Hello Monaco magazine Winter 2018 - issue HM02 - Page 58

INVESTORY ENG R Internet of values emember the beginning of the Internet? First it snuck up on us, then involved and consumed us, then raced past us. The digi- tal currency revolution is proving to be just like that — an unstoppable wave — full of hype and speculation, but also genuine, fundamental change. The new digital technology known as «Blockchain» stands at the origins of the currency revolution. In fact, Blockchain is the system protocol representing a brilliant method of creation of a reliable digital record protected from un- authorized access, which cannot be changed or counter- feited, but transferred quickly and easily. Blockchains are stored simultaneously on the computers of millions of users, which makes it al- most impossible to fake data or damage it. Bitcoin, the original block- chain currency, is a chame- leon with many faces. At the beginning it was a lone wolf, but soon Litecoin, Etherium and a vast number of other digital currencies joined it. These «coins» are known as «crypto-currencies», creat- © depositphotos.com ed, bought and sold using Blockchain technology, and causing quite a commotion in the finance world. So what, you might ask, is wrong with good old paper money? Isn’t physical tender more secure? Let’s figure it out! Without banks, without governments, without interme- diaries! This is the power of Blockchain. The problem many people see with physical currency is that governments print money and devalue their currency, in turn devaluing people’s savings, and allowing banks to operate as a «big brother», using their hard-earned money and charging them handsomely for the privilege. Justified or not, there is widespread distrust and a populist wave against this common practice. And so Blockchain came on the scene with Bitcoin, a digi- tal currency designed to compete with the banks, offer- ing instant transactions, no holding period, no charge- backs (merchandisers will like this), no account freezes, lower or even zero inter- national wire transfer fees, no minimum balances, no maximum balances, and global access. Your «wal- let» is always open — no waiting for business hours, no waiting for an account to be approved, accounts are opened easily based on email, and no traditional bank account is necessary. Block chain technology runs a completely egali- tarian platform, available to anyone with an Internet connection. It doesn’t require a printing press, a monetary fund, government-backed insurance and therefore, no hy- perinflation or bank bailouts. The power of Bitcoin Bankers are WORRIED The financial system began in Florence, Italy, during the Renaissance. The Medici family became intermediaries between creditors who had a lot of money and borrowers who needed it for travel and business development. But, alas, there was no trust between them. In time, bankers filled this gap and took a commission for the management of finances and trust. Today, our present global economic system is still based on mediation, and where there are a lot of intermediaries, there is a lot of bureaucracy. So how do crypto-currencies like Bitcoin differ? The ge- nius and simplicity of this technology lies in eliminating the intermediary, and at the same time, providing the in- frastructure for strangers to do business with each other. All this circumventing of the establishment is causing trem- ors in the financial bedrock of the first world. The heads of the largest investment firms have begun to publically de- nounce crypto-currency. At an Investor Conference in New York this past September, Jamie Dimon, CEO of JP Morgan Chase said: «It is a fraud. It’s worse than tulip bulbs … it will be the emperor with no clothes.» He then declared Bitcoin a «bubble». Is Bitcoin a bubble? Certainly the price has gone crazy — but Bitcoin has a long track record of crazy prices. Will it crash, or even plateau? As we go to press, Bitcoin has broken an- other record, with a price above 10500 USD and its Market Cap exceeds 158 billion USD (on 29th of November 2017). Nobody really knows what the price will be when you read this. HelloMonaco will be watching — yet another new record, or perhaps a crash!!! Nevertheless the number of merchants accepting Bitcoin is growing steadily, but it’s still extremely challenging to use it as a main curren- cy. Bitcoin is still not ready Bitcoin will do to banks what email did to the postal industry» — Rick Falkvinge, founder of the Swedish Pirate Party 56 / Hello Monaco – Winter 2018