In the Eyes of the Beholder ?

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 :

https://www.coindesk.com/information/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 / Cézanne /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

www.hemenparekh.in / blogs

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