Bitcoin price, gold, and nonsense – how not to value bitcoins

Every few days I hear the argument “If x% of the money in gold (or other asset class) moved into bitcoin, a single bitcoin should be worth $y”.  This article explains why this argument is utter nonsense.

The (flawed) reasoning is as follows: the total value of gold in circulation is estimated at US$8 trillion.  If some small fraction of the people holding gold (say, 5%) sold their gold for US Dollars (releasing $400 bn), and the USD proceeds were used to buy bitcoins, the total value of bitcoins (commonly referred to as “market capitalisation”) would increase by that amount of dollars ($400bn), and because we know the total number of bitcoins in circulation, we can derive a price per bitcoin.  Continue reading

A gentle introduction to money

This post aims to explain the various common forms of money that exist today, and the words we use to describe them.

types_of_money

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In a nutshell: Ian Grigg’s Ricardian contracts and digital assets prehistory

In a nutshell: Ian Grigg’s Ricardian contracts and digital assets prehistory

I enjoyed listening to Episode 151 of the podcast “Epicenter” (previously “Epicenter Bitcoin”) featuring Ian Grigg, inventor of Ricardian Contracts and blogger at Financial Cryptography. Here are my notes – part transcription, with some edits. This one is a goldmine and covers many topics: bonds, contracts, cash, Chaumian e-cash, DigiCash, financial cryptography, Ricardian contracts, digital signatures, smart contracts, dispute resolution, Ethereum, triple entry book-keeping, oh my!

Misunderstandings and paraphrasing errors are entirely mine.

This gets fairly technical; if this is hard to follow, it may be helpful to read my introduction to smart contracts first.  Hmm, if it’s still hard to follow, also read about blockchains and bitcoin and Ethereum, and digital tokens.

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The emergence of blockchains as Activity Registers

This post tries to describe two very different uses for blockchain technology: Digital Token Ledgers that record ownership changes of digital tokens, and Activity Registers that record timestamped proofs of existence of data or agreements about data.  Bitcoin is used for both.

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No, “Blockchain” is not a solution looking for a problem

I have heard this comment many times:

“Blockchain” is a solution looking for a problem.

 

That is incorrect – here’s the problem statement, originally articulated in 2008:
Bitcoin whitepaper

The problem statement, to paraphrase, is

“How do people pay each other electronically without being at the behest of Financial Institutions?”

The proposed solution is:

“Bitcoin”

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Interview on Brett King’s Breaking Banks

I was honoured to be invited to Brett King’s Breaking Banks podcast to talk about Bitcoins and blockchains with an Asia angle in the “BITCOIN & BLOCKCHAIN IN ASEAN” episode.

Rob Findlay, CEO and founder of Next Money (formerly Next Bank) hosted the conversation, and Marcus Swanepoel, CEO of BitX also shared his insights.

The full audio episode is here and I recommend subscribing to the podcast if you are in to FinTech.  A transcript of the relevant section is below, edited for clarity:

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Just because it’s on a blockchain it doesn’t mean it’s true

Just because it’s on a blockchain it doesn’t mean it’s true

This short article attempts to explain what people mean when they are talking about blockchains being a “single source of truth”. In classic Chinese Whispers style, the narrative has become confused about what is meant by “truth”.

This is currently relevant to discussions in the insurance industry where blockchain enthusiasts may be eager to promote blockchains as a solution to the problem of verifying if something has happened or not.

Here, I permanently recorded on Bitcoin’s blockchain a non-truth about the world.

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