Bitcoin and the other (1000+) Cryptocurrencies
“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.” – Thomas Carper, US-Senator
Terminology
I am a blogger not a financial writer (well sometimes I am see example ). But here I am a blogger. The terminology mentioned is by no means a comprehensive list. I have not tried to write a Dummy’s guide to Bitcoin but in explaining the terminology I try to assist you in smiling at the attempted humour in the message following the terminology (should you find the message bland and boring, the terminology will help you to understand Bitcoin). A win-win situation my mother called it…
Fiat currency – It is created by governments to represent value in order to trade using currencies like the dollar and rand (the money we are used to). A central bank regulates the amount of currency available and influences it’s value.
Cryptocurrencies – a digital virtual currency (i.e. Bitcoin) existing in cyberspace. If computer networks should vanish crypto currencies vanishes – it cannot exist outside a computer network. Encryption techniques are used to regulate the generation of units or “coins” and to verify the transfer of funds. It operates independently of a central bank and is therefore decentralized. Its value is determined by the community based on supply and demand. Crypto and Fiat currency is in competition with each other.
Cryptology – Cryptology is the mathematics, such as number theory, and the application of formulas and algorithms, that underpin cryptography, while cryptography is both the practice and study of the techniques used to communicate and/or store information or data privately and securely, without being intercepted by third parties. Also known as encryption.
Kryptonite – Kryptonite is a material from Superman’s home planet of Krypton and is harmful to and can even kill Superman (what is this doing here?).
Blockchain – This is the heart of cryptocurrencies. A blockchain is a public ledger of all cryptocurrency transactions that have ever been executed. It is constantly growing as completed blocks are added to it with a new set of recordings. Each node (owner’s computer) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the first block to the most recently completed block. It is therefore claimed that fraud cannot be committed as the blockchain cannot be altered as it exists on multiple computers
Cryptocurrency wallet and address – Cryptocurrency wallets are software programs that store your public and private keys and interface with various blockchains so users can monitor their balance, send money and conduct other operations. No coins are actually stored in the wallet. It is merely an access to show you the amount of currency you own and to transact. If hackers hack into your wallet and find your address they can however withdraw your coins. Thus it is important to store it offline. Mega millions have been stolen by hacking into wallets. While transactions can be traced via the blockchain these transactions are anonymous. You know how much currency is in a wallet but you do not know whose money it is. This has pro’s (and many cons).
Ether – has various meanings and in the message I apply this meaning: a light volatile flammable liquid especially used formerly as an anesthetic. However, the second biggest cryptocurrency – Ethereum uses the word as it’s core but in the crypto world it has altogether a different meaning
Mining – Bitcoins (or any cryptocurrency) are not printed out like traditional money, they are mined out of the system (literally created from nothing). A miner is just a person with a computer that runs a mining program on it. But miners don’t just generate new Bitcoins. They also use their computers to verify transactions and prevent fraud. Cryptocurrency was not created for the miners but without miners cryptocurrency (and Snow White) cannot exist.
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Those who know me also know I do not write fiction. Similarly The Message is based on actual events in so far that I did send my friend the Afrikaans version more than a year ago. If the content of the message really happened, you be the judge; let’s just say I applied allegory, irony and parody liberally as it all rhymes with currency. The message followed a vigorous discussion during a hike.
The Message
Daniel
I went to dig further in order to get a grasp of all of this. Unfortunately my wallet fell into the mine. Using a blockchain I lowered myself deeper into the mine searching for the wallet. At a certain level I could smell ether and I started seeing weird posters against the tunnel walls: “Created by the most brilliant minds from around the world” , “Derivatives are delusional – cryptocurreny is real” and “Go crypto or end up in a pauper’s crypt” Suddenly I saw people digging with their laptops in the ground. They stared at me if I’m crazy because I was not doing the same. I started wondering if I’m not mad and missing out on something. A bit crazy to coin a phrase. Or is it the effect of the ether that influenced my thinking. I heard a loud bang. Some miners out of frustration were kicking a Fiat car behind me??? As if the car did something wrong!
