When I first learned about Bitcoin I was living in Thailand, around 2013. I spent two hours reading about it and became instantly excited because it seemed a way to escape the tyranny of the executive class, with its corrupt politicians and an overall rigged system against little Joe.
I spent another two hours trying to buy some, allocating $200 out of my meagre budget back then, which would have landed me more than two coin considering they were then valued at $90. If I would have succeeded and had become a trader like I am now, selling those two bitcoin when the price peaked at almost $20,000, that would have given me more than $40,000 in assets. The price then dropped slowly until it reached a low of $3,000. It is at this point that I was in the Philippines, read reports that it should have bottomed out, and discovered a way how to buy in through the local 711.
The price then did climb to a peak of around $14,000, when I had started trading. The price then started another slow decline, but if I would have been able to get in early on the game as I wished and sold at its second peak of $14,000, that initial $200 investment would now be valued at almost $200,000 ($40,000 would have bought 13 coin at its low of $3,000, which would be valued at 13×14,000 = $182,000).
Like one investor explained, if in 2013 you had invested only 1% of your portfolio into bitcoin (leaving the rest in cash) instead of all of it into the stock market, even though the latter has experienced the greatest bull run in all of history, you would still be ahead.
Now that I’m a trader I’m actively engaged in news on the subject and have recently come across some revelations that I would like to share with you.
First of all, up until now it has mostly been “retail investors” involved in the market, meaning average Joe like me and you. But there are more than 7 billion of us, which can add up to a lot. And we tend to get excited, called FOMOing (Fear Of Missing Out). This can tend to drive up the price and make things volatile.
To tame the market Trump at it’s second peak of $14,000 introduced futures trading, and hence the long decline. But measures are in progress to make it easier for “institutional investors” to get in on the action. That could release funds of around two trillion dollars into the picture.
Perhaps you have heard of McAfee. That is a famous anti-virus software. John McAfee the owner is a big bitcoin bull and is in the process of setting up an exchange that he is burying into the blockchain and as such believes it cannot be shut down by any government organisation. He is firmly convinced that once this two trillion institutional money enters the game, considering that the total cap on the bitcoin amount is 21 million (where 7 million have already been permanently lost because there are many computer illiterate out there who forgot their passwords etc.), simple math dictates that the price must reach at least $2 million by the end of 2020. Many are skeptical, but most believe it will reach at least $50,000. Time for you to get in on the game, no?
What is blockchain?
This is what bitcoin is entirely based on and has long been an elusive subject for me, but since last night that I saw some youtube videos which explained it to me in the most simple terms, I have become excited enough to write this article.
According to Wikipedia: “Blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin. The identity of Satoshi Nakamoto is unknown.” He or the group came out with a whitepaper about the concept, from MIT, and it quickly caught on. Bitcoin started at a value of two US cents.
For transactions to be possible, there must be some computer power allocated for this purpose. To remunerate anyone sacrificing computer power to process transactions, they are rewarded with a certain amount of bitcoin. They become “miners”, and as such bitcoin are created, although with a firm maximum of 21 million bitcoin built into the system. Every four years there is a “halving” (I believe something like chopping the bitcoins in half). The next halving is in May of 2020 and during which traditionally the value surges. Currently 18 million bitcoin have been produced so far, and with the halving every four years, it will apparently take about 150 years to produce the remaining 3 million.
The world’s best hacker was once commissioned with the task of hacking into the blockchain (a growing network of computers allocated for the purpose of mining bitcoin and performing the transactions). He identified nine weak points, but on attempting to hack each of them, he came across something he had never before experienced: a simple message “attack removed”. He said it was as if the software was alive and had instantly rewritten itself in response to his probings. Some speculate that artificial intelligence is involved.
There is one fascinating theory that the internet, with all its interconnected personal and supercomputers, is similar to the synopses of the human brain, instead though spanning the entire globe. And that at some point this massive planet brain has attained self-awareness. So it masterminded this way to convince humans to dedicate their computer power to build its brain. It devised the blockchain, an unhackable system in which it could hide and grow as more and more people dedicate their computer power in lust for wealth.
Now you have entire countries like Saudi Arabia which has built massive factories filled with dedicated computer power 200 times faster than the strongest super computer. In fact, Saudi Arabia is the first country to award citizenship to a robot.
Entering a new revolution
This is where the videos I watched last night have crystalised so much for me.
One described four parts of the industrial revolution:
- Steam revolution: where you can throw coal into a furnace to boil water, the resulting force capable of moving an entire locomotive and all that it pulls behind it along steel rails (with the resulting conquering of vast lands and the increased trade that comes with it). And other uses in industry attaining so much more than our humble human hands were previously able to.
- Electricity: telephone conversation, lights and all that comes with it.
- Computers: with internet and all that comes with it.
Now imagine you want to buy a house. You go to the owner and ask him for the property’s “ledgers”. These are records about the house, such as past plumbing work. But these pieces of paper can be easily adulterated. Certain records can be deleted, others can be added. Our entire existing system of transactions is based on trust. We trust the middleman, who builds up a name for himself, so we can trust these records.
What the blockchain does is it stores each record added, with an associated key relating to the identity who added that record. It becomes a block of data. If someone else wanted to add a record concerning the subject, such as when the leaking roof needed to be fixed, that piece of data or block is added to the first block, hence creating a chain (blockchain). No data can be deleted from the chain of records, or changed, only added to, where each added record shows the identity of who added it.
This creates a new revolution, because essentially we do not have to depend on a middleman or company with some reputation we can trust. Instead, the very product that is delivered to our door can show a string of records how it was created. Did it require the nimble fingers of a 12 year old Indian child working 16 hours a day to make this product possible? “Not interested in purchasing it, I have ethics.”
More and more companies are incorporating their entire system into the blockchain, to gain greater trust from the consumer and give them an edge over the competition. The president of China recently announced they want to embrace blockchain nationwide. It will become the system of production of the future and all who want to remain competitive will be forced to jump on board.
In all, it is estimated that some 50 trillion dollars of production and services will enter the blockchain, which will certainly have a positive effect on the price and value of the cryptocurrency within it. The days of the fiat paper currency are coming to an end. That is also mostly based on blind trust.
But with that there is also a danger, because these transactions within the blockchain are completely traceable. Where transactions with paper currency are not. Big brother is watching you, which is why “privacy coins” such as Monero are busily in the works. The establishment which sees its inevitable demise rapidly approaching will argue that cryptocurrencies and such privacy coins can be used by terrorists, but it is a blatant fact that the US dollar has been used for such activities and money laundering on a rampant scale, because what other medium is available? These are therefore merely false arguments designed to scare the public away from its adoption.
With this new technology, for the first time in the history of humans, average Joe has the opportunity to free itself from the shackles of control from those who hold vast amounts of property and currency. But those in power will obviously not want to give up without a fight. This month of November is due to explode in the price of bitcoin, especially in light of the upcoming halving. Hope you jump on board and join this next revolution, the people’s revolution.