“The Gold Standard” of Cryptos
“The white whale tasks me; he heaps me. Yet he is but a mask. ‘Tis the thing behind the mask I chiefly hate; the malignant thing that has plagued mankind since time began; the thing that maws and mutilates our race, not killing us outright but letting us live on, with half a heart and half a lung.”
– Captain Ahab
Information + Resources
The granddaddy of the now more than 900 cryptocurrencies, Bitcoin (BTC) represents the original vision of cryptocurrencies. Invented by an anonymous programmer or group of programmers known only as Satoshi Nakamoto (thus why people say 0.00000001 BTC = 1 satoshi), Bitcoin is an open-source peer-to-peer (direct) digital payment system. These transactions are verified via a public ledger known as the “blockchain” and relayed through network nodes like a wallet on your personal computer.
Bitcoins are generated by “mining” the blockchain, or processing raw data produced by an algorithm. This algorithm is designed to simulate supply/demand and regulate inflation while value is exchanged from other currencies like Dollars or Euros into Bitcoin. Bitcoin is capped at 21 million tokens, while about 2/3 of the tokens are actually circulating. This makes it more difficult to capture large amounts of supply and keeps value fluid and distributing, though bitcoin still has some very large holders. Most every cryptocurrency uses a similar model with tweaked values like overall supply, inflation rates, and central holdings (ex: Ripple holds 60% of the overall supply of 100 billion XRP tokens and intends to put $14bn of it in cold storage to protect the long-term value of the platform, while increasing public supply by 1 billion tokens per month).
Bitcoin’s system was the first decentralized digital currency. As such it is used by the most merchants and holds the most value. As of 2015 (when the value was under $800 USD), over 100,000 merchants accepted Bitcoin. Today popular banks and credit unions are starting to pick it up and offering to exchange it. Venezuelans, Japanese, and Chinese use it regularly in every-day . It it globally recognized and is only projected to increase in value, quite dramatically in fact. The CEO of Paypal recently said Bitcoin could reach $1 million USD in value in 5-10 years. While that may be a stretch, current projections are upward with the platform receiving upgrades and more support throughout this year. The value already blew past $3,000 this year and nearly touched $5000 on Sept 1st, something considered a pipe dream even in May, and that’s low for what could happen this year according to some. In Zimbabwe in late September they traded at $7200 due to hyperinflation.
You will always want to watch the price of Bitcoin while trading and for news on general cryptocurrency infrastructure as it’s the center of the legal and economic debate about blockchain tech. Always be prepared for the volatility of the market as part of a natural growth process of an emerging economy. And remember, don’t panic when those price drops happen! It’s a bumpy road!
Bitcoin has many projects under it now to bring it into the next generation, including OmniLayer, Factom, Stratis, Counterparty, and Rootstock. There are always interesting projects like these happening nowadays. It’s happening at light speed. The industry is moving fast so be sure to keep up-to-date on the projects you’re betting on. You want to know about the many recent evolutions of blockchain technology like Ethereum, Ripple, New Economy Movement, IOTA and many more you can find out about on this site!
Other interesting developments include Singapore and Russia looking into digital currencies as well as India, Japan, and China. Definitely watch news for regulations, as currently there are basically none and there are lots of political incentives to make that not the case. Venezuela is talking about adopting Bitcoin as the national currency in the midst of an ongoing political and economic crisis, as well as their desire to get away from the US Petrodollar. Recently, Nevada state legislature blocked an attempt to introduce taxation on cryptocurrencies.
In late June, Burger King announced its Russia chain will accept bitcoin due to increasing popularity. That’s a sign if I ever saw one.
// Originally written May 29, ’17. Price at the time: $2100/BTC
// Edited June 15, ’17. Price at the time: $2450 / BTC
// Edited June 19, ’17. Price at the time: $2600 / BTC
// Edited June 28, ’17. Price at the time: $2560 / BTC
// Edited Sept 26, ’17. Price at the time: $3900 / BTC