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Archive for the ‘bitcoin’ category

Jul 14, 2019

About the Fuss: Is Bitcoin really important?

Posted by in categories: bitcoin, cryptocurrencies, economics

This afternoon, an automated bot at Quora suggested that I answer a reader question. Quora is essentially an “Ask the expert” web site. It is the world’s largest, cataloged and indexed Q&A repository.

This is the question I was asked to answer:

Some pundits believe Bitcoin is a fad, while others seem to feel that it is better than sliced bread. I like sliced bread.* Is Bitcoin really that cool? —Or is it just a lot of Geeky hype?

One other columnist answered before me. Normally, I pass on an invitation, if a question has already been answered. But in this case, the individual answering the question has yet to see the light. He has wandered into the Church of the Blockchain, but he just didn’t realize that the man sweeping the floor is the prophet.

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Jul 14, 2019

Does decentralized currency thwart crisis intervention?

Posted by in categories: bitcoin, cryptocurrencies, economics

Here is another economics/policy question that I was asked to address at Quora. It provides great fodder for a quick Lifeboat economics review.

The US used quantitative easing to deal with one monetary crisis, and a bailout of the automotive and banking industry to deal with another. If nations, economies or individuals begin to embrace a decentralized currency, they will inevitably shift away from government issued money. Won’t this hinder a nation’s ability to intervene in a crisis?

Answering this question goes to the very heart of the ethics and politics of cryptocurrency.

Yes. Without centralized control over monetary policy, government options for intervention in a money crisis would be severely limited. But this fact may lead to a false impression…

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Jul 13, 2019

Profit from Bitcoin with out Investing or Trading

Posted by in categories: bitcoin, cryptocurrencies, economics

I find it encouraging that so many people want to know if they should get into Bitcoin. But, I am discouraged when I discover that “getting into” is a euphemism for investing, trading, flipping or HODL (Buy, then hold on for dear life).

Sure, Bitcoin is deflationary. If widely adopted, it is likely to increase in value. But adoption is being thwarted by traders. Today 95% of cryptocurrency transactions are by individuals or organizations buying or swapping cryptocurrency rather than using crypto to buy apples, a new car, or a family vacation.

Many people consider Bitcoin to be risky and not just as an investment! They think its risky to use a payment instrument. The perception of risk is associated with its widely fluctuating exchange rate. In the end, the exchange value won’t matter at all, because Bitcoin will be the money and not the dollar, yen, euro or pound. But, unfortunately, even though the argument for widespread adoption is compelling, it will not occur while we continue to see spikes and plunges on a graph.

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Jul 12, 2019

Bitcoin Could Help Stop News Censorship – from Space

Posted by in categories: bitcoin, space

An advocacy group is testing out the idea that the combination of bitcoin and orbital communication can help fight news censorship.

Jul 12, 2019

Cars, Gold, Houses, Toys & Stock: What gives value?

Posted by in categories: bitcoin, cryptocurrencies, economics


The title of this post is intentionally misleading. We frequently discuss the traits that lead to value here in the Lifeboat Blog. But today, I was asked a more nuanced question: “What things will hold their value?

And there is a ulterior motive in being a columnist for Lifeboat. Analyzing the dynamics of durable value leads to some surprising conclusions about the money supply and what a society chooses to use as money. We’ll get to this at end of this post.


We know that value comes from supply and demand. There are no exceptions. But, we have not addressed the properties that make an asset hold value over the long haul. Let’s consider some examples…

Cars

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Jul 11, 2019

Blockchain and carbon offsetting can help cities reduce emissions – but sometimes simpler is best

Posted by in categories: bitcoin, business, climatology, government

Carbon offsetting initiatives have been offered by private companies – including British Airways and Shell – for many years. These voluntary schemes give customers the choice to pay a premium, on the understanding that the company will offset some greenhouse gas emissions. Since carbon offsetting became an option, projects around the world have resulted in a saving of approximately 994m tonnes of carbon dioxide (CO₂) equivalent. But given that global CO₂ levels in 2018 were 33.1Gt, it’s fair to say that a lot more could be done.

The UK could become net zero emissions tomorrow if the government wished, but it would cost the tax payer dearly. In 2017, the UK’s total greenhouse gas emissions were 460m tonnes. If, for example, the government used the Gold Standard offsetting scheme, at an average cost of £10/tonne, that would amount to an astonishing £4.6 billion bill. Most would agree this would be an excessive cost for the government to bear, and anyway the public, private and third sectors should share responsibility for tackling emissions.

Local authorities have an important role to play in meeting this target, given their ability to work with residents, charities and businesses to make meaningful changes at a local level. Some local authorities are leading the way by setting ambitious targets: Liverpool City Council aims to become the UK’s first “climate positive” city by the end of 2020. The council has formed a partnership with a private sector organisation – the Poseidon Foundation – to achieve this through carbon offsetting.

Jul 10, 2019

Lack of standards leads to new Bitcoin wallet advice

Posted by in categories: bitcoin, cryptocurrencies, economics

This update is an adaptation of my recent answer to a Quora reader who was in a panic. She asked:

What can I do after a hard drive crash?
How can I recover my cryptocurrency?

In the past, I would address the immediate problem of course. (My answer is below). But to prepare for the next unfortunate event, I recommended a wallet type based on a user’s unique experience, expertise and comfort zone. I guided the reader to weigh trade-offs of important criteria: Security, portability, convenience, and quick access to assets).

I had believed that some types of wallets were better for some individuals, but that they required a background in cryptography—or at least a discipline for meticulous practices. As CEO of the Cryptocurrency Standards Association, I had also believed that simple, unified, and popular standards would emerge very soon. I figured that this would enable users to practice safe-wallet maintenance in their own homes.

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Jul 9, 2019

How can Bitcoin be divided into small units?

Posted by in categories: bitcoin, cryptocurrencies, economics

As with other recent articles, this one was originally published as an answer to a member of Quora, a Q&A site in which I am a cryptocurrency columnist. And just like the previous one in this Lifeboat series (also posted today), this is a Q&A exchange with a newbie—a bitcoin beginner.

The question is simply: “How can Bitcoin be divided into units smaller than one?” While the answer may seem obvious to someone versed in math, statistics or economics, I see this question a lot—or something very similar.

I can explain by asking a nearly identical question; one that the enquirer can probably answer easily. The goal is to provide the tools to answer the question—and in a manner that helps the reader recall and make use of the answer in the future. This is how I approached an answer…


Puzzle me this: Can you divide 100 into smaller pieces? Of course you can! You just divvy it up. After all, it’s just a number.

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Jul 8, 2019

Why is it impossible to create more Bitcoin?

Posted by in categories: bitcoin, cryptocurrencies, economics

This article was originally an answer to a member of Quora, a Q&A site in which I am a cryptocurrency columnist. The reader is a “Bitcoin beginner”. If you understand the nature and purpose of a blockchain, the political leanings of Satoshi or the economics of a capped cryptocurrency, then this reviews things that you already know. But sometimes, a recap can be fun. It helps ensure that we are all on the same page…

In a previous post, we have already addressed a fundamental question:

It has nothing to do with how many individuals can own bitcoin or its useful applications. It simply means that—if widely adopted as a payment instrument or as cash itself—the number of total units is capped at 21 million. But each unit can subdivided into very tiny pieces, and we can even give the tiny pieces a new name (like femto-btc or Satoshis). It is only the originally named unit (the BTC) that is capped.

But, this article addresses a more primitive question. (Actually, it is a naïve question, but this adjective has a negative connotation, which is not intended). I interpret the question to be: What prevents me from creating, earning or being awarded an amount that brings the total circulation above 21 million BTC?

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Jul 8, 2019

Update: Building (and placing!) a Bitcoin ATM

Posted by in categories: bitcoin, cryptocurrencies, economics

A new section: Bitcoin ATM business model
has been added. Jump to “2019 Update

The good news is that building a Bitcoin ATM is easy and less expensive than you might expect. But, offering or operating them engulfs the assembler in a regulatory minefield! It might just be worth sticking to selling bitcoin on PayPal (visit this website for more information on that). You might also wish to rethink your business model —especially user-demand. That’s the topic of our 2019 update at the bottom of this article.

A photo of various Bitcoin ATMs appears at the bottom of this article. My employer, Cryptocurrency Standards Association, shared start-up space at a New York incubator with the maker of a small, wall mounted ATM, like the models shown at top left.

What is Inside a Cryptocurrency ATM?

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