Frequently observed in literature, are five legendary conflicts. Man versus self, man versus society, man versus man, man versus nature, and man versus supernatural. Extraordinary stories have to evoke raw existential emotion from its audiences. Inspiring incredible fictional narrations are heart-gripping stories originating in reality. Putting on a heavy winter coat and stepping out into an icy blizzard is reality. Reality is what we see, hear, touch, and taste. But at the same time ones and zeros can’t be seen, heard, touched, or tasted. How can this recurrent numerical anomaly be reality as well? In 2016 1.61 billion people purchased goods on the internet. Today a device brings products and services straight to your door using electronic money that is hopelessly undefinable as a physical entity.
Cold hard cash, is steadily being replaced by the virtual dollar.
If you have ten thousand dollars in a local bank, you might assume that all of it will be stored in a physical vault. Unfortunately that is not the case and a small bank does not have a minimum reserve requirement. Meaning that if you wanted to withdraw all of your funds in cash right now the bank would legally have the right to offer you a check instead. Virtual reality isn’t a game, it’s an actual phenomenon. Thirty years ago stealing an identity was a long and grueling process for the thief. Today it’s the victim that spends two months and 200 hours on average cleaning up identity theft. Getting robbed on the way to work and getting robbed in a virtual void seem different, but anyone who has experienced similar situations have found massive amounts of suffering in both.
Virtual money is versatile. Payments are relatively fast, and convenient. Since virtual transactions are quick, investing online is quite an easy task. You can buy into a stock very low and in an hour when that stock goes up, you can sell it and you’ll have made a profit.
Psychologically, an investor has two main objectives. The first goal, is to minimize risk. In order to better your position financially, it is only natural to protect the assets you already have in your possession. The second goal is to accumulate wealth. Usually, this is done by putting your hard earned money directly into the hands of another entity. Whether that party is a large corporation or a small supplier, you have given away your capital in the hopes of receiving it back with sizable interest.
Investing involves uncontrollable factors and therefore increases our risk. Good investors minimize risk while simultaneously maximizing their reward. Perpetually looming over any financial decision is the chance of fiscal disaster. Commonsense would dictate that the best way to overcome financial failure is to mitigate risk as best we can by making smart financial decisions. What has constituted as smart financial advice for centuries has been to work hard at a job and deposit those funds into the bank for safe keeping.
Even if you could remove all risk of physically losing your money, it is still very far from being safe. Money is killing itself. Quantitative easing is the process by which governments are able to print large quantities of unbacked measurements of financial equity. Money is losing its value every year at the rate of 2 percent. It is important to note that some websites such as Shadowstats suggest a 10 percent inflation rate. Why is money losing its value? Because as more money is printed, it becomes less rare thus lowering its value. Meaning that in the long run if you are not making more than two percent on the money you have in savings, that money is rapidly becoming less valuable. This is why many people choose to invest in precious metals, real estate, or stocks. Countering inflation has become a daunting problem with little to no tangible solution. That is, until now.
Verging on mainstream adoption this year, is a cutting-edge noninflationary systematized technology known as Blockchain. Blockchain has arrived on the scene as an imperfect solution to the perfect problem. Inflation. Only imperfect because of it’s infancy, as blockchain develops we can expect to see incredible changes in the private, political, and financial arenas. What is blockchain? Blockchain is a trustless distributed record of ownership. Every transaction that occurs on the blockchain is value that can be recorded and then publicly viewed by anyone using the blockchain. Meaning that no money can be double spent, and all transactions and users of the technology can be kept accountable. Bitcoin is a cryptocurrency that uses blockchain, to send and receive money directly from one individual to another. This is called a peer to peer transaction. Removing forever the need for banks to legitimize a transaction. As it stands now, banks are required as the necessary middleman that deems a transaction from one party to another as authorized. In other words, an existing centralized system will soon merge and or clash with a new decentralized system in the next three to five years.
Since there will only ever be 21 million Bitcoins, inflation is nonexistent because of an unwavering total supply of coins. How is a Bitcoin made? It can be created through mining. Mining can be defined rather simplistically. Renting out computer processing power to solve algorithms on the blockchain network. A more complex definition would be an option for any end users to use their own computer to secure the network by competing in time to solve mathematical algorithms known as blocks with open source software. In other words, blockchain needs computer processing power to keep its decentralized ledger balanced, and running smoothly. That processing power is provided through “miners” people who rent out their computer processing power to solve algorithms known as blocks. The first miner to solve the next block and link it to all previous blocks will be rewarded with Bitcoin. So for example, if you wanted to mine a cryptocurrency the first step would be to download software that harnesses the processing power of your mining machine. Which for the example we will say is a laptop with a GPU. Short for Graphics Processing Unit. Your laptop will then run that software and harness the power of your laptop’s GPU to solve algorithms on the blockchain ledger.
What does this mean for you? Absolutely nothing, for the time being. Bitcoin and it’s blockchain technology are currently not effecting your daily life in a positive or negative way. Which means your opinion on them could be rather indifferent. That’s perfectly OK. All anyone can ask of you is to at least be sentient of this new technology. Some would say that we are witnessing the greatest financial revolution of our lifetimes and becoming well informed on this subject could change your opinion from that of indifference to that of intrigue and perhaps even cautious curiosity.