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Archive for the ‘cryptocurrency’ tag

Mar 12, 2018

John Oliver explains Bitcoin, Blockchain & Crypto (with precision & clarity)!

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, internet

John Oliver is a crossover who bridges the art of a comedian with the reporting and perspective of a liberal political pundit. Even detractors acknowledge that Oliver addresses serious issues with unusual wit and humor.

I never thought Oliver could (or would) tackle the topic of cryptocurrency—at least not with value to the viewer. It is too geeky, and too esoteric. (It also cuts into my mission of evangelism and education). smile

He did, and he sparkles! Feel free to jump past the fluff. The Bitcoin tutorial starts at 3:40. Of course, my friend, Shechter, in Long Island New York will bust a gut over what Oliver says at 9:40. It is not only clear and concise, it is accurate and terribly funny!

Whether you are a Bitcoin newbie or a seasoned blockchain coder, this is the video you have been looking for. This one is durable.

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Mar 11, 2018

Building a Bitcoin ATM is easy, but…

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, internet

…But offering or operating them engulfs the assembler in a regulatory minefield!

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?

You could cobble together a Bitcoin ATM with just a cheap Android tablet, a camera, an internet connection, and [optional]: a secure cash drawer with a mechanism to count and dispense currency).* A receipt printer that can also generate a QR code is a nice touch, but you don’t really need one. You can use your screen for the coin transfer and email for a receipt.

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Mar 6, 2018

What happens to your Bitcoin if you die or forget passwords?

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, internet, law

Legacy Method of Inheriting Assets

Many Bitcoin owners choose to use a custodial account, in which the private keys to a wallet are generated and controlled by their exchange—or even a bank or stock broker. In this case, funds are passed to heirs in the usual way. It works like this…

An executor, probate attorney, or someone with a legal claim contacts the organization that controls the assets. They present a death certificate, medical proxy or power-of-attorney. Just as with your bank account or stocks and bonds, you have the option of listing next of kin and the proportion of your assets that should be distributed to each. These custodial services routinely ask you to list individuals younger than you and alternate heirs, along with their street addresses, in the event that someone you list has died before you.

Of course, Bitcoin purists and Libertarians point out that the legacy method contradicts the whole point of owning a cryptocurrency. Fair enough.

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Mar 6, 2018

Have there been successful Transaction Malleability attacks?

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, internet

First, let’s get some basics out of the way…

What is Transaction Malleability?

Here are 2 explanations of transaction malleability: [Coindesk] [TechTalk]

In a nutshell, Transaction Malleability is a weakness in the original Bitcoin implementation that enables a bad actor to change the unique ID of a bitcoin transaction before it is confirmed on the Blockchain. Such a change makes it possible for someone to pretend that a transaction didn’t happen, if all necessary conditions are in place.

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Feb 22, 2018

Would an ethical government surrender control of monetary policy?

Posted by in categories: bitcoin, cryptocurrencies, economics, government, internet

Godfrey Bloom is a member of the British Parliament. His in-your-face style of educating and shocking his peers has made him a controversial politician. He has occasionally been escorted out of the assembled parliament because of his rowdy rhetoric.

Consider the video below. Bloom offers a critical, but simple and clear explanation of the Fractional Reserve banking system used in the US and Europe. This gets to the heart of the matter! [continue below video]…

Conclusion (mine, and not Mr. Bloom’s): It is in the interest of governments to use a form of money that they cannot manipulate, print, spend, hide or lend without first earning, taxing or legitimately borrowing — and then balancing the books, openly.

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Jan 16, 2018

Cryptocurency: Thoughts on a “Korea Krash”

Posted by in categories: bitcoin, cryptocurrencies, economics

If you are reading this on January 16, 2018, then you are aware that Bitcoin (and the exchange rate of most other coins) fell by 20% today. Whenever I encounter a panic sell-off, the first thing that I do is try to ascertain if the fear that sparked the drop is rational.

But what is rational fear? How can you tell if this is the beginning of the end, or simply a transient dip? In my book, rational fears are fundamental facts like these:

  • A new technical flaw is discovered in the math or mining
  • A very major hack or theft has undermined confidence
  • The potential for applications that are fast, fluid and ubiquitous
    has dropped, based on new information*

Conspicuously missing from this list is “government bans” or any regulation that is unenforceable, because it fails to account for the design of what it attempts to regulate. Taxes, accounting guidelines, reporting regulations are all fine! These can be enforced. But banning something that cannot be banned is not a valid reason for instilling fear in those who have a stake in a new product, process, or technology.

