10 Questions & Answers on Bitcoin, Blockchain

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By Karl Maier via Iris.xyz

When I talk to people about Bitcoin, the first question I am asked is typically, “Is Bitcoin just a scam or a bubble?”, which is a great question. To me, there are two key point to consider when considering that question.

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First, if someone in Venezuela or Zimbabwe was dealing with their currencies hyperinflation, they might think that Bitcoin looked like a stable store of value compared to what their government was offering. These are cases where Bitcoin (or more generally, cryptocurrencies) make sense from a current economic perspective.

Second, Bitcoin is the first example of blockchain technology. (More about blockchain in a moment.) Bitcoin’s value to blockchain is significant in that it is a proof of concept. Bitcoin has a combined market value of well over $100 billion depending on its current market price. While people have hacked some of the exchanges that trade Bitcoin, no one has hacked the Bitcoin blockchain. If someone did hack the blockchain, they would be able to get away with billions of dollars. So, based on this standard, the technology of blockchain looks very secure.

But, isn’t Bitcoin just for black market activity?

Actually, Bitcoin and most other cryptocurrencies (cryptos) are very traceable based on their wallet ID’s. Governments did not initially understand this aspect of Bitcoin, but they are becoming more sophisticated about cryptos. In fact, governments may eventually want cryptos to replace the cash transactions (85% of all transactions world-wide are in cash) to make transactions more easily taxable.

What is blockchain?

According to the Harvard Business Review, blockchain is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”. Or in other words, a secure public database to trace transactions and ownership.

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