I became dizzy and stumbled. To keep my balance I pulled hard on the chain, but the blockchain tumbled down, and with that I am deprived of a place where things make sense, I cannot climb back. My world started spinning and I wondered if I’ll be caught in hashes and nodes and decentralized and centralized platforms that compete algorithmic-ally forever. With everything in a haze (or is that hash) I fortunately lost my consciousness.
I awoke up in the arms of a man with the sensation that I am flying and realize that I’ve completely lost it. I’m relieved to to see that the person’s mother dressed him funny in realizing that it is Superman – he saved me! Still under the influence of what happened, I say gratefully: “Superman you’re my crypto knight”. It was a mistake – he heard kryptonite, got a fright and let go as I fell back into the mine …
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Yes it ís one of those – you have have to think up your own ending. Did I ever get out of the mine; I honestly don’t know… But there is a lesson: I am scared that cryptocurrency will turn into Kryptonite and kill me financially. You cannot do a due diligence of a cryptocurrency’s value. Regarding a share you can look at the company’s PE ratio (price earning ratio) and at the management and sector it is in and make certain deductions. The value of a cryptocurrency is speculative – it cannot be objectively determined. Having said that if I invested 6 years ago when the price was under a Dollar… Even if I bought it n April last year instead of sending the message to a friend who have bought years ago)… But the time is right to write: recently Toortsie took the lead and wrote about it.
The fact that brilliant people created it, is not a guarantee of its success. Today it fell 5.9% – the start of a bubble? I simply cannot understand how the values can increase like this for something which only real practical use is to hold and transfer money. I will rather admit it that I do not see. The following may sound familiar (it is about clothing)…
They pointed to the empty looms, and the poor old minister stared as hard as he dared. He couldn’t see anything, because there was nothing to see. “Heaven have mercy,” he thought. “Can it be that I’m a fool? I’d have never guessed it, and not a soul must know. Am I unfit to be the minister? It would never do to let on that I can’t see the cloth.”
No earthly currency, crypto or fiat, can sustain you once it becomes necessary for a crypt.
For you know that it was not with perishable things such as silver or gold that you were redeemed from the empty way of life handed down to you from your ancestors, but with the precious blood of Christ 1 Pet 1:18
Ooooo dit maak sommer my kop seer.
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Ek het vir meer as jaar nie daaroor geskryf nie want ek weet dit maak koppe seer!
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Ek het ‘n baie selgte geldwaarhouding maar as hulle nou die staatspensioene op die SAL mors het ek dalk ‘n kitsoplossing nodig
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Daar is ongelukkig nie kitsoplossings nie
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Dis waar… en my waaghouding is nie te goed nie
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Sug. Dink dis tyd om my kleine kleine kleine splintertjie van’n coin te verkoop. Dan het ek nie te veel verloor nie.
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Toortsie ek sou nie. Hou dit daar soos genoem die waarde kan nie bepaal word nie en my skeptisme is dalk baseer op onnoselheid. Ek wag vir die prys om te val dn wil ek ook so stukkie bitcoin koop. Daar is bir coin analiste wat sê dit gaan $10 000 word. Ek weet nie verstaan nie hoe.
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Dis goeie informasie, so maak maar die koppe seer. Gaan jy die kwessie van regulering (AML, KYC en SA Exchange Control) ook aanspreek? Dit lyk vir my na ‘n vrotmelkskema.
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Kam later daar is ook die kwessie van belasbaarheid en die feit dat dit deur kriminele gebruik word maar nee ek dink nie dit is vrotmelkskema maar wel skema wat te hoof waardeer eord
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Ek sien die hackers het ook al hulleself goed gehelp aan die ouens se currency.
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Dit is helaas so
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I didn’t understand any of that… apart from Superman is afraid of Kryponite 😉
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You understood the best part! Kryptonite is more real cryptocurrency 🙂
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Trying to comment in English. I don’t know keeping pace with the theme, if a conversion happens and changes the language to Afrikaan?!
Enjoyed reading …fluid narration and a lot of humour thrown in good amount….
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You are certainly welcome to comment in English and welcome to my blog. You wil notice that various others commented in English as well. I normally write in Afrikaans but do photo challenges in English. The Afrikaans people has an unwritten rule that we cmment in Afrikaans when Afrikaans people writes blogs. Glad you enjoyed the humour and narration 🙂
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At your best! I loved your story!
