"Money, not morality, is the principle commerce of civilized nations."

Thomas Jefferson



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All everyone talks about these days when in polite company is cryptocurrencies–mainly Bitcoin. Cryptocurrencies are digital assets designed to work as a medium of exchange using cryptography to secure the transactions, control the creation of additional units, and verify the transfer of assets. They are revolutionary because their decentralized nature releases the investor from the banks who charge for each transaction and governments who print money out of thin air.


Ok, fasten your seat belt; this is about to get technical. I am writing this for us, the people who just have no idea what cryptocurrencies are. This early explanation may be too pedestrian for experts and too complicated for beginners but, like anything else I write here, this is a mere opinion, “blockchain for dummies”, or if you will “cryptocurrency for the judgmental”.

This article is written to help you have a conversation with smart people about this subject and also give you a quick map of this wonderful new world. Like any article about a new technology this will be obsolete within weeks of its publishing so read it now, before it all becomes comedy, not the comedy I write—the good comedy.

Most Cryptocurrencies are exchanged on something called the Blockchain, an online continuously growing list of records called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp, and transaction data. By design, blockchains are inherently resistant to data modification, which is the main advantage of this technology. Most people know cryptocurrencies through its most important currency being traded on the blockchain, Bitcoin. People confuse Bitcoin with all cryptocurrencies and also with a third concept called token, however they are not the same. Bitcoin, like other cryptocurrencies, has a cap or an issue limit. There will only be 21 million units of Bitcoin. Because it created the blockchain, it acts like the market standard. If you want to buy other cryptocurrencies you will have to buy Bitcoin (unless you want to go through the hassle of finding an exchange that accepts something else).

You don’t need to buy a whole Bitcoin. You can buy a part of it. The smallest unit of Bitcoin is called satoshi, which is a one hundred millionth of a single bitcoin (0.00000001 BTC). Once you have a Bitcoin (or a fraction of it) you can invest on other cryptocurrencies, which are not as valuable (yet!). I will mention five, which are the biggest, according to their market cap at the time this article was written. The market cap is calculated by multiplying the price of the currency with the supply (amount available). These five crypto-currencies are Ethereum, Bitcoin Cash, IOTA, Ripple, and Litecoin.

Of the big five cryptocurrencies, IOTA is a post-blockchain solution, and Bitcoin cash is a fork for Bitcoin, so I will focus on Ethereum–ETH–the brain fart child of cryptocurrency visionary, Vitalik Buterin. ETH is the second in market cap behind Bitcoin. It is more than a currency, Ether, it is also a platform. The ETH platform allows for people to invest in services for which they can pay with Ether coin. For example the Basic Attention Token, BAT (https://basicattentiontoken.org) allows you to pay for their service with Ether and for that you will receive something called token. The BAS token can be used to obtain a variety of advertising and attention-based services on the Brave platform. Other tokens on the market offer other services. The name of a new token launch is ICO–Initial Coin Offering.

ICOs are making a lot of people rich. The name of the game for ICOs is marketing. If you hire the right marketing company to advertise your token on the blockchain ecosystem, and prove you are not a scam you stand to win a lot of money. There are several marketing agencies out there specialized on ICOs, like Ambisafe and ICO Box, but Israel has the most aggressive one–Token Label. This company is able to turn ICO creators into millionaires, using just marketing tools.

But what most people ask in these crazy days where the value of Bitcoin has increased by more than 1000% in less than a year is, “Is it worth investing in something that only exists on a virtual blockchain?” Well, I am not an expert and right now I am convinced that not even the experts have the right answer for this question. Just keep in mind that in an ever unstable world where governments and FIAT currencies–money without intrinsic value established by government regulation–don’t offer the same stability they once did Crypto-currencies are a new world of opportunity. You should, nevertheless be cautious of the new threats that also come with a new way of performing transactions, and a complete lack of market supervision. I will enumerate a list of cryptocurrency pros and cons and let you decide. It’s a new world, but it’s your decision.

Pros
• Limited Minting—Unlike a natural resource, that can have virtually unlimited quantities, all currencies have by design a limited issue.
• Fungibility—One Bitcoin will always be worth one Bitcoin, wherever you are.
• Integrity—You cannot copy paste or fake a cryptocurrency unit.
• Decentralization—No banks or middlemen make transactions way, way cheaper.

Cons
• Speculation based value—You don’t need to be a Nobel Prize in economics to realize there is no intrinsic value to any cryptocurrency except the one given and taken by speculation. This makes cryptocurrencies an unstable security and a bubble. But a bubble by design, like dot com. Everyone knows the bubble will burst, the question for investors is who will survive? Cryptocurrencies are here to stay, like the strong dot com companies Amazon and Google survived when the bubble they were in burst in the early 2000’s
• Difficult to inherit—If you don’t transmit your codes, your assets are lost and there is NO WAY you can recover them.
• Unrecoverable keys—If you forget your blockchain codes you loose your assets. As simple as that.
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Disclaimer: The views and opinions expressed in this blog article are those of the author(s) and do not necessarily reflect the official position or viewpoint of The Jerusalem Post. Blog authors are NOT employees, freelance or salaried, of The Jerusalem Post.

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