you might be tempted to take part.

Until you hear the other stories saying the Bitcoin bubble is about to burst and you decide to hold back.

So, let’s start at the very beginning.

What is Bitcoin?

Bitcoin is a digital currency, otherwise known as cryptocurrency. It was invented under the alias of Satoshi Nakamoto in 2009, with several goals. One, to cut out the middlemen (banks), as transactions can take place online from Bitcoin to Bitcoin with no fees and no delays. Small businesses don’t have to pay credit card transaction fees and we can do business internationally without converting currency.

Sounds pretty smart, right? Yes, but Bitcoin is not without its problems. Its decentralized nature means that no bank or institution controls the level of inflation, which means it’s highly volatile to peaks and troughs in value. What started out as a few cents on the dollar shot to a record high of almost $20,000 in December 2017 and then slumped back down to half of that within a few days.

Clearly, this makes stable business with Bitcoin currently impossible. And you may be asking, if one Bitcoin is so expensive, how are regular people getting involved?

Anyone can buy into Bitcoin because you don’t have to buy a whole Bitcoin; you can buy fractions of a Bitcoin, called Satoshi. Its skyrocketing value has led to many to call it “digital gold,” as most people treat Bitcoin as an investment and not a currency–at least, for now.

Types of Cryptocurrencies

Bitcoin isn’t the only cryptocurrency out there. You probably already know that. What you may not know is that there are now close to 5,000 different cryptocurrencies available! Why? Each cryptocurrency is created for a different purpose. For example, Agrecoin is for agricultural transactions, Audiocoin for buying music, and so on.

But instead of analyzing every coin on this growing list, let’s give you a general idea. Cryptocurrencies can be broken down into three different types:

1. Coins

“Coins,” make up the first group of cryptocurrencies, (albeit digital ones). Coins use encryption techniques to regulate the generation of units of currency and verify fund transfers. The original crypto coin? You guessed it, Bitcoin. Instead of using these as coins though, Bitcoin has become more of an investment vehicle, with people investing and holding, rather than buying and selling.

2. Utility Tokens

If you’re looking to get the real use out of crypto, make a transaction and daily purchases, utility tokens are the best option. Ethereum is the best example of a utility token that helps waiver transaction costs and move money without fees. It still has a volatile value, but markedly less so than Bitcoin.

3. Tokenized Securities

Call them tokenized securities, or security tokens. Basically, the idea is the same. They represent shares in a business. Like buying into a project (such as the two currencies mentioned above, agrecoin and audiocoin).

Coins, utility tokens and tokenized securities, when it comes to investing, are presented to the public as an ICO, or initial coin offering, to raise funds in the same way as an IPO, but with a crypto twist, and, of course, without the regulation.

The Takeaway

You’re probably realizing by now why you haven’t had a straight answer to your question about what is Bitcoin yet. That’s because it isn’t easy to explain! Here are the main things you should know:

  • Bitcoin is a digital currency with no regulatory body and no banks.
  • It’s good for making Bitcoin to Bitcoin transactions
  • Lack of regulation is getting continuingly banned in countries like China
  • It’s extremely volatile and subject to huge fluctuations

So, if you want to jump on the Bitcoin train, are you too late? Some people may think so, others remain quietly confident that it’s not over yet. But one thing you should keep in mind–never invest more than you can afford to lose.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

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Bitcoin Uses As Much Energy As Austria, Could Add 2°C to Earth’s Atmosphere 2,187 14281

Bitcoin mining, it turns out, damages the earth more than more traditional environmental assaults like actual mineral mining.

According to a paper published Monday in Nature Sustainability, the power-hungry Bitcoin mining process consumes more than triple the amount of energy needed to mine the equivalent amount of gold, more than quadruple what’s needed for copper, and more than double what it takes to mine platinum.

Other coins didn’t fare much better. By their measurements, Ethereum and Litecoin consume 7 megajoules of electricity to produce the equivalent of $1, the same energy expenditure as copper mining but more than that of platinum or gold. Monero eats up 14 megajoules to produce $1.

Naturally, these measurements refer to the notoriously variable dollar valuations of such tokens. “While the market prices of the coins are quite volatile,” write researchers Max J. Krause and Thabet Tolaymat, “the network hashrates for three of the four cryptocurrencies have trended consistently upward, suggesting that energy requirements will continue to increase.”

Bitcoin’s Growing Electricity Bill is Bigger Than Some Countries

We’ve long known that Bitcoin is unsustainable. In a 2015 article for Motherboard, Christopher Malmo pointed out that a single Bitcoin transaction used 5,033 times as much energy as a Visa swipe, and could power 1.5 American homes for a day.

The electricity used to crunch Bitcoin code—and its environmental cost—has been growing with its increasing popularity. Digiconomist’s Bitcoin Energy Consumption Index shows Bitcoin currently consuming 73.12 terawatt hours (or 263.232 billion megajoules) of electricity annually. To put that in context, it’s comparable to the amount of energy it takes to power Austria for a year.

