A Bit about Bitcoin: Straight From the Horse's Mouth
Oh my, humins can be so hard to understand! I’m a European Warmblood and I’ve been bred for skill, stamina and strength and one might say we have technical moves. My humin is very techie and likes to talk tech in the barn. I tend to ignore her rants and focus on the task at hand or whatever treat she has in her hand. But then one day, I got confused – she kept saying ‘bitcoin’ to her trainer in hopes of buying another horse (not happy about that part…) but I thought she meant the metal, that I don’t like, that goes in my mouth – called a bit.
Maybe you can help me understand this new thing. This is what I heard…
Bitcoin was developed in 2009 and is also known as crypocurrency. It is powered by blockchain (maybe it’s a bit with a chain?!), which is a digital ledger that documents the Bitcoin owners. When a transaction takes place, it changes from one owner to another and is grouped into a block – where members compete to be the first to confirm the transaction is legitimate (sort of like a live auction, but its all online). A Bitcoin owner is identified by a digital address – a string of 27-34 letters and numbers (similar to a racehorse with numbers tattooed to their lip). And then they make the next part super secret – in order to prove ownership without giving your identity, the system relies on public key cryptography. Digital addresses of a Bitcoin owner serve as public keys that everyone can see and the transactions are completed by debiting one address and crediting another.
As of February 16, 2018 the value of 1 Bitcoin equaled $10,779 and the total value of all Bitcoin in existence (@16 million) is now more than 151 billion. Globally, more businesses are starting to accept Bitcoin. Bitcoin can be purchased through online exchanges or specific ATMs and websites have popped up to serve as virtual wallets for tracking, storing and spending Bitcoin. There are even mobile apps that allow you to send Bitcoins the same way you send cash digitally. Bitcoin has created a new digital transaction world and is shaking up the current legacy financial system.
What’s the Flip Side?
A big red flag (or something bright and loud that makes me spook!) is that this new currency is unregulated due to its secrecy. This basically means it attracts the bad guys. Bitcoin is also not backed by a trusted central bank or government. The other crazy thing is that there is no physical money (so no more throwing coins in the water fountain or my water bucket) that gets exchanged; it only exists in the network and so my owner can't get any cash from it.
Future Direction
As a currency, Bitcoin can certainly be used for payments, however given the volatile nature (such as a stallion that enters the ring) of the value of Bitcoin – people are holding onto it since the value has rapidly increased. However, longer term, once adoption grows – we could see it be a more accepted form of payment. If it makes transactions easier, it could have a viable future and your next horse investment could be completed via Bitcoin.
So there you have it – maybe I do know a thing or two about this stuff! But I better tell the humin to do more homework before using it to buy another horse!
Now where is my treat??