Everyone has heard how Bitcoin and other crypto currencies have made millionaires of those who bought as recently as a year ago. Gains of 1,000% or more are not just possible, they have been common place with many of these crypto currencies. Someone who bought Bitcoin in May 2016 at less than $500, would have had a gain of 1,400% in about 17 months. Then over the past few days, we saw Bitcoin lose almost $1,000, so to say these crypto currencies are volatile would be a massive understatement.
Since the inception of Bitcoin in 2008, we at Trend News have been skeptical of crypto currencies’ ability to survive, given that they present a very clear threat to governments who want to see and tax all transactions. But while we may still be cautious on the actual crypto currencies, we are very aware of the potential of the underlying technology that powers these electronic currencies. In fact, we believe that this technology will be a significant disruptor in how data is managed, and that it will impact every sector of the global economy, much like how the internet impacted media.
Here are some questions & answers to get us started…
Q: What are Crypto Currencies?
The most well known crypto currency (CC) is BITCOIN. It was the first CC, started in 2008. Today there are more than 800 CC’s, including Ethereum, Litecoin, Dash, Zcash, Ripple, Monero, and they are all “virtual”. There are no “physical” coins or currency.
Q: How do CC’s work?
CC’s are virtual currencies that exist in very large distributed databases. These databases use BLOCKCHAIN technology. Because each Blockchain database is widely distributed, it is thought to be immune to hacking, as there is no central point of attack and every transaction is visible to everyone on the network. Each CC has a group of administrators, often called “miners”, who validate transactions. One CC called Ethereum uses “smart contracts” to validate transactions. Crypto TREND will provide more details in upcoming news publications.
Q: What is BLOCKCHAIN?
Blockchain is the technology that underpins all CC’s. Each transaction for the purchase, sale, or exchange of CC’s is entered into a BLOCK that is added to the chain. This technology is complex and will not be explained here, but it has the potential to revolutionize the financial services industry, as transactions can be executed quickly and easily, reducing or eliminating fees. The technology is also being examined for applications in many other industries.
Q: Are CC Exchanges regulated by government?
For the most part, the answer is NO, which, for some users, is a big attractions of this market. It is the “wild west” right now, but governments in most developed countries are examining this market to decide what regulation may be needed. A big decision is whether to treat CC’s as a currency or a commodity / security. Canada and USA have so far declared that CC’s are legal, however the situation remains fluid as for reporting and tax implications. Crypto TREND will be following and reporting on these development