Bitcoin (BTC) has "Irreplaceable" Value in the DeFi Sector ...

[Table] IAmA: We are Wall Street Journal reporters and authors Paul Vigna and Michael Casey, here to answer your questions about our new book on bitcoin and cryptocurrencies.

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Date: 2015-01-29
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What exactly give Bitcoins/Cryptocurrencies there value? It's an understandably common question. I like to take a few steps backward on it. First to say that ALL currencies ultimately derive their value from a shared community view that the currency in question represents a token of value that all agree on and that it is widely accepted. Bitcoin has some ways to go in that regard. But it is no different from other currencies in that it has no intrinsic value -- the idea of a currency's intrinsic (or commodity) value, even for gold, is a myth in our mind. But the next point is what are the kinds of things that lead communities to come to such conclusions about a currency. And that comes down to trust. In the case of gold-back, it's that people trusted that the gold behind it would retain its value because that commodity happened to have some good qualities as a currency: durability, divisibility, fungibility, transportability, et. In the case of fiat money, the trust lay in the idea that the government would stand behind it. And while that's in itself a flimsy notion -- what can a government back a fiat currency with other than currency itself? - it is still a worthwhile basis for trust because a trusted functioning government is one that successfully collects taxes. And it can promise to honor taxes in its currency. So what about bitcoin? Here, the trust (and therefore the value) comes down to math. You trust that that mathematical algorithm behind it is irrefutable, more trustworthy than a human. And it's also secure: the bitcoin algroithm, decentralized and distributed as it is, can't be hacked, and there is so much money invested in the mining hardware that runs that system that's difficult anyone to take it over. (That's akin to the infrastructure that a government brings to the table, though much less.) Finally, there's the fact that bitcoin is simpy incredibly useful. Far more effectively than dollars and gold you can send it anywhere, cheaply, without a fee-taking middleman. It makes digital commerce so much more effective and efficient than non-digital currencies. All of that goes into the mix that gives bitcoin its value.
Are Bitcoins a good short term/long term investment? Is there any digital currencies that are or will give Bitcoin a run for their money? At this stage, bitcoin is far and away the biggest, most widely held and most valuable cryptocurrency. But relative to the dollar, euro or yen it is tiny (when measured in transactions). So one could imagine, perhaps, a big, monied interest creating an alternative - a government, perhaps, or a consortium of banks - to compete with it. Would such an offering win people's trust, however? Who knows. The other question, though, is whether the blockchain technology of a different "altcoin" could challenge bitcoin in building all the payment infrastructure and non-currency applications for transferring value that many investors foresee. There are projects such as Ethereum that are interesting in that regard. And, of course, Ripple Labs' payment system -- which is effectively a cryptocurrency system for banks and other institutions to use to move money and value around the world among themselves -- is making good headway in signing on partners. In that sense, Ripple is a decent competitor to bitcoin for that internal payment infrastructure role.
What impact do you believe Bitcoin will have on economic growth? I'm of the opinion that moving and settling money at a much quicker rate could be quite profound. Huge potential. Starting point: $80 trillion global economy. If you just save 3% in fees on that, you start with $2.4 trillion in savings. That's about 16 times the total global development aid budget alone. But of course, the savings on remittances and the many hidden fees are even bigger. You do away with cash, you save on massive security costs. If you remove escrow agents, trustees, stock exchanges, lawyers and other intermediaries who simply play gatekeeper roles in global finance, you get even bigger savings. And what happens if we integrate 2.5 billion "unbanked" into the global economy? You think the integration of China into that economy was big. This could be even bigger. It could spur a whole new wave of decentralization in supply chains. And to your straightforward but vital point: speed is critical. As the old adage says, time is money. If we can clear and settle money without two-day time lags, that frees up trillions of dollars in capital that can be re-deployed. The global economic implications are indeed profound. Hence the subtitle to our book.
There is a lot of startups, investment and innovation in various cryptocurrency and blockchain technologies. What is the low hanging fruit and who’s playing the long game against regulatory institutions? It seems that low-hanging fruit is in the wallet and exchange businesses, because these are the basis infrastructure of a functioning digital currency ecosystem. You need those tools to make it function. But Holy Grail for now seems to be in developing apps that make international remittances feasible. The savings for immigrants and their back-home families from digital currency transfers could be significant. Other cool things being built on the blockchain: copyright certification tools, database management, decentralized memory sharing, decentralized Uber-like ride-sharing, crypto stock exchanges... a long list. All these in some way are challenging the various institutions that sit in the middle of global commerce.
