Bitcoin and The History of Money | BTC Theory. To understand Bitcoin, we need to also understand the history of money over the last century, and how that has changed to what money is, and how it is managed today. Bitcoin has two distinct functions as money that are independent of each other, but ultimately influences its value. The fungibility of bitcoin–that which allows for it to be a mode of exchange and function as a payment network–and the storage of wealth function, which is created from bitcoin’s limited supply of 21 million in total. Both of these features have important functions for money, but it is important to understand how each one of these functions effects money differently.
I cover this in more detail in “What is the intrinsic value of Bitcoin? “ History of banking To understand banking, we need to know what is a mode of exchange, how did it come about, and why it was needed in addition to a storage of value. The Breton Woods Era This system would have worked, if the U.S. was not cheating on their balance of payments. Unfazed By Bitcoin’s Wild Swings And Mysterious Origins, Silicon Valley VCs Place Their Bets. Bitcoin’s record highs and the ensuring surge in hacking attempts and thefts may be grabbing headlines. However, beneath the chaos, Silicon Valley’s best-known venture firms are finally starting to make real bets around the crypto-currency. The price of a single bitcoin had more than quintupled to $265 amid a banking crisis in Cyprus and new signs from the U.S.
Treasury’s Financial Crimes Enforcement Network that regulators will tolerate the currency. It then settled back down to $120 as increased volumes and DDOS attacks hit the biggest Bitcoin exchanges today and yesterday. While anyone who has ever worked in trading knows that a chart like this often ends in a world of pain, there is a growing sense that Bitcoin, or another math-based currency like it, is here to stay. “It’s far from certain that Bitcoin is going to be a big deal,” said Lightspeed Venture Partners’ Jeremy Liew, who has made two investments in the space. An Unusual World “I wanted to be secluded,” he said. China Regulates Virtual Currency Market. Sohu IT, 6/26/09 China's Ministry of Culture and Ministry of Commerce have jointly laid out regulations to further strengthen supervision of the online gaming virtual currency market.
The two national ministries have issued restrictions that prohibit virtual currency from being exchanged for any real goods or services, in order to prevent virtual currencies from disrupting real currency markets. The new regulations are also meant to address the issues of insufficient protection of the rights and interests of users, inadequate monitoring of market behavior, and an increase in the number of disputes related to online game virtual currency. According to the ministries, virtual currency is defined as any online currency used to recharge, prepay or purchase points for online game accounts, but does not encompass virtual items earned within the game world itself.
The new regulations stipulate that: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. The 99.99998271%: Bitcoin as Force for Democracy. "It is inevitable that Bitcoin will become a multi-trillion dollar enterprise because every other currency in the world is tied to dying central banks that are encumbered with impossible-to-pay debts and bankrupt counter-party risks" - Max Keiser It has been a rollercoaster of a week for Bitcoin, an open-source, peer-to-peer, digital currency that can be used online to send or receive payments with a high degree of anonymity.
The climb this week to a high of $266 per bitcoin followed by an epic crash (from which it has somewhat recovered and stabilized) helped to bring wide mainstream attention to a currency that had until now inhabited a niche realm. A good deal of the recent interest appears to have come from get-rich-quick investors, many of whom will likely also have been part of the panic-selling that occurred during the most recent crash.
This negative press has served to obscure many of the great things about Bitcoin. 1. 2. 3. 4. 5. 6. The currency is still relatively new. What Bitcoin teaches us about the Internet’s energy use. Over at Bloomberg, Mark Gimein calls Bitcoin — yes, Bitcoin — an "environmental disaster. " Why? Because all that processing power used to mine for new Bitcoins requires a staggering amount of energy: Mining is a process in which powerful computers create Bitcoins by solving processor-intensive equations. ...Blockchain.info, a site that tracks data on Bitcoin mining, estimates that in just the last 24 hours, miners used about $147,000 of electricity just to run their hardware, assuming an average price of 15 cents per kilowatt hour … That’s enough to power roughly 31,000 U.S. homes, or about half a Large Hadron Collider.
It's a stunning stat, but does this really count as a "disaster"? In any case, Gimein's piece does touch on a red-hot topic in energy circles — how much electricity does all of our computing and Internet infrastructure actually consume? Bottom line: On the vast scale of environmental disasters, Bitcoin barely registers. Bitcoin’s Triple Accounting innovation and the Verification by the whole network of peers. The hacker Jaromil has produced a report on Bitcoin, from which the following passage has been excerpted: “”The most remarkable innovation brought by Bitcoin deals with the system of accounting that we use today. Double-entry bookkeeping is what we use today to make sure that earnings and expenditures match, basically authenticating the ? Ow of money and making sure “nothing is duplicated”. From an historical perspective, the double-entry bookkeeping system is very ancient and barely actualised through the ages: it was described by an Italian mathematician and Franciscan friar named Luca Pacioli in his book “Summa de arithmetica, geometria, proportioni et proportionalità” published in 1494 in Venice.
The second half of his book, dedicated to geometry, is a section titled “Trattato de computi e delle scritture” in which he describes the necessity of mathematics in accountancy. Such a system is still, as of today and despite its ? Quoting Ian Grigg: