Q&A : Bitcoin
What is Bitcoin ?
(from Wikipedia )
Bitcoin is a worldwide cryptocurrency and digital payment system called the first decentralized digital currency, as the system works without a central repository or single administrator. It was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.Bitcoin can also be held as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
Hahhh !! What is 'Blockchain' ?? ( from Investopedia )
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.
Originally developed as the accounting method for the virtual currency Bitcoin, blockchains – which use what's known as distributed ledger technology (DLT) – are appearing in a variety of commercial applications today.
Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitize, code and insert practically any document into the blockchain. Doing so creates an indelible record that cannot be changed; furthermore, the record’s authenticity can be verified by the entire community using the blockchain instead of a single centralized authority.
STE : Ummm….. you may continue to explore and read the meaning of various jargon …..like “mining” , “nodes” ,”distributed ledger”, “Hashcash “ ,”SHA256” etc….
It’s simply too heavy for me … as someone who is not so tech savvy .
Is Bitcoin an Investment ?
STE : I don’t know leh , some say yes , some say no …
Why You Shouldn’t Invest in Bitcoin ( From CNN.Money)
Is Bitcoin an Asset or A Currency ?
STE : You may refer to below article from Forbes.com.
For me , Bitcoin is more on a speculative alternative asset rather than currency…how can we use it as currency or medium of transaction when there is such huge fluctuation in value …
Is Bitcoin a Ponzi Scheme ?
STE : No , is not a Ponzi Scheme…is not getting money from one to pay the others ….is the last buyers willing to pay for the price in anticipating the price increase further …”Greater Fool Theory “ ?? ummm … I don’t know leh !!
Then Why the price keeping going up ?
STE : It’s matter of supply & demand and scarcity , when there is limited supply and unlimited demand , the price will shoot up like crazy especially when the publicity and network is getting more intense and complicated , the network effect from the feedback loop will continue to make the system evolve and getting more popular , it may end up like any bubble which we never seen before…
What do you mean like “ bubble we never seen before “ ? does it mean Bitcoin would fetch USD100,000 in future?
STE :Yes ! It’s possible , if the party and music continue …. Look at the below chart :
1 Bitcoin equals 5673.61 US Dollar
So , it might be a great investment and multi-bagger , will you invest in Bitcoin ?
STE : No , my heart couldn’t take it ….. only for those who have very high risk appetite , this may form part of their portfolio as “ alternative asset “ class.
By looking at the chart above , is Bitcoins another Tulip Bubble ?
STE : Hard to say as both are really different animals and creation , but at least Yes for Jamie Dimon ,Chief Executive of JP Morgan Chase..
Quote “Dimon, one of the most powerful voices on Wall Street, said he would fire anyone trading in it because it’s “stupid.” “It’s worse than tulip bulbs,” said Dimon, referring to the 17th-century mania that ended in collapse. “It won’t end well. It will blow up.” Unquote.
<BitCoin> vs <Tulip Mania>
If what Dimon said is right , the “magnitude “ of the collapse and price correction will be huge and painful …
Is there any other alternative to Bitcoins ?
STE : Yes , please refer to below link .
Then WHY is that Bitcoins is so popular than others and have highest market cap ?
STE : Eeerr… Yah hoh , I don’t know leh, may be they are the first crypto-currency in the market and enjoy the higher network & popularity effect….
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To be clear, I am not predicting where Bitcoin goes from here. I wouldn’t be surprised if, in the next year, Bitcoin quadruples in value or plummets to $0.
The concept behind Bitcoin is “ scarcity “ that there will only ever be 21,000,000 tokens, meaning that it may stay consistently valuable base on above assumption and unpredictable demand. The only thing for sure is the “fluctuation and volatility “ of the price.
Nobody really know where the Bitcoin will be heading ,it may produce many multi billionaire or make many poorer ! But I am more worry about the "disruption" created by "Bockchain Technology " to those industries or companies I have invested.
Stock Market or Any Kind of Market