My neighbor is a congenital idiot -- a nitwit, a dunce, a complete clot. When God called us forth for brains he came in sixth or seventh. He bought GameStop at $400 because a kid on the Internet told him to: he built a bunker to survive Y2K; he donated to Trump’s Save America election legal fund. Nevertheless, he told me the other day he had made several million dollars buying something called Bitcoin. What is this Bitcoin and is it so lucrative a guy like my neighbor, who is one small step away from extinction, can make that much money owning it?
Bitcoin is the leading example of what is known as a “cryptocurrency,” a word that combines ”currency,” meaning money, with “crypto,” meaning secret, as well as the name of Superman’s dog. And that’s what Bitcoin is – a secret currency that very few understand and that, thanks to this compelling virtue, gains in value every day. Let’s answer your questions about it!
So is Bitcoin a piece of paper, or perhaps a coin, as its name suggests?
No. Ordinarily, “currency” is a piece of paper. A government takes a piece of paper, prints some words on it along with a picture of a dead white guy, and presto, it’s worth twenty or fifty or a hundred bucks, depending on the Caucasian in question. But Bitcoin is different – instead of a piece of paper, it consists of 64 hexadecimal characters that are kept in a cloud, or written down on a Post-it note, or kept in a hard drive you throw out one day and then hysterically search for in a landfill when it’s worth more than the GDP of Burundi.
What is a hexadecimal character?
“Hexadecimal” comes from the Latin word “decimal," meaning “point,” and “hexa,” meaning cursed. It replaces the conventional counting to ten with counting to sixteen, a tradition that goes back to enforcement of the Mann Act. It was invented by relatively-unknown mathematician Edward Spiderhands. When written out in notation, It includes the numbers from zero to nine and most of the treble clef.
How does Bitcoin differ from “ordinary” money?
“Ordinary” money is printed by the “government,” whoever they are. Bitcoin, in contrast, was first proposed in a “white paper” released under an MIT “public license” in 2008 by Satoshi Nakamoto, or a person who claimed to be named Satoshi Nakamoto, and is therefore far more trustworthy. The government, after such notable failures as the moon landing, monoclonal antibodies, the Interstate Highway System, the integrated circuit and Internet, the coronavirus vaccine, and Tang is hardly in a position to ask to be trusted with something as volatile as the money supply. Every time the government prints its name and the words “Twenty Dollars” on a piece of paper, it makes twenty dollars in profit. As many economists – a word derived from the Greek word “econo,” meaning “cheap,” and “mist,” meaning “fog” – will tell you, this leads government to print too much money, which is why we experiencing crushing hyperinflation today. Moreover, as Bitcoin proponents point out, any government can at any time declare its notes no longer valid and require people to exchange them for new ones at the bank, which actually happened in India a few years ago. To some, this is a clear warning that governments cannot be trusted. To others, it is a clear warning not to live in India.
If governments don’t create Bitcoin, then who does?
Instead of being printed by the oppressive hand of government, Bitcoin is created by thousands of computer weenies who could not find the treasure buried in the Rockies by eccentric millionaire Forrest Fenn several years ago. They are called “miners,” under a plan created over a decade ago by Satoshi Nakamoto, or a person calling herself Satoshi Nakamoto, or a group of people calling themselves Satoshi Nakamoto, and is therefore much safer and reliable. “Mining” a Bitcoin does not mean “mining” in the conventional sense of toxic groundwater, pneumoconiosis, and militant trade unionism. Instead, every so often, new Bitcoins are created by an algorithm even smarter than Alan Greenspan but without his mistaken opinions about deficits and mortgage regulation. These self-appointed “miners” attempt to “find” the new Bitcoins in exchange for a reward. They do that by guessing the 64 hexadecimal characters in these new Bitcoins. If they guess them without exceeding any of the values of each of the 64 characters, they earn a Bitcoin reward and the Bitcoin is put into circulation. If they do go over any of the 64 characters’ actual values, they do not earn a Bitcoin reward, and do not win the dinette set, Spiegel catalogue prizes, or a hug from Drew Carey on The Price Is Right.
This sounds incredibly easy, as if the government was giving out twenty-dollar bills to anyone who can guess how much they’re worth, or as that’s called nowadays, “monetary policy.” But there are over 16 trillion combinations of those 64 characters, so “mining” them requires a supercomputer, a great deal of patience, and the ability to pay an electric bill larger than the GDP of Burundi.
How many Bitcoins are there?
