Why Bitcoin is Not Cash - Computerphile
Bitcoin is not backed by anything other than the faith of the fools who buy it and of the greater fools who buy it from these lesser fools.
All this is true.
What may be less easy to grasp is that U.
The main difference is that, for the moment at least, the illusion, in the case of dollars, is more widely and more fiercely believed.
In fact, almost all of our U.
There is nothing stopping our banking system from creating more dollars whenever the mood strikes.
The temptation for leaders of nation-states to manufacture money has historically been practically irresistible.
The bitcoin blockchain was created, in part, to address this historical weakness.
After the 21 millionth bitcoin is mined, in around 2140, the system will produce no more.
Gox, the DAO, and Tether.
All stores of value are targets.
And using any system of exchange — through fair means or foul — fortunes can and will be made and lost.
And yet, surprising as it may sometimes seem, there are enough people acting in good faith to prevent monetary systems from collapsing entirely.
There are a few radical differences between cryptocurrencies and U.
For example, the bitcoin is not real money conducted in the bitcoin system are recorded in an unfalsifiable ledger that relies not on the authority of banks or governments, but on the strength of a public computer network that theoretically, at least anyone is free to join.
Also, again, the supply of bitcoins is ultimately fixed.
The anonymity of cryptocurrency is not, perhaps, quite as bulletproof as the anonymity of unmarked cash.
Money itself is an illusion, a mass hallucination.
Which is indeed awesome, considered from a certain angle.
Our shared understanding of the value of that green-tinted piece of paper, that Krugerrand, ether token, or pound coin, is all that counts.
That is money, but exactly what does it have in common with the invisible money that is your paycheck, a string of numbers colliding in the ether with the string of numbers that is your bank account?
Maybe the price of avocados or coffee goes up or down between the time of the electronic collision in your bank and the day you go to the market.
There are natural disasters in which people must suddenly become willing to pay vastly inflated sums for a few gallons of clean water.
It means that if you take one dollar to the U.
Or four quarters, if you want, probably.
The unfortunate fact is that monetary crises in unstable governments like those of Greece, Venezuela, and Spain have already precipitated bitcoin is not real money number of spikes in the crypto markets.
Spanish bank depositors must have wondered: Would their own banks be next?
The theory behind all cryptocurrencies, including bitcoin, is that the records produced by a distributed computer network can be made tamperproof, thus theoretically guaranteeing bitcoin is not real money soundness of a currency better than governments can.
And so far, despite some substantial bumps in the road, the blockchain system on which bitcoin is built has at least partially proved this theory.
The many thefts and ripoffs that occurred in the early days of bitcoin call to mind the movie The Treasure of Sierra Madre, a fine drama of greed and corruption set during the 1920's.
There can be no question that the prospect of instantaneous wealth, almost close enough to touch, can drive people insane.
Note, however, that the propensity of greed to produce crime and insanity did not cause the value of gold to evaporate.
Even today, the various forks and growing pains still bedeviling the bitcoin system are providing a kind of stress test.
As a separate issue, cryptocurrency speculators ran the risk of getting fleeced, early on, because of the difficulties in 1 creating safe storage, and 2 developing systems for getting ordinary money in and out of cryptocurrency safely.
Because of disasters like the theft of around 800,000 bitcoins from the Mt.
Gox exchange, which was discovered in 2014, the whole ecosystem of cryptocurrency got kind of a bad rap.
The public impression was that bitcoin itself was somehow hacked, when in fact it was the largest exchange that was hacked.
Rather like the central Bank of Bangladesh was in its account at the Federal Reserve Bank of New York last year.
Bitcoin was used on the dark web to buy and sell drugs!
Well…most hundred-dollar bills bear traces of cocaine, so if you object to hundred-dollar bills on that account, please, send your surplus my way.
The truth is that money visit web page tainted in its very nature.
Soon enough, the blockchain system now in use to guarantee bitcoin transactions will morph and meld with other systems, because its value is incalculable.
Investors from Wall Street to Sand Hill Road have already invested significant amounts of money, real money no deposit, and effort in blockchain-based businesses.
Everywhere human beings need to know for sure whether or not something really happened, blockchain technology can be bitcoin is not real money to give us incorruptible information about it.
Whatever the online keno real money in the system Satoshi Nakamoto launched in 2009 — and they are still substantial — he proved that there really is a way for people to create foolproof, guaranteed records of human transactions, entirely without reliance on outside authorities such as banks or governments.
The fight for stability in any currency is always in the process of being bitcoin is not real money, because wherever there is a chance to game or forge a transaction, human nature is such that some will try to cheat.
The struggle to preserve the illusion that money is real is never over, and it never can be.
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Is Bitcoin Real Money?
Few would say that one would not benefit from having more money. Given the birth of cryptocurrency, can the same be said about Bitcoin? That, at least in part, depends on whether Bitcoin is equivalent to money.
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