Have questions about Bitcoin?


#1

Hi all!

Bitcoin has certainly been a hot topic the last few months, and if you are tech-challenged like me you might have questions about what Bitcoin/cryptocurrency is, how it works, and why it does or doesn’t have potential as a future currency.

To help tackle some of these questions, I am going to be interviewing a cyber and politics expert on my blog. A good friend of mine has his PhD in Politics, did his post doc at Harvard’s Belfer Center working on their cyber security project, and is now a Senior Security Strategist at Microsoft. Cryptocurrency comes up often in his work and research and he’s offered to answer our questions. Yay!

The goal isn’t to focus on whether Bitcoin is a good investment, but more on bringing understanding to how cryptocurrency works.

If you have a question, drop it here, and I’ll pass it on to him to include in the post :slight_smile:


#2

The one thing I’ve never been able to fully get an answer on is why crypto is a better alternative to normal currency.


#3

How many cryptocurrencies can actually exist and hold significant value? There are over 1,300 in existence, apparently.


#4

Most currencies are pegged to the backing of a government or a gold/silver supply. Likewise, most currencies have their money supplies controlled by a central bank. Bitcoin does not have any of this. How would one derive the value of bitcoin? There seems to be no value backing the currency.

As an add on, I understand most all currencies are fiat. However, bitcoin seems more fiat then other currencies. Also appears to be too volatile and by definition cannot be a currency in its current state.


#5

Actually, I don’t know if there are any currencies that are backed by gold or silver anymore.


#6

Chile :wink:

All major countries still hoard gold/silver but it’s typically <5% of M2


#7

Hmm. I don’t think Chile uses the gold standard either. But can you point me to the evidence? Curious to learn.


#8

Guess I missed it. They are out too. Looks like Switzerland was the last two give it up.

Gold/silver plays a role in currency values but there isn’t enough gold or silver to support the global money supply. ‘Faith’ of governments is sadly a larger part too. Government credit ratings are bogus.


#9

I’ll start with the disclaimer that I am far from an expert in blockchain and cryptocurrentcy. With that being said my perspective is blockchain technology has the opportunity to revolutionize a lot of industries including financial markets. The biggest question I have about Bitcoin is how can it remain the leading cryptocurrency in an ultra competitive market? This is probably a terrible example but Bitcoin feels like the MySpace or AOL of cryptocurreny. Usually the leader out of the gate in a new market crashes and burns and another competitor emerges to be the industry leader. Who knows which one, if any, will emerge to be the leader but I just don’t think it will be Bitcoin. I personally think in the long run that blockchain will be used more in other industries outside of cryptocurrency.


#10

It seems to me like the cryptocurrencies only function as long as everyone is playing by the same rules. What kinds of effects will large corporations like currently in China hoarding the computing power have on the blockchain? Will they be able to dictate how they see fit? If so the whole underlying theories behind the cryptocurrency would fall apart.


#11

Thanks, guys! These are super helpful - going to be talking to my friend tomorrow afternoon. I’ll update here when the post goes live, likely mid-January


#12

Correct - hence the interest in blockchain based crypto currencies. By limiting the supply (by the id string length) the idea is to re-introduce scarity (an important part of stores of value) into the system.
I posted a short piece on valuing Bitcoin recently (did my advanced tech thesis on Bitcoin - doesn’t make me an expert just that I have thought about it a lot )

Question for the cyber expert person if it is not too late! I have heard folks say that someone will figure out how to increase the Bitcoin (of pick your favorite crypto currency). Is that possible to do?


#13

Hey all! Here is the post with the cryptocurrency Q&A with my friend! Hope you enjoy it :slight_smile:


#14

This is one of the best posts I’ve read on the topic. Thanks for sharing :slight_smile:


#15

Great job on this article. Thanks for using my question, even though I had to re-read the response 3 or 4 times to kind of understand it. Cryptocurrency is fascinating and kind of confusing!


#16

Ha, yeah, that answer was confusing. I think it is partially because crypto is just confusing, and partially because Cyber Fish isn’t an investor. We talked about that for a while and he kept saying things like, “Yeah, Bitcoin probably won’t end up being the most widely used but investors can just sell it and buy something else. The guys who get screwed are the miners!” He was thinking less about the fact that if everyone sells to buy something else Bitcoin investors lose their shirts…


#17

I was inspired to write out a post about my thoughts on cryptocurrency.