There are now 18.6 million Bitcoins in existence, although about twenty percent of them are thought to be “zombie” Bitcoins, meaning they’ve been lost or otherwise unavailable to the people who once owned them. Two people have reportedly lost 70 million Bitcoins each, which is understandable, since people are always losing their car keys, their passwords, or a thumb drive worth 400 million dollars. If Bitcoin were cash money and had the same “loss” rate, there would be about 1.7 trillion in bills, coins, or checking that disappeared between sofa cushions, in pants sent to the dry cleaner, or under the seat of your car when you intended to have them available for parking meters or tolls, demonstrating the greater security Bitcoins offer.
In his MIT “public license” white paper 2008, Satoshi Nakamoto, or a K-pop band named Satoshi Nakamoto, or the talking dog living next door to Satoshi Nakamoto, decided there would be no more than 21 million Bitcoins, a number that captured “the perfect spirituality of three times seven, particularly in Atlantic City,” times a million, a number that captured “a lot.”
Can I use Bitcoin to buy things the way I would use money?
An enthusiastic “yes!” You can donate to Wikipedia, pay your AT&T mobile bill, make purchases on Overstock, or, thanks to the visionary Elon Musk, you can buy a Tesla automobile or a SpaceX Starship that explodes into a fireball after crashing. In Venezuela, where people don’t trust the money in their pocket or the government that created it or each other, you can buy a Burger King Whopper with Bitcoin, and then use it to pay for bail, if offered, after the kid behind the counter fingers you to the secret police for evading currency controls. Of course, with Bitcoin now worth $56,476.76 – give or take a few months’ pay – a Burger King Whopper that costs $4.19 can be purchased for 74.19 millionths of a Bitcoin. The good news is a millionth of a Bitcoin has a name – it is called a “Satoshi,” to honor Satoshi Nakamoto, the name chosen by a guy named Irving Finkelstein when he first thought up to Bitcoin idea over a decade ago in a retirement community in Naples, Florida.
Can my Bitcoins be stolen?
Anything can be stolen – a glance, a kiss, your virtue, or a German Christmas fruit bread. But Bitcoins are very hard to steal. That’s because every one of Bitcoin’s thousands of “miners” has on their computer a record of every Bitcoin transaction that was ever made. This technology is called “blockchain,” as in “blockhead,” “blockbuster,” or “arterial blockage.” To steal a Bitcoin, you’d have to hack the majority of the computers that use Bitcoin, which would be incredibly difficult unless you’re a teenager in St. Petersburg, a member of the North Korean military, or a 400 pound guy lying in bed in New Jersey who’s tired of reading John Podesta’s e-mails. When you use a Bitcoin, all of the computers in Bitcoin’s brain-like network ratify the validity of the Bitcoin – or the Satoshi – being used in the transaction, as if a panel of ten thousand Orthodox rabbis were certifying whether a particular cow was kosher.
Given its secrecy and anonymity, isn’t Bitcoin just a plaything for gangsters, criminals, and social reprobates?
No. It is also used or sold by such upstanding citizens as Amazon’s game platform Twitch, the Libertarian Party, the Robinhood brokerage, and Elon Musk.
Why is Bitcoin appreciating so rapidly?
Sometimes a company’s stock price appreciates because it has invented a microbe that consumes carbon in the atmosphere, or finds a way to put two razor blades on one razor. The price of Bitcoin appreciates, in contrast, because most people think they are smarter than everyone else and will sell their Bitcoin to the people like my neighbor when the time comes.
Proponents offer various reasons for the increase. Some note the number of Bitcoins will not keep up with the economy’s growth, a trait Bitcoin shares with bellbottoms and episodes of The Gilmore Girls. Others point to big companies (Apple) and financial institutions (Goldman Sachs and J. P. Morgan) announcing their intent to hold Bitcoins, which means Bitcoin has a bright future, and these entities have way too much money. Sure, Bitcoin (or son of Bitcoin) could become the way big banks, companies, and rich folks move money around the world, but it it did, would central banks like the Fed restrict or replace them? Like they say, you can't trust government.
So – bottom line – do you recommend buying Bitcoin?
What do you want here, the meaning of life? How should I know? “Everybody” says Bitcoin, once worth $3,000 only three years ago and now worth around $56,000, is a sure thing for $100,000 on its way to $500,000. And if “everybody” says it, how could they be wrong?
One day, you may use Bitcoin to tip the waiter, put in the church collection basket, and flip before a football game, and everybody will have at least a few Satoshis in their portfolio, a name taken from the penname used by a staff writer for Mr. Robot on a treatment for a dystopian science fiction television series starring Rami Malek and BD Wong, which ended up published as a “white paper” under an MIT “public license” in 2008.
Kommentare