That means there are 175ish countries on earth using less energy than Bitcoin (to say nothing of crypto on the whole), while 66 countries consume less energy per capita than one Bitcoin transaction (it takes 94 thousand kilowatt hours of electricity to mine a single Bitcoin).

Iceland, a major hub of Bitcoin mining farms, spends nearly as much energy on Bitcoin as it does powering its residential homes. In this case, the damage is mitigated because most of Iceland’s power comes from renewable energy.

Canada’s Bitcoin emissions are also on the lower end due to renewable energy sources. They’re using this to court mining companies from China, where mining emissions are about four times that of Canada’s. Montreal International attracts foreign investment by calling Quebec the land of “green bitcoin”. This has caught the eye of some Chinese mining companies looking to go overseas as the Chinese government has discouraged expansion and shut down some mining operations altogether.

Depending on Bitcoin’s growth, some have projected that it could use as much energy as the entire world by 2020.

Digital Currency Has a Real Carbon Footprint

Krause’s and Tolaymat’s research reminds us of the sobering reality that all this invisible wealth has real world costs.

For the 30 months they measured between January 2016 and June 2018, they estimate their four featured tokens collectively belched out at least 3 million tons of CO2 emissions, possibly as much as 15 million tons.

These findings follow another study, published last month, which determined Bitcoin alone could add two degrees Celcius to global warming within the next three decades. That’s enough to raise ocean acidity by 29 percent.

Solving Bitcoin’s Energy Consumption Crisis

So what is the solution? If the world were to switch to 100 percent renewable energy overnight, the problem would be moot. But we can’t hold our breath for that. There could be ways of incentivizing clean energy so greener mines reap more coins, or of implementing clean energy in other ways.

It’s also possible to adopt less computationally intensive mining algorithms so the mining computers don’t guzzle as much juice. This would disappoint a lot of old school Bitcoiners who have invested in hardware, but their feelings don’t really outweigh that 2 degrees celcius that everyone will have to live with (or die by).

Whatever the best solution turns out to be, something needs to change soon. Bitcoin is growing up, and it’s time for it to mature into something more sustainable.

There’s an Inflatable ‘Bitcoin Rat’ Staring Down the Fed 95 13026

Someone has put a giant inflatable rat outside the Federal Reserve Bank in New York.

It’s covered in Bitcoin code, printed in rainbow colors, and is apparently a piece of installation art aimed at subverting the federal institution that controls the US dollar. Or is it pale, puffed-up pariah a commentary on Bitcoin bros themselves? Or does it have something to do with Warren Buffett, who earlier this year called Bitcoin “rat poison squared”? According to CoinDesk, who first reported on the inflatable rat, the meaning is intentionally ambiguous.

The artist behind the puzzling prank is Nelson Saiers. He describes his own work as “mystifying” and “singularly original”, notwithstanding the long history of rats being inflated as protests or used as economic and political icons in art and entertainment around the world.

“It’s art, so I hope they’re entertained by it,” he said, apparently implying that art is entertainment. “It’s informative, I hope people will learn [and] I’m hoping it’ll at least help people understand bitcoin better and be kind of faithful to what Satoshi would have wanted,” he added, citing the mysterious pseudonym of Bitcoin’s founder with a touch of reverence.

A $50 Million Artist

Saiers, a phD in theoretical mathematics, was a hedge fund manager who did that thing where you give up all the money to chase your dream of being an artist.

His financial experience includes a stint as managing director at Deutsche Bank’s prop trading desk, before becoming CIO of Saiers Capital, the hedge fund that bears his name. His creative career gives credence to the theory that working as an artist is more and more a privilege of the very wealthy.

CNBC estimated Saiers’s wealth to be around $50 million at the time of he departed from the financial industry to pick up his paintbrushes.

The Rat Joins a Tradition of Sculpture-as-Commentary in FiDi

The Bitcoin rat, which stands on Maiden Lane, isn’t the first pop up sculpture to grace Manhattan’s financial district. Last year, Kristen Visbal’s 50 inch bronze ‘Fearless Girl’ statue made waves by staring down the famous ‘Charging Bull’, to the outrage of ‘Charging Bull’ sculptor Arturo Di Modica. The 3.5 ton ‘Charging Bull’ itself was left on Wall Street in the middle of the night when Di Modica originally created it, obstructing traffic and drawing the curiosity of passers by.

When Saiers placed the Bitcoin rat, he initially set it up on private property and was promptly ushered off by security guards, who he says were good natured about the situation. He expects the sculpture to be more temporary than the aforementioned Wall Street bronzes, and will probably only be around for a few days.

A Critique of the 2008 Bailouts

The placement of the rat on Maiden Lane seems to be no accident, but rather a reference to the Maiden Lane Transactions, more commonly known as that time when the Fed bailed out the big banks after they all caused the 2008 market crash. The Bitcoin crowd’s antipathy towards the Fed and the big banks is palpable in Sairs’s rat sculpture, and while a more specific meaning eludes, perhaps the success of the piece depends upon its ability to start conversations about the state of finance.

We’ll leave it to the viewers to decide who’s the rat—the Federal Reserve, or Bitcoin itself—and what that means for the future of currencies.

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