Bitcoin, Digital currency and game of Roulette

By | January 20, 2018

Recently unless you lived under a rock, chances are you heard the word Bitcoin, Ethereum, Ripple or digital currency more than once, per day.

It is a shame that some commentator used the term “Bitcoin” and “Investment” in one sentence: that just showed that the person does not know what bitcoin is, or what is investment, or maybe neither.

All these digital currencies are just a “derivative” or “realization” of the underlying blockchain technology. The Blockchain technology promises to de-centralize the currency from a traditional central verification/clearing institution stand behind the validity of the currency to utilizing some unique hash based on prime numbers so you know they are real and won’t be a duplicate.

Out of the gate the biggest winner actually will be merchandise or money remitting or banks who rely on such centralized clearings to be the intermediary: for example, if you wire money to your friend, your bank needs to make sure your account has sufficient funds (i.e. the number you said you are going to wire actually belongs to you), before the bank “puts” the funds into your friend’s account – a process normally will take days.

With blockchain technology, since you will be having a private key that unique to you i.e. your ownership is verifiable instantly, the wire can be sent probably within a few seconds. This way all settlements of financial assets can be done within seconds not days, therefore making banks who are utilizing such technology one notch more advantageous against their competitors who are still using past models.

However, just like everyone may have their own idea of using what “form of digital currency” to utilize blockchain technology, unless a standard is established, nobody knows if there is a final digital currency accepted by all businesses to realize the instant transaction/settlement and other features.

That makes betting on one currency almost equivalent to betting on a roulette in a casino.

If the digital currency of your choice eventually becomes the standard, you probably will rip 36 times of your original bet, and if the “ball” falls within other digital currency’s slot, your bet will lose 100%.

Or you have a “0” or “00” situation when the government dictate its own form of digital currency that is not any of the existing ones, everybody loses their pants in the game.

According to coinmarketcap.com, as of 1/19/2018, there are 1469 different digital currencies.

With a roulette wheel running 1 to 1469, including 0 and 00, a 1471:1 odds AGAINST your favor, are you still playing, and you call that “investment”?

 

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