Bitcoin
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Bitcoin is a digital currency that allows for anonymous and instant peer-to-peer payments through a shared public ledger called a blockchain. Bitcoins are created through a process called mining, where computers on the Bitcoin network compete to solve complex mathematical problems and the first to solve it is awarded new bitcoins. There will ultimately only be 21 million bitcoins created. Bitcoins can be exchanged for real money through computer programs and used to purchase goods and services from retailers accepting bitcoin, providing benefits like lower transaction fees compared to credit cards. Government and regulatory bodies have differing views on bitcoin and digital currencies.
![Government on Bitcoin
The Federal Government's Reaction To Bitcoin Is An Acknowledgement Of
The Dollar's Vulnerability
FORBES
There are many different digital currencies being used over the internet, the most
commonly known being Bitcoin. In Washington, digital currency is included in the
definition of "Money" in the Uniform Money Services Act (UMSA), chapter 19.230 RCW
WA STATE DEPARTMENT OF FINANCIAL INSTITUTIONS
“[T]here are also areas in which [such currencies] may hold long-term promise,
particularly if the innovations promote a faster, more secure, and more efficient
payment system.”
FEDERAL RESERVE CHAIRMAN BEN BERNANKE](https://image.slidesharecdn.com/3e645691-c5b8-43d3-bafe-ebf1e6f6c144-150212115606-conversion-gate02/85/Bitcoin-6-320.jpg)
Bitcoin
- 2. What is Bitcoin? Bitcoin is a digital currency which allows anonymous and instant peer-to-peer payments. The Bitcoin system uses a shared public ledger called a blockchain, which contains all verified payment records in chronological order - allowing everyone on the network to see every transaction. Tip: It is not a coin!
- 3. Where do bitcoins come from? Bitcoins are intangible and must be digitally “mined.” Computers connected to the Bitcoin network compete against each other to find solutions to extremely complex mathematical equations, the first to crack the equation is awarded with freshly minted digital coins. There is a set ceiling of 21 million bitcoins and it is expected that they will all be unlocked by 2140. Tip: Inflation until 21 Mill Then deflationary
- 4. How can bitcoins be used? Computer programs and smartphone applications allow users to anonymously exchange real money for bitcoins and many retailers - both online and offline - now accept bitcoins as payment for goods and services Tip: Current Market cap i $9.5 billion
- 5. Bitcoin in Media “At the start of the year, one Bitcoin was worth around $20, but by the end of November, it was more than $1,000.” “BitCoins are just a new tool in the cyber criminal’s toolkit.” “There have been spikes and lows. But I think one day it will settle at a price that, I personally believe, is higher than the price today.” - Sir Richard Branson "Technology is a tremendously disruptive force in society, and it knows no boundaries. It disturbs every status quo. That's what is does. Just don't make the mistake of thinking that you can reverse it by calling it a bubble."
- 6. Government on Bitcoin The Federal Government's Reaction To Bitcoin Is An Acknowledgement Of The Dollar's Vulnerability FORBES There are many different digital currencies being used over the internet, the most commonly known being Bitcoin. In Washington, digital currency is included in the definition of "Money" in the Uniform Money Services Act (UMSA), chapter 19.230 RCW WA STATE DEPARTMENT OF FINANCIAL INSTITUTIONS “[T]here are also areas in which [such currencies] may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.” FEDERAL RESERVE CHAIRMAN BEN BERNANKE
- 7. Speculation – Currency? Commodity? Stock?
- 8. Benefits to Merchants and Consumers 1% transaction fee vs. 2-3% fee on credit cards Worldwide Money Transfer Currently up to 8% fee
Editor's Notes
- #4: Can be divided up to 10million times, a single satoshi (named after the creator of the system) is .0000001 BTC Can the penny do that? Can you pay someone for micro actions, like views of an ad, in less than pennies?
- #5: Overstock.com – O club points, 1% bonus Buying houses, cars, and hotel rooms in btc Tesla Virgin galactic even The way I became involved in bitcoin was helping bars and restaurants in Seattle start to accept them
- #6: Money laundering, drugs and anonymity The lie of anonymity – transactions are public online, as are wallet addresses There are ways to “tumble” these for harder to trace transactions - justdice No one knows who the address belongs to until they can tie a name to it. The internet, when it first came out, was full of porn, pirates, and its creators (the government/researchers) Volatility CNN Money and Business love to show the huge spikes in the “bubble” that is bitcoin. Disruptive technologies have always come with distain from the incumbent technologies and their media groups. Microsoft didn’t think Google would be a big deal. You cant stop new disruptive technology. Compare the volatility of gold, that went from $200/oz to $1280 in ten years, and is now back down to $1200. Or the argentine peso that loses 1% a day to inflation. Or the US dollar that has a current relative inflation of 5% per year. (not core inflation of 1.7%, but total including healthcare, food, living increases) Bitcoin is Banned The only country that has banned BTC is Taiwan. China has only banned third party payment processors. Russia dislikes it. Argentina hates it as a government (limited to two transactions a month), but the people love it. Bitcoin is Hacked To date, the only explits have been on websites that handle the transaction of currency to BTC, the exchanges; or on individuals getting duped or using inadequate security themselves. Things like short or insecure passwords, having spyware that steals your information.
- #7: China “Ban” on third party payment transfers to bitcoin, not bitcoin itself In WA, bitcoin is legally considered money At its peak in November, it surpassed an oz of gold. Current US exchanges in NY, CA – coinbase Taxation – recommended to be counted as capital gains when transferring back into US dollars
- #8: Bitcoin a commodity, not currency: Finland – because the law stipulates that a payment instrument must have an issuer responsible for its operation Anyone recognize the candlestick analysis? Globally, bitcoin has had a mixed reception, with China’s central bank banning lenders from handling the virtual money. The US Internal Revenue Service has not offered official guidance on bitcoin beyond saying it is working on the issue and that it has been monitoring digital currencies and transactions since 2007. Meanwhile, US Representative Steve Stockman is accepting bitcoin donations for his senatorial campaign. Volatility The current market has a low volume compared to most other currencies and therefore is susceptible to volatility. For comparison, Visa processes a transaction volume of about 1 trillion per year. With a market cap of 10B, bitcoin is small fish. With more adoption, the price has, and will continue to stabilize. Volatility has to be viewed by percentage of change, not dollar amount. Where to buy Exchanges – just like currency – these are online and require links to bank accounts or ACH, and require identity verification Individuals – buy from other people – I could sell you some right now. Mining – Operate hardware that interacts with the blockchain to process transactions as well as equations to discover new blocks – earning BTC rewards