Blockchain: The Quiet Revolution

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LightWorker111

Author Bio.

Blockchains, Bitcoins, and Cybercurrency are all new terms in the rapidly advancing worlds of finance and technology.

You may have heard that investing in cybercurrencies can pay off big. But some speculators are hesitant to buy into an unknown opportunity.


Here are the basics you need to understand this quiet, techno-economic revolution, underway at this very moment.

Gavin Andresen is certainly not a household name, but this man holds the distinction of being bitcoin’s chief scientist and lead developer on the Bitcoin protocol.

Although Bitcoin has been around for many years, it has vaulted into public consciousness in 2017 through social media, leaving its mainstream counterpart far behind. This explains why the Average Person knows nothing about cybercurrencies or blockchain technology.

However, most people do understand this basic investment principle: Buy low and sell high. Remember, all speculation involves the risk of loss, as well as gain.

That said, Coinbase (a federally approved digital asset broker, since June 2012, for three types of cybercurrency) shows Bitcoin, at the time of this writing, trading at $16,747 – up $10,130 (153.09%) in ONE MONTH. [AUTHOR’S NOTE: Bitcoin is trading with very high volitility: the day after writing this article, the price shot up one thousand dollars, to $17,669.]

 

Hedge fund manager James Altucher predicts that Bitcoin will reach $1 million by the year 2020 – and MGT Capital Investments CEO John McAfee agrees.

Heavyweight investors like Warren Buffet, Bill Gates, and Richard Branson have endorsed Bitcoin and cybercurrencies as a way to handle very large cash transactions with minimal fees. And we all know a penny saved is a penny earned.

Michael Foust, founder of Digital Tycoons, claims: “The technology likely to have the greatest impact on the future of the world economy has arrived, and it’s not self-driving cars, solar energy, or artificial intelligence. It’s called the Blockchain. Bitcoin and other cryptocurrencies using Blockchain technology are the next financial revolution.”

To understand blockchain technology, we start with distributed ledgers. According to IBM:

“A distributed ledger is a type of database that is shared, replicated, and synchronized among the members of a network. The distributed ledger records the transactions, such as the exchange of assets or data, among the participants in the network.

“Participants in the network govern and agree by consensus on the updates to the records in the ledger. No central, third-party mediator, such as a financial institution or clearinghouse, is involved.

“Every record in the distributed ledger has a timestamp and unique cryptographic signature, thus making the ledger an auditable history of all transactions in the network. One implementation of distributed ledger technology is the open source Hyperledger Fabric blockchain.”

Investopedia builds on this knowledge:

“A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.”

Quinn Michaels, programmer and an expert in the areas of blockchain technology, AI and cryptocurrencies, explained the basics of blockchain, and why it is important to the development of an AI (Artificial Intelligence), in a SteemIt interview. What follows is a summary of his observations.

Blockchain mining is a computer program that is based on the limit of human intelligence (nodes). Intelligence grows based on quantity, as data and nodes accumulate. This is like a human intelligence algorithm.

The block system is essentially a system solving problems. Whenever it solves a problem, it completes a block. Think of a building block for a building. It’s not really mining coins, it’s building blocks for a digital reality.

Building blocks can be transactions, objects, the amount of digital currency exchanged for the transaction of the block, the ledger that gets maintained, the transaction volume through the network, and the amount of wallet sizes over time.

Computer servers can “mine” blockchains

As the blocks get solved, you need more advanced machinery to do the mining, so the technology is advancing.

Blocks are a database that represents, virtually – meaning, in cyberspace, as bits of data – the contents of your physical wallet, your refrigerator, your closet, receipts for every transaction you make, and users with whom you transact.

The big difference with blockchain technology is its de-centralized, distributed model. Financial activity no longer resides on a single computer or system. Devices all over the world record these transactions, creating what is essentially a collective human memory of the group of people who agree that this type of transaction occurred.

It is important to understand that, in and of itself, cryptocurrency has no intrinsic monetary value. It only has an exchange trading value in order to make it important to the miners (who are merely agents, or nodes) – who make more bitcoin with their computer processors, motivated by financial profit.

Bloomberg Businessweek cautions readers that “about 40 percent of bitcoin is held by perhaps 1,000 users; at current prices.” These investor “whales…can send prices plummeting by selling even a portion of their holdings.”

There is a financial adage that the higher the risk, the greater the reward. Another one is never to gamble more than you can stand to lose. At least, now you have a fundamental understanding of distributed ledgers and blockchains. We all know that knowledge is power.

This writer believes that the rise of cryptocurrencies is the modern equivalent of the American Gold Rush of the 1890s.

Coinbase price for Bitcoin passed $16,000 on 12/14/17 at 4:52pm CDT USA

Will Bitcoin actually rise to $1 million? Is one all you really need to retire a millionaire? This is the question in many people’s minds.


Whether bearish (pessimistic) or bullish (optimistic) on cybercurrency investments, enjoy the tax-free benefits of trading cybercurrencies now, while you can. Daniel Cawrey of Coindesk said, in 2013, that Patrick Murck, the Bitcoin Foundation’s general counsel, has been busy crafting new regulatory compliance.

But, as of October 2017, there is no federal regulation, and states may choose their own rules and regulations.


5 Comments
  1. Post Author

    I have a BA in math but I haven’t read a formula for “mining” or an explanation of how the uniqueness is read and how there can be a finite number of these things. Could you please direct me to such a source? Thanks

    • Post Author

      Try this, Dear Reader: the “Currency with Finite Supply” section at https://en.bitcoin.it/wiki/Controlled_supply – is this what you seek?

    • Post Author

      “Mining” bitcoin is a process whereby numerous servers collect a set of pending transactions and their associated data, and guess at a “checksum” number (which is hard to calculate, but easy to verify). The first miner program which guesses correctly for its block of transactions, wins, and is awarded additional new bitcoins (at this point, 12.5). The block is verified by at least 6 other miners, and it is written into the blockchain permanently. This is how bitcoin come into existence. The network has a hard limit of 21 million bitcoins, no more than that can be created. There is more to it, but that is a short explanation.

  2. Post Author

    It is a little hard to get your head around. Reading it several times might help??

  3. Post Author

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