Lets talk bitcoin ethereum cryptocurrency
Whereas Facebook, Twitter, Google, etc. No, what I like is that Blockchains create value by inventing protocols that solve a problem, and as they gain more widespread adoption, the protocol itself becomes more valuable. It means the geeks and nerds who designed it, wrote the code, and made it useful are extracting value out of it. As more blocks are mined by others on the network, the network becomes more valuable in and of itself - the Network Effect.
For example, Ethereum is a platform for creating Smart Contracts. That solves a problem. The creators of Ethereum will themselves have Ethereum tokens which would be useless by themselves; but as Ethereum is used as a platform to solve more and more problems, more and more Ethereum tokens are mined and drives up their value. You are rewarded for driving value, rather than needing a corporation to come in and drive value.
Corporations, of course, can do that to. And they should; and, they will derive value by building applications on top of the Blockchain. But the creators of the Blockchain are also rewarded for creating the protocol upon which many things are built. This is where I differ from a blockchain being a "fat protocol, thin client". Whereas the reverse is true for the current web, I think for Blockchain it will need to be "fat protocol, fat or thin client" in order to drive value both for the protocol and for the application layer, otherwise no one will build applications.
Or, if they do, they may have margins too thin to incentivize people to move to blockchain. I'm not sure that this is the correct way to think about cryptocurrencies. There are coins and then there are tokens. I'm not even sure what those are yet. Thus, when it comes to distinguishing the hype around blockchain and cryptocurrencies, there are several questions to ask:.
In Bitcoin's case, yes. It's trying to be a decentralized currency that is resistant to manipulation by central banks, and it is trying to act as a store of value similar to the way that gold does. And unlike gold, it is easier to conduct transactions. Is it a legitimate problem? Or is it likely to be just another one of the tech world's false prophets? Speculating in these gives a better dopamine rush, but building apps on them is better for the advancement of humanity.
I'm going to end this blog post here even though I have plenty more to say on it. How can I know which cryptocurrencies will go up [4]? How do I hedge my risk? How do I know which blockchain is worthwhile, and which other ones are fluff? What does it take to make one succeed? What resources can I use to better educate myself? There really is a lot to take in.
But truthfully, I haven't been this intrigued by a new technology in a long time. Let's hope it doesn't let me down. Corporations play an important part of our market-oriented economy. There's no better mechanism that private enterprise to deliver a large percentage of goods and services. But they are not the best at all things, and the mantra that corporations should exist only to drive shareholder value seems very 's to me.
What does that mean? It means it treats it like a stock or bond actually, more like a stock that doesn't pay dividends. You've doubled your money! Now suppose you want to buy a popsicle at BitcoinPopsicles. You may think "Sweet. No, what happens is you first "sell" your bitcoins and realize a capital gain, and then send them over to BitcoinPopsicles. Thus, when you pay for stuff with bitcoin, you need to realize that it's going to cost you more than you think.
You'll want to talk to an accountant. Disclaimer I've been thinking about writing this blog post for a while now. Introduction If you've been paying attention to the news, or maybe even if you have, you've no doubt heard about the phenomenal rise of Bitcoin over the past 12 months. Khan Academy's nine-part series Beginner's Guide: CoinCentral What is Bitcoin?
And then for Blockchain: A step-by-step guide BlockGeeks What is Blockchain? Business Insider What is Blockchain? What's the brou-ha-ha about blockchain and cryptocurrencies? You may even have FOMO and are therefore looking to see how you can get some I don't have time on this blog to discuss what Bitcoin is or how blockchain works, except to say that Bitcoin is a cryptocurrency that is built on top of blockchain.
If you've never heard of Bitcoin or blockchain before, and you've gone and watched those videos or read those articles, then congratulations! You've graduated to having zero-knowledge to being a noob, just like me on a scale of , I consider myself a 2.
Now that we have that out of the way, let me answer a question you may be having: Well, I first heard about Bitcoin in , and since then I've kept loose track of it, watching it go way up and way down over the years. I don't often get excited about technology, but this did it. Since that time, I've started to research Bitcoin and blockchain a lot more, really ramping up my efforts over the past 6 weeks which is what has prompted this blog post.
And the things I want to talk about is not how it works, but how blockchain will shape the future and whether or not it's worth me investing in a particular cryptocurrency. This blog post does not contain investment advice, you should do your own research and evaluate your own financial position before making determination. The cryptocurrency aspect of blockchain is one thing, but to me it's not the most interesting thing. I think what is more alluring is the inversion of the value that protocols bring - from thin protocols with fat clients, to fat protocols with thin clients.
These are not my terms, but it's part of what I've read. If you think about the protocol that defines email, SMTP, it's a very "thin" protocol. It just defines the rules about how to exchange messages over the web.
But nobody ever made any money by inventing SMTP. Instead, it's the ISPs, email service providers, and endpoints that have extracted the overwhelming value from email. Blockchain inverts that model. Rather than a thin protocol like SMTP or HTTP that only defines the rules of data exchange, Blockchain lets you, as a protocol creator, define the rules and derive a ton of value right in the protocol itself.
The application layer is much less important:. The applications are thin, and must compete with each other in order to compete for users and drive value for their creators. But these applications are distinct from the Blockchain protocol itself. And what speaks to me about this model, especially as a software geek who cares so much more about building cool stuff than driving shareholder value [2], is that the Blockchain is decentralized.
Whereas Facebook, Twitter, Google, etc. No, what I like is that Blockchains create value by inventing protocols that solve a problem, and as they gain more widespread adoption, the protocol itself becomes more valuable. It means the geeks and nerds who designed it, wrote the code, and made it useful are extracting value out of it. As more blocks are mined by others on the network, the network becomes more valuable in and of itself - the Network Effect.
For example, Ethereum is a platform for creating Smart Contracts. That solves a problem. The creators of Ethereum will themselves have Ethereum tokens which would be useless by themselves; but as Ethereum is used as a platform to solve more and more problems, more and more Ethereum tokens are mined and drives up their value. You are rewarded for driving value, rather than needing a corporation to come in and drive value. Corporations, of course, can do that to. And they should; and, they will derive value by building applications on top of the Blockchain.
But the creators of the Blockchain are also rewarded for creating the protocol upon which many things are built. This is where I differ from a blockchain being a "fat protocol, thin client". Whereas the reverse is true for the current web, I think for Blockchain it will need to be "fat protocol, fat or thin client" in order to drive value both for the protocol and for the application layer, otherwise no one will build applications.
Or, if they do, they may have margins too thin to incentivize people to move to blockchain. I'm not sure that this is the correct way to think about cryptocurrencies.
There are coins and then there are tokens. I'm not even sure what those are yet. Thus, when it comes to distinguishing the hype around blockchain and cryptocurrencies, there are several questions to ask:. In Bitcoin's case, yes. It's trying to be a decentralized currency that is resistant to manipulation by central banks, and it is trying to act as a store of value similar to the way that gold does.
And unlike gold, it is easier to conduct transactions. Is it a legitimate problem? Or is it likely to be just another one of the tech world's false prophets? Speculating in these gives a better dopamine rush, but building apps on them is better for the advancement of humanity. I'm going to end this blog post here even though I have plenty more to say on it. How can I know which cryptocurrencies will go up [4]?
How do I hedge my risk? How do I know which blockchain is worthwhile, and which other ones are fluff?
What does it take to make one succeed?