Sunday, 6 August 2017

In the Eyes of the Beholder ?



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 :

·         What is Bitcoin ? 






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 / C├ęzanne / 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


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