Page 25 - Provoke Magazine Vol1

Who’s Buying Bitcoin?
Cryptocurrency is a digital medium of exchange secured through electronic keys and network codes. The name is a deriv- ative of the cryptography concept used as an alternative method of payment when transacting business through the internet. In a digital cryptic format, individuals can buy, sell, and use crypto- currency without disclosing personal identifiable records. Almost similar to the use of cash in a busy public bazaar.
The cryptocurrency community uses the term bitcoin to de- scribe the units of electronic currency or the system of using bit- coin as an alternative payment. Units are in whole and fractional denominations. There is limited number of bitcoin units. The lim- ited number of outstanding bitcoin units produces an economic market in the buying and selling of the currency. Prices per unit fluctuate daily. If there is a high interest in bitcoin ownership the cost of the currency would be higher. If the interest is low, the cost would be less. The value of bitcoin changes all the time.
Bitcoin units exist in a virtual marketplace as a collection of IOUs passed from one person to another. The confirmation of the exis- tence of a true unit lies within the historical record of transactions associated with certain blocks of coded bitcoin units. Data min- ers trace these blockchain transactions from initial purchase to its current secured keyholder location to validate the legitimacy of the current unit. Transactions flow through peer-to-peer connec- tions within the distributed network which effectively becomes the central ledger of balances for bitcoin transactions. Unit owner- ship lies with the holder secured in a digital wallet. The distributed network has the authority to confirm the legitimacy of the bitcoin unit and approve bitcoin-based purchases.
Once you acquire bitcoins, you must ensure that you secure the information of the virtual currency with your private key. The distributed network responsible for the virtual book of bitcoin units do not register these holdings to owners. The person with the key owns the currency. If the distributed network validates the blockchain, the bitcoin secured by private and public codes are acceptable in the virtual community. You own your bitcoin shares until you transfer them to another holder.
Bitcoin is the first decentralized digital/virtual currency. The U.S exchange does not regulate the bitcoin as an investment in- strument. The use of the currency is not subject to banking regu- lations. This means that there is no central regulator to ensure that buyers of the currency are not disadvantaged. The Securities and Exchange Commission warns the public of fraudsters who target bitcoin investors for illegitimate investment schemes. Bitcoin ac- tivity is dependent upon the willingness of another bitcoin user to accept its terms. You are at the mercy of the distributed network charged with identifying your possession through the attached blockchain history mined from complex algorithms. The network determines if your bitcoin holdings are a legitimate digital cur- rency.
By Shawn Washington
For example, if you buy a bicycle for 3 bitcoins you would use your private key to access your holdings and send the units to seller’s pub- lic key for acceptance. The transfer of units would filter through the network. Assigned data miners verify the blockchain information to ensure that the shares are not counterfeit. The entire confirmation process could take hours or days. Once the network validates the transaction, your seller receives the bitcoin price and delivers your bicycle.
Which brings us to our important question.: Who in the hell uses bitcoin to transact business? As of September 19, 2018, reported cost of one bitcoin was well over $6,000[i]. The use of bitcoin for curren- cy remains speculative and technical. The finite number of units has a volatile effect on the price of each whole and fractional unit. So why take the risk in purchasing these shares, instead of using PayPal? The inherit anonymity makes the exchange an attractive opportunity for people to buy illicit substances on the dark web. But, we are not buying illicit substances on the dark web now, are we? Purchasers of bitcoin are looking to make money by buying low and selling the currency sometime in the future at a higher rate. There are those that believe that bitcoin will become the next single global currency, since it is outside any one country’s jurisdiction. This belief assumes a utopic illusion of people-rule economies dependent upon an elitist control of the monetary system, or maybe not.
Information contained herein should not be considered as investment advice or a recommendation of any strategy or investment product.
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Whatever the outcome, the value of one bitcoin is so high that it could be worth learning about why this al- ternative system is so popular.