Explainer,
We need to talk about bitcoin. If you had spent $ 100 on Bitcoin 10 years ago, it would be worth around $ 50 million now. So what’s up? Did someone really invent free money? (Spoiler alert: they don’t have). Bitcoin is money, just like dollars or pounds or yen are money – but it doesn’t exist in physical form (there are no coins and bills). It is a digital currency that records accounts (who pays to whom) in cyberspace. There is no overseer. Everything is hidden behind complex electronic walls in a complex electronic system. But whoever owns each Bitcoin is secretly recorded in the system. There is no central register. You can buy and sell Bitcoin with “real money” – dollars and cents – even though you have bought or sold a foreign currency. The price rises and falls. Many types of money do not have a physical form. Not all is cash. When you pay with a debit or credit card, there are no actual bills and coins involved – however, these transactions are processed through your bank. Bitcoin transactions don’t. You are private. There is no central authority that can do it – no central bank. Nobody knows who invented the system. The idea came up in 2008 when a person using the pseudonym Satoshi Nakamoto imagined how people could make payments anywhere without going through a bank. A smart, unknown person or people created the platform. The amount of Bitcoin is increased by a computer generated system that involves a puzzle. Bitcoin is best understood as cash, according to Professor Rabee Tourky, director of the Research School of Economics at the Australian National University. “It offers the ability to conduct electronic transactions as if you were exchanging paper money,” he said. Electronic money has advantages and disadvantages for the holder, some of which are legal and some of which are illegal. For example, the authorities are unaware of transactions and these authorities may include the Australian Tax Office and the Police. But cash has one major drawback: if you lose it, it’s gone. If you stash your money under the bed, the ATO doesn’t know about it (and you’d be breaking the law if you didn’t declare it, other than withholding their income from schools and hospitals), but if it burns, try it the insurance company that there was $ 100,000 in banknotes under the bed. If you’ve forgotten the password for your Bitcoin account, the money is gone too. The New York Times estimated that about a fifth of the existing 18.5 million Bitcoin (valued at more than $ 140 billion) was lost to their owners. A man forgot the password that would unlock more than $ 220 million. Bitcoin offers legitimate advantages. There are no bank charges. It’s easier to pay someone remotely than it is to send cash in the mail. “You can buy a cup of coffee with cash,” said Professor Torky, “but you cannot buy drugs from Perth.” You can really value your privacy and not trust the banks with any information. There may be legitimate transactions that you want to secretly carry out. After the report by the Banking Royal Commission, the lack of trust in banks increased, according to Professor Tourky. At the same time, the banks became much more curious. “A lot of people were worried about credit at the time and started doing cash transactions so the banks wouldn’t question them about their habits.” Professor Tourky calls the Bitcoin economy a “privacy economy” or the black market (although he doesn’t like the term). Imagine two countries with two separate economies and currencies: the Australian economy we all live in and the Bitcoin economy. There is an exchange rate between the two currencies Bitcoin and the dollar. This exchange rate rises and falls. If we want to make better use of the Bitcoin economy, the price of Bitcoin will go up. Four months ago, the Silk Road, an online market for drugs, the details of stolen credit cards and even the services of hit people, was shut down by police in the United States, who confiscated 70,000 bitcoins worth about a billion dollars in the real economy. The price of Bitcoin fell. In May 2010, a Bitcoin would have cost less than a cent. At 2:40 p.m. on Thursday, the price of one Bitcoin was 69,358.38 Australian dollars. People made a lot of money buying hyper-cheap and then watching the price go stratospheric. You can exchange Bitcoin for cash in the real economy. However, this is a speculative, volatile market. It can crash. Banks and the police don’t like Bitcoin because it offers a way to avoid taxes and laws. Environmentalists don’t like BitCoin because it uses an immense amount of electricity. According to one authoritative estimate, computer usage accounts for more than 0.5 percent of global electricity consumption. Many economists, including eight Nobel Prize winners, believe the price will go up because of speculation – people buy Bitcoin because they believe the price will go up, and that’s fine until the bubble bursts. If you get caught crashing with Bitcoin, you are a lot poorer. Under the headline “Bubble, Bubble, Fraud and Trouble”, Nobel laureate in economics Paul Krugman asked, “So is Bitcoin a giant bubble that will end in grief?” Yes “, he answered his own question:” But it is a bubble of techno-mysticism in a cocoon of libertarian ideology “.
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EXPLAINER
April 30, 2021 – 12:30 p.m.
