Of late , there is a lot of news about Bitcoins
It says , there are Bitcoin miners and Bitcoin traders and Bitcoin exchanges
But , what is a Bitcoin ?
I am a Bit-Confused !
In case , you wish to be a Bit-Confounded , I suggest you study :
Or , go to Google and just search for Bitcoin
But here is my understanding :
· It is not any 3 dimensional physical thing which you can touch with your hands
It is a “ unique piece of software code “, generated by software geeks , using a very complicated Mathematical Algorithm
This “ Mining “ of a Bitcoin is somewhat like solving a SUDOKU or a CROSS-WORD puzzle, of which , there are only a total of 21 MILLION correct “ Solutions “ - making its supply LIMITED
These geeks are called Miners and it takes many days of working on a computer ,
to Unearth / Discover / Mine , just ONE Bitcoin
· Each “ discovery “ ( no matter by whom and from where ), is recorded / stored and its “ ownership “ established and made known publicly to everyone
· Obviously , you cannot carry Bitcoin in your wallet like a metal coin of Rs 5
· Hence , a Bitcoin is of very little day to day “ practical value “ to you / me
· It is this RARITY ( limited supply ) , that gives its VALUE to the Bitcoin
In this respect , it can be compared with a metal called GOLD ( as opposed to another metal called IRON , which has plenty of SUPPLY , and therefore , a low value )
· You can also compare a Bitcoin with a painting of Van Gogh / Picasso / Cézanne / Monet / Hussein / Ravi Verma etc
There are just a few / limited number of these available ( SUPPLY )
Their VALUE lies in their RARITY ( - and in the HUMAN GREED ! )
· Art Connoisseurs buy these paintings at auctions , for millions of dollars ( only to lock up in vaults – no practical value ! )
· Traders ( auctioneers ) , come out with fancy / expensive brochures and even SELL these brochures ( of course , for a fancy price ), among the potential rich buyers
Now , you get the idea !
Just as the Beauty of a piece of RARE painting lies in the Eyes of the beholder ( and goes on increasing , with time ) ,
The VALUE of a Bitcoin lies in the mind of the buyers and keeps increasing as more and more traders / speculators , enter the market !
Yesterday , its value reached $ 3200 per piece !
But if you want to bid – and buy – a rare painting at an auction , you need to have a fat / official bank balance in dollars and must pay for your purchase only through official banking channels , in a transparent manner !
But as a recent Malaware ( WannaCry ) showed , Bitcoins do not form part of official banking channel ( national and international ) and can be used for Ransom / Terrorist activity etc , without any knowledge of governments .
Very difficult to trace who owns , how many , since when and bought from where and at what price
Or worse , generation of tons of BLACK MONEY , through BitCoin hawaala !
After reading this , it would be understandable , if you are a Bit-Scared !
07 Aug 2017
www.hemenparekh.in / blogs