Understanding Crypto a little bit better

Crypto currencies and Bitcoin alike have come a long way from when they were first released. So I decided to ask what may become of the future for crypto currencies? Now for those of you who don’t know, Crypto currencies, like Bitcoin, are cryptographic algorithms that can confirm amounts sent from point a to point b. The proof of work crypto currencies operate on mining hardware now known as Asics which stands for application-specific integrated circuit. These machines perform operations to confirm these transactions on the network and get rewarded for confirming these same transactions through a small fee. One of the biggest problems that people think that Bitcoin has is that the fees are too high to become a global currency and as time has gone on updates have been made because the transaction limit was being reached. It seems to me that Bitcoin is not going to be going anywhere any time soon unless some major security flaw is found. Now Bitcoin is not the only Crypto currency, there are now thousands of other currencies. Bitcoin is the known one thanks to something called the first move advantage as it was the first global release of blockchain technology that succeeded.

Kumar talks a bit about the current state and trending future of crypto currencies and studied at the Indian Institute of Technology Delhi to come up with a lot of his work. Having a background in Polymer Chemistry, Metal-organic framework and luminescence shows that he has a lot of knowledge in other areas as well. There was a major correlation with regulations during covid and the effects it had on the price of the Crypto market. Throughout covid, we printed trillions of dollars and also had lock-downs so people were more so staying at home and possibly being on the internet. During this time, fears of inflation and government control over people were increasing and I believe people tend to see Bitcoin as this kind of life raft that can help ease the Burdon of economic downturn and help to give people back the control of their money that they have lost to their governments. Kumar states, “The reason being, as the number of reported cases and death rise, the governments impose additional restrictions and in turn, those restrictions are likely to have an increasing effect on the demand for non-traditional assets.”(Kumar). So as the government shut more and more businesses down due to covid deaths, people began to flock to assets that they saw would help to protect them in the case of government overreach. Along with this adoption period we saw many people and companies come forward to begin adopting the currency known as Bitcoin. Kumar believes that we are still too early though “Even companies like Tesla who were the very first entrants in the electric vehicle market were too early to enter that market segment but eventually, it is being recognized for its highly innovative work.”(Kumar). So one of the world’s richest people decided to start accepting BTC as payment and even invested a couple billion dollars, but due to lack of information on the energy use of Bitcoin, Elon decided to halt payments.

Now the construction industry could find many uses for Bitcoin thanks to its ability to now have smart contracts, which was not a part of Bitcoin when it was first released. Mohammed did some research and found “According to the McKinsey Global Institute, construction-related spending has reached 13% of global GDP, making the real estate, infrastructure, and industrial sectors the world’s largest industries.”(Mohammed). With construction being one of the largest industries in the world, people are always looking for ways in which this industry can be improved. With construction comes a lot of paper work and contract information on the jobs at hand. What blockchain technology allows for is for these smart contracts to be publicly available and accessible at any time for those parties and those outside the party to view as well. The industry needs improvements in areas of record keeping, arbitration, dispute resolution, contractual workflows, resources tracking, delivery confirmation, and post-delivery services according to Awsan Mohammed. This blockchain technology is considered the next disruptive technology to enter the field and has great improvements for the communication aspect of construction jobs. So big in fact that the Australian National blockchain Committee estimates blockchain construction projects to be worth 200 billion USD by the year 2025. For those that don’t understand exactly what blockchain is, it is just a type of database with a distributed ledger that everyone has access to if they want to see it, simply download the wallet or there are websites that help you access Bitcoin’s blockchain. With the ability to have this public ledger, construction projects should become cheaper, quicker and ensured with better documentation thanks to Crypto and it will become a major disruptor in any industry that’s involved with contracts. A lot of the information found in this article is found from other sources as well and Mohammed has written many research works about the topics of energy systems and many other Journal articles.

This next article is from 2015 and they are talking about Bitcoin and whether or not it is in a speculative bubble. It seems to me that they believe the real value of something like Bitcoin to be Zero; now it’s hard to put a number figure on the value of Crypto. But, I believe what they are truly saying is that you can’t put a price on the value of Block Chain technology. The article was written by Eng-Tuck Cheah and John Fry who are both college graduates. Cheah graduated from the Sheffield University Management School and John went to the same school as Cheah. Jeremy Eng Tuck Cheah has a background in crypto currency, corporate social responsibility and socially responsible investments. This shows just how hard it is to gauge what the numerical value of something like Bitcoin should be. When this article was written the market value of Bitcoin was only 3.3 billion dollars, right now as I’m writing this, Bitcoin’s market value is currently about 580 billion dollars now. Bitcoin is still not fully feasible to be a global currency though “In order to serve as money Bitcoin should fulfill the roles of unit of account (Dwyer, 2014), means of payments and store of value.”(Cheah and Fry). This is one of the problems that still has not been solved by Bitcoin itself, but many other currencies are now out there trying to solve this issue. Coins such as Litecoin were developed not long after Bitcoin and they tried decreasing the block times from 10 minutes down to 2.5 minutes which allows for the network to have four times as much bandwidth.

The block chain can help create environmental incentives as well. According to Matthew “Environmental problems emerge because we lack trust. The environmental crisis grows in a fertile ground, which is the multiplication of intermediaries.”(Matthew). Block chain technology works just like the qr codes you may find on some products. This will allow you to see every step of the process when something is shipped on a public ledger that is immutable. Also, the immutability can help in areas of things like land ownership. Along with these incentives the machines that run the network incentivizes you to go towards renewable energy sources. That is because if you can make the net result of your electricity costs zero, then every coin that you end up mining on the network results in complete profit rather than putting money back in to pay for the costs of electricity. The main saving features here for Bitcoin is that it allows for complete trust on the network. You could even perform voting features on the blockchain that are immutable and add more trust to voting mechanisms. All in all Bitcoin still seems to be too slow, but it is still being researched to add use cases for the currency. If people keep working with Crypto currencies, Bitcoin could cease to exist due to the advances in other coins and technologies. If Bitcoin wants to continue to exist it, the community must be willing to adapt to changes in the coin, whether that’s to increase output limits or some future advancement in the technology. Matthew Hutson is a writer at the New Yorker.

I find that the biggest factors in where crypto currencies is going to be relative to what countries decide to regulate it and companies that decide to adopt it. Some countries are already using Bitcoin as a currency and have deregulated it to be tax free as well. I find that the contract abilities with Bitcoin also allow for more use cases rather than just it functioning as a basic currency. I didn’t understand how the price of Crypto was taking off so much before researching this, but after reading quite a bit, I understand that there are more uses for blockchain technology than I thought and there were many global events taking place to impact non-traditional assets. I still think that there may be some additional use cases to explore for the cryptographic currency industry as well as a lot of people compare Bitcoin now to the internet in the 1990s. I think it’s important to keep in mind what kind of regulations are being placed around the world on to the Crypto Industry as well as any major developments that come to Bitcoin and LiteCoin too. It’s also a good question to ask what may become of the mining industry years down the line for coins like Bitcoin/Litecoin as there is a limit to the amount of coins that would be allowed to be mined. Dogecoin’s merge mine with Litecoin seems to be one of the possible solutions long-term to me as well.

Crypto is always an interesting thing to learn because it is constantly changing and evolving. There are always new coins and tokens being created, and new ways to use blockchain technology are being developed all the time. This makes it a very exciting and dynamic field to be a part of.

1 Like