We need to talk about bitcoin.
If you had spent $ 100 on Bitcoin 10 years ago, it would be worth around $ 50 million now.
Did someone really invent free money? (Spoiler alert: they don’t have).
Bitcoin is money, just like dollars or pounds or yen are money – but it doesn’t exist in physical form (there are no coins and bills). It is a digital currency that records accounts (who pays to whom) in cyberspace. There is no overseer. Everything is hidden behind complex electronic walls in a complex electronic system.
But whoever owns each Bitcoin is secretly recorded in the system. There is no central register. You can buy and sell Bitcoin with “real money” – dollars and cents – even though you have bought or sold a foreign currency. The price rises and falls.
Many types of money do not have a physical form. Not all is cash. When you pay with a debit or credit card, there are no actual bills and coins involved – however, these transactions are processed through your bank. Bitcoin transactions don’t. You are private.
There is no central authority that can do it – no central bank.
Nobody knows who invented the system. The idea came up in 2008 when a person using the pseudonym Satoshi Nakamoto imagined how people could make payments anywhere without going through a bank.
A smart, unknown person or people created the platform. The amount of Bitcoin is increased by a computer generated system that involves a puzzle.
Bitcoin is best understood as cash, according to Professor Rabee Tourky, director of the Research School of Economics at the Australian National University.
“It offers the ability to conduct electronic transactions as if you were exchanging paper money,” he said.
Electronic money has advantages and disadvantages for the holder, some of which are legal and some of which are illegal. For example, the authorities are unaware of transactions and these authorities may include the Australian Tax Office and the Police.
But cash has one major drawback: if you lose it, it’s gone.
If you stash your money under the bed, the ATO doesn’t know about it (and you’d be breaking the law if you didn’t declare it, other than withholding their income from schools and hospitals), but if it burns, try it the insurance company that there was $ 100,000 in banknotes under the bed.
If you’ve forgotten the password for your Bitcoin account, the money is gone too. The New York Times estimated that about a fifth of the existing 18.5 million Bitcoin (valued at more than $ 140 billion) was lost to their owners. A man forgot the password that would unlock more than $ 220 million.
Bitcoin offers legitimate advantages.
There are no bank charges. It’s easier to pay someone remotely than it is to send cash in the mail.
“You can buy a cup of coffee with cash,” said Professor Torky, “but you cannot buy drugs from Perth.”
You can really value your privacy and not trust the banks with any information. There may be legitimate transactions that you want to secretly carry out.
After the report by the Banking Royal Commission, the lack of trust in banks increased, according to Professor Tourky.
At the same time, the banks became much more curious. “A lot of people were worried about credit at the time and started doing cash transactions so the banks wouldn’t question them about their habits.”
Professor Tourky calls the Bitcoin economy a “privacy economy” or the black market (although he doesn’t like the term).
Imagine two countries with two separate economies and currencies: the Australian economy we all live in and the Bitcoin economy. There is an exchange rate between the two currencies Bitcoin and the dollar.
This exchange rate rises and falls. If we want to make better use of the Bitcoin economy, the price of Bitcoin will go up.
Four months ago, the Silk Road, an online market for drugs, the details of stolen credit cards and even the services of hit people, was shut down by police in the United States, who confiscated 70,000 bitcoins worth about a billion dollars in the real economy.
The price of Bitcoin fell.
How do people make money?
In May 2010, a Bitcoin would have cost less than a cent. At 2:40 p.m. on Thursday, the price of one Bitcoin was 69,358.38 Australian dollars. People made a lot of money buying hyper-cheap and then watching the price go stratospheric. You can exchange Bitcoin for cash in the real economy.
However, this is a speculative, volatile market. It can crash.
Banks and the police don’t like Bitcoin because it offers a way to avoid taxes and laws.
Environmentalists don’t like BitCoin because it uses an immense amount of electricity. According to one authoritative estimate, computer usage accounts for more than 0.5 percent of global electricity consumption.
Many economists, including eight Nobel Prize winners, believe the price will go up because of speculation – people buy Bitcoin because they believe the price will go up, and that’s fine until the bubble bursts. If you get caught crashing with Bitcoin, you are a lot poorer.
Under the headline “Bubble, Bubble, Fraud and Trouble”, Nobel Prize winner Paul Krugman asked: “So is Bitcoin a giant bubble that will end in grief?
“Yes,” he answered his own question, “but it is a bubble wrapped in technomysticism in a cocoon of libertarian ideology.”
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