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Jan 11, 2018

Is Cryptocurrency Good for Government?

Posted by in categories: bitcoin, cryptocurrencies, economics

Today, editors at Quora asked me to answer a seemingly simple question:

“Is cryptocurrency good for government?

This is a terrific question, and one that I write about frequently. The question gives me a chance to summarize the key facets of widely mistaken fears. But, here, in the Lifeboat Blog, there is room to elaborate a bit.

In the first phase of cryptocurrency adoption (we are in the midst of this now), there is an abundance of skepticism: Misunderstanding, mistrust, historical comparisons that aren’t comparable, government bans & regulatory proposals—and a lot of questions about intrinsic value, lack of a redemption guaranty, risky open source platforms, tax treatment, etc, etc.

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Dec 29, 2017

Should we ‘out’ Bitcoin creator, Satoshi?

Posted by in categories: bitcoin, cryptocurrencies, economics

Everyone likes a good mystery. After all, who isn’t fascinated with Sherlock Holmes or the Hardy Boys? The thirst to explore a mystery led us to the New World, to the ocean depths and into space.

One of the great mysteries of the past decade is the identity of Satoshi Nakamoto, the inventor of Bitcoin and the blockchain. Some have even stepped forward in an effort to usurp his identity for fame, infamy or fortune. But in this case, we have a mystery in which the subject does not wish to be fingered. He prefers anonymity.

This raises an interesting question. What could be achieved by discovering or revealing the identity of the illusive Satoshi Nakamoto?…

The blockchain and Bitcoin present radically transformative methodologies with far ranging, beneficial impact on business, transparency and social order.

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Dec 16, 2017

Is Bitcoin a Store of Value?

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, government

Bitcoin has many characteristics of a currency. It is portable, fungible, divisible, resistant to forgery, and it clearly has value. Today, that value came close to $20,000 per coin. Whether it has ‘intrinsic value’ is somewhat of a moot question, because the US dollar hasn’t exhibited this trait since 1972. Today, economists don’t even recognize the intrinsic value of gold—beyond a robust, international, supply-demand network.

Lately, Bitcoin is failing as a viable currency, at least for everyday consumer transactions. The settlement of each transaction is bogged down with long delays and a very high cost. The situation has become critical because of squabbling between miners, users and developers over how to offer speed transactions or lower the cost of settlement. Bitcoin forks and altcoins such as Dash and Bitcoin Cash demonstrate that these technical issues have solutions. Since Bitcoin is adaptable, I believe that these issues are temporary.

But an interesting question is not whether Bitcoin will eventually become a consumer currency. it is whether Bitcoin can distinguish itself as a store of value, rather than just an instrument for payment or debt settlement. After all, a Visa credit card, a traveler’s check and an Amazon gift card can all be used in retail payments, but none of them have value unless backed by someone or something. US Dollars on the other hand are perceived as inherently valuable. They carry the clout and gravitas of institutions and populations, without users questioning from where value arises. (This is changing, but bear with me)…

What about Bitcoin? Does owning some bitcoin represent a store of value? Yes: It absolutely does!

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Dec 11, 2017

Bitcoin Fair Value Calculation

Posted by in categories: bitcoin, cryptocurrencies, economics, finance, government

In an April 2014 article, I demonstrated how one might approach a fair Bitcoin valuation.

  • Original Methodology: What fraction of the daily float
    needed to support daily global commerce will Bitcoin capture?

My methodology was based on the demand that Bitcoin would generate if it displaced a small fraction of cash and credit used for retail and commercial payments around the world. At the time, Bitcoin had a value of USD $450. I estimated that if it captured 5% of global payments, it would have a fair value of about $10,000/BTC (I didn’t complete the calculation—I left that up to the reader. That’s because I was concerned that publishing such a prediction would cause me to lose credibility as an economist and blogger. For what it is worth, I also predicted that a rise to $10,000 would take 5~8 years.

As you might imagine, my friends and family urged me to unload my BTC investment. The April 2014 price of $450/BTC seemed very high to most armchair analysts. After all, thirteen months earlier, it had been just $45.

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