Bitcoin's achilles for consumers may be its price volatility. What decentralized technologies for addressing price volatility did you find in your research and which seem to have promise to improve on the technological innovations in bitcoin? There are all sorts of ways to attack this problem. One is "simply" to build out more robust, better secured and regulated trading infrastructure, so that institutions and other investor enter the market and add liquidity. Exchanges, hedging instruments, ETFs, etc. All these are coming. A deeper, more stable market will allow the price to cool down. Then there are various asset tokens built on the blockchain that literally peg an IOU to the dollar or some other more stable asset such as gold. These are worthless unless the issuer is fully backed by a reserve of those assets. But some are offering that and the cool thing is the the public ledger technology behind the Blockchain allows people to audit those reserves in real time.
Would you say you're transhumanists? I've never been one to want to label myself -- a classic journalist's trait. But I do think technology has always been a driver of progress and that the human condition itself has improved as a result of it. Through history, technology has led to better and more sophisticated societies -- money itself is one of those great innovations to achieve this. Those democratized, integrated societies have resulted in less violence, longer life expectancy, healthier people, greater prosperity. Decentralized technologies like cryptocurrencies have the capacity to continue that. Does that make me a transhumanist? I have no idea.
Why is bitcoin fluctuating a lot? Is it pure speculation? Yes, there's a lot of speculation, and not all of it is healthy. We still have very underdeveloped, underregulated exchanges. And the advent of speculative trading tools and margin trading has allowed big players, particularly in China, to manipulate the price and take advantage of arbitrage opportunities across the world. More stable, robust, regulated and institutional investor-friendly exchanges and investment vehicles will go some way to resolving this problem.
Will bitcoin take over the world? It depends on what you define as the world. I think bitcoin, or at least some decent cryptocurrency clone, will take over the world of financial payments and value exchanges. It will work in the background, just as the Internet does. Will it take over the dollar? That's more of an open question.
For this to actually come to fruition, what would you guess the market cap would need to be, as I feel $3-4B capitulation is way too low. I really don't know. You're right in that the market cap needs to be much higher eventually. That will give it more security and guarantee its independence, but as for a precise number, it's hard to say. Also, though, it's chicken and egg --and circular. The wider the adoption of bitcoin, the more its overall value rises, the more secure and viable it becomes for further adoption.
Thanks for doing this. What will be Bitcoin's next "big break" ? Amazon accepting it ? New easier-to-use platform or implementation ? Who knows? It needs to me more than just another merchant accepting it -- we already have Microsoft accepting it -- but in having some institution actually use it for their own financial management: a big U.S. bank, for example. Not something on the immediate horizon. But if and when that happens... it will matter.
Why did you decided to not sell the e-book version of your book on Overstock, but only on Amazon ? Sorry. That's a question for Overstock and for the publishers. But the short answer, I imagine, is that Overstock -- unlike Amazon's Kindle or Barnes and Noble's Nook format -- doesn't (yet?) have an e-book platform. A pity.. (We need to get Amazon to accept bitcoin, of course. That's the real solution.)
Hey! Thanks for doing this, i'm very much interested in a career in economics, how would you recommend starting in the field, and how do you think the rise of cryptocurencies will affect those starting out? Go to school. Study economics. ... Oh, and read The Wall Street Journal! As for cryptocurrencies, all I'll say is that there's a huge opportunity for a field of crypto-economics to develop. Intrigued economist should love this stuff, with its ready-made trove of data to collate and study.
I don't know if I'm a transhumanist, but I am a Trekkie. I need to jump here and also highlight Paul's other line of business. He is WSJ's chief chronicler of the Walking Dead. So, just so you know: he's into zombies too.
Do you think that a major government will ever adopt their own forms of crypto-currency? There already some looking into it. Definitely a possibility. Saves them money. Is easier to track. Superior economic structure.
I haven't talked to Jesse Powell in a while, not since their price quotes got put up on Bloomberg terminals. I'm not really sure what they're up to these days. I have. Kraken is actively involved in resolving the Mt. Gox problem and investing in developing its exchange for euros.
Last updated: 2015-02-02 16:32 UTC
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Bitcoin is a distributed, worldwide, decentralized digital money. Bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin. You might be interested in Bitcoin if you like cryptography, distributed peer-to-peer systems, or economics. A large percentage of Bitcoin ... Bitcoin (BTC) has "irreplaceable" value in the DeFi sector, due to its outstanding liquidity, according to Jay Hao from OKEx. r/Bitcoin: A community dedicated to Bitcoin, the currency of the Internet. Bitcoin is a distributed, worldwide, decentralized digital money … Press J to jump to the feed. Press question mark to learn the rest of the keyboard shortcuts. r/Bitcoin. log in sign up. User account menu. 0. Bitcoins stolen from MtGox. Close. 0. Posted by. u/timmmay11. 7 years ago. Archived. Bitcoins stolen from ... Bitcoin was valued at around $120 when trading was halted by Mt.Gox for about 12 hours on Thursday, following a substantial drop. The exchange told that increased demand had led to a ... Blockchain Center has compiled data for some of the biggest Bitcoin (BTC) hodlers — from the Winklevoss twins to various scammers and hackers, and even “zombie coins”. Allegedly, the twins own 150,000 BTC, which places them between the Bitfinex hackers, who own 120,000 BTC, and the Mt. Gox trustees who lay claim to 166,000 BTC.

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The Bitcoin Group #175 - Bitcoin Regulation - Mt. Gox Sells - Binance Hacked? - Blockchain Voting

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