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Thank you Anne I think some people msy hsve missed that I actually wrote a story! Appreciate you commenting on it
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Gelukkig?/ongelukkig het ek nue genoeg ching om eers te eonder of die bitcoin jou tande gaan breek of nie. Al klink dit doms lekker, gaan ek nie kan byt nie en arm bly ( of ryk word)
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🙂 Mens kan selfs 1 miljoenste van ‘n bitcoin koop en dit sal net klein stukke vn jou tand breek
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die moeilikheid is, ek dink nou aan valstande
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Hi Abrie,
I love this post! What are you? Hahaha! What is your day job? I also read your Sanlam REIT article. I’m a finance person and I refuse to write anything finance… maybe if I do real time while attending the CFO Indaba next month.
This article can go quite viral, you know… but I can see you published this in a hurry. 😛 I’d like to share but my anal-retentive personality will be screaming… hahaha. I should email you. If I don’t find your email address, mine is annajaileneaguilar@gmail.com.
Believe me when I say that this comment is all compliment! 🙂
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What am I? I do believe I am a human. Although there is some dought. I do not suffer from hayfever but sometimes I sneeze up to ten times in a row. I had an allergy test and due to the results It was redone for confirmation but it was confirmed that I am allergic to oxygen. Goverments are now pursueing me as they believe I am an alien…
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Haha! Nice answer… I must just see if I can find you on LinkedIn. I should see there “what you are”, which I know is wrong because what we do don’t make who we are… 😆 I’m an Accountant by training, by the way… 😂
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Ek het verkoop. Ek wou sien hoe dit werk en ek is tevrede. Dalk us dit ‘n bekeggingven dan moes dit bly. Maar om te koop en te verkoop moet mens hands on wees en binne 2 dae het dit my geïrriteer.
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Ek het gister jou geantwoord maar ongelukkig het dit nie as reply gaan le op jou kommentar nie maar apart. Ek gaan baie sleg voel as bitcoin duer die dak gaan en jy het verkoop!!
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Asb nie! As jy weer my bloginskrywing daaroor lees, sal jy presies dit raaklees dat ek dit wou toets om te sien hoe dit werk. En die paar rand wat ek ingesit het vir die toets, sal my nie ryk maak nie, selfs al vlieg Bitcoin tot deur die hemel. Niks verhoed my om weer te koop as ek sien daar kom beweging nie.
Ekonomie en rekeningkunde was my hoofvakke destyds, daarom is ek nuuskierig oor huerdie goed, maar ek dink ek het my nuuskierigheud bevredig. O, en ek hét jou kommentaar gister gesien.
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Ek het gister jou geantwoord maar ongelukkig het dit nie as reply gaan le op jou kommentar nie maar apart. Ek gaan baie sleg voel as bitcoin duer die dak gaan en jy het verkoop!!
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Must admit I’m not an admirer of the whole bitcoin phenomenon but then I thought debit cards would never succeed and I told my sister–in-law (back in the dark ages when I sold mainframe computers) that she was crazy to invest in a Computerland business (turns out I was right) because no one would ever buy a computer in a retail establishment (and then I was wrong). And DUH, I forgot to mention this rule to Apple. Anyway, as always, enjoyed your post and your sense of humor.
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Hi Tina. Since I published this blog the price has gone down to $3 100. It is scary to have such power 🙂
In my latest blog I have mentioned you in an impersonal way (if such a thing is possible).But I haven’t linked you. Thought that would be a bit too bold. do not want to be called a bold bald baddy 🙂
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Lekker artikel hierdie en gelag. Kon nie uitmaak of julle ernstig is of grappe maak nie,☺
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Die eerste helfte is die cryptocurrency terminologie maar “the message” is ‘n grap wat el wel vir ‘n vriend gestuur het. Kommentare is ook ernstig
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https://invertedlogicblog.wordpress.com/2017/09/20/political-opinions25-going-back-to-the-gold-standard/
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Nice post!
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Thank you and I see Bitcoin is over $7000
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