Ken.
Apology accepted and comment forgotten. That Merlot needs a licence terrible stuff 8) I am certain I am on a few peoples blocked list as I often speak my mind (it's very small) and I guess I am not offended easily. I am happily married which also means I am happy to learn. It even works sometimes.
So I will chance my arm and try and explain my thought process. Having worked in IT for a long time it tends to wander.
Don't confuse bitcoin and blockchain, they have arrived together in the public eye but are different products.
Some of the descriptions are a bit crass, sorry if you are skilled in this area. I do not claim to be the DaveW of Neoprene.
Bitcoin is marketed as a currency. I personally believe you should think of it more like buying and selling copper or gold as a commodity. I give a bank £xxx.xx and you buy XXXX grams for me. The value of the commodity then fluctuates as we are seeing. The coins are a limited number of unique codes that have been found and these are the so called equity. Its fluff, you have to trust in the technology and logic that they set out. I happen to think technically they are correct but you cannot walk up to it and stroke it like a pile of gold. There is no physical presence as a fall back and no government is going to bail you out. It is your choice.
You can buy into Bitcoin at any time through a gateway such as Blockchain itself. You don't need some person taking a cut as an "investment". If I had paid £1000 into my Blockchain "bank account" a year ago (at say £1000/GBP per coin) it would now be worth £17,000. So this is just like investing in any commodity. But less stable and known.
As a comparison if I were to invest £1000 in USD$ today and the US was to do something silly, like go to war with Korea for example, then the country might find its currency takes a smack. Like we did when we announced the Brexit results. However the Bank of England stepped in and supported the GBP in the event of issues providing stability for the system. The Bank of England retains a sovereign role to some extent. I would be broke but not homeless if it all goes wrong due to this support. Who will do this the first time someone hacks a Bitcoin account and empties it. I know this is not a flaw with Bitcoin or Blockchain but does anyone want to guess how the press will treat it and the onward effect? Bitcoin is outside the banking system and so legislative control is not the same. If we all ran on an unregulated Bitcoin today you could have a second depression in days if it crashed. This is why I compare it to a commodity.
Blockchain is actually a general purpose transaction tracking process that is a bit like electronically hallmarking a transaction. It has gained notoriety through finance as this is where they have aimed it in the first stage. It does have a very high level of security attached to it but as it needs human involvement I am expecting a gaff at some point. People remain the weak point. I was introduced to Blockchain a few years back and could see enormous challenges using it in the European financial community. That proves how stupid I am as I overlooked it!
As two people exchange something they both leave a mark on the file. This is handed forwards with the file. The next trade results in another marker so it grows a tail of information. Not totally accurate but close enough to understand its role I hope. There is no central database of all transactions.
Slightly confusingly Blockchain also act like a bank/exchange, you give them GBP/USD/EUR and they purchase the Bitcoin and act like a bank holding it for you. You can then buy things or gift people money etc in fractions of a Bitcoin. They can then take them out at the other end as a local currency on the exchange rate they are offered. As it is outside the banking regulation environment (legal reporting, maximum cross border limits etc, countries embargoed) people with less morals see a quick win. Also the cut that previous money cleaners may have asked are reduced to an exchange rate. Right now the baddies who may be using it are actually earning from the legal growth of Bitcoin. Slightly frustrating.
If you do want to trade in Bitcoin I would suggest opening a Blockchain account would be a painless way of doing it. I also point out that I have NO relationship with them.
www.blockchain.com and follow the wallet sign at the top. You will notice the sign-up is quite comprehensive and DO take good note of the backup code information or your MONEY IS GONE if you forget a few things. they take security very seriously as it is their reputation. I like this.
However I no longer have money in Bitcoin. It feels like the bubble is straining now. The public coverage on TV at every hour means that there will be pressure on governments to act now. Quietly and in the background at first. How this will pan out I have no idea. I am guessing about the move to commodities as no country will own the risk. This side steps regulation to a degree as well. I cannot see the global banking community/countries agreeing how to regulate this Internet thingy. Most countries banking programs are not in agreement globally so why will they agree on Bitcoin so bringing it into banking is a challenge. One good thing is that Blockchain also helps the security services. As the transactions do include an audit chain there is the opportunity to track and trace more things if it is done correctly. However this will require privacy intrusion and hence my comments on implementation in the EU. Germany and France are going to have a say in this one.
But then they said that about Amazon.
All comments and corrections welcome.
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