Two international experts on cryptocurrency are hosting a seminar in Perth tomorrow night.
Alex Bradford and Dr. Garrick Hileman, from San Franscisco and Cambridge respectively, are the founders of Mosaic, a interactive platform that is set to become the main app for the gateway to the world of cryptocurrency.
The platform allows people to discuss ideas with like-minded followers whilst also managing their own portfolios through the Mosaic meta-exchange.
Crypto, a 21st century phenomenon that has produced digital currencies such at Bitcoin and Ethereum, has sent the world into a spin in recent years.
But how many people actually know what cryptocurrency is, and how it works?
I need someone to explain crypto currency to me. But I need you to explain it like you’re talking to a 4 year old child.
— Madi Horner (@madihorner) April 11, 2018
CRYPTOCURRENCY FOR DUMMIES
Curtin University’s Head of Accounting, Professor Sauvar Dutti, describes cryptocurrency as an unregulated form of money that is accessed online.
“True currency is a legal tender that the government issues,” he says.
“Cryptocurrency is a currency that is generated by public domain without the government backing.”
I hope Bitcoin is like Snapchat in that people stop talking about it before I have to learn what it is.
— Josh Gondelman (@joshgondelman) December 13, 2017
HOW DOES IT WORK?
Cryptocurrency operates through the channel of ‘blockchain’, a ledger that records each transaction ever made and is accessible to the public.
The identities of parties involved in a transaction are suppressed, with names written as address codes instead.
“Blockchain is the technology of the infrastructure that operates cryptocurrency,” Professor Dutti says.
“It allows independent third parties to record transactions and computers all around the world have records of the transactions.”
if i had a bitcoin for every time someone tried to explain bitcoins to me I’d have a lot of bitcoins and no idea what to do with them
— spüke (@adrianjxmes) December 8, 2017
IS IT TAXABLE?
Cryptocurrencies are not regulated by governments and, therefore, cannot be taxed.
Professor Dutti says governments are not alone in their opposition to currencies such as Bitcoin.
“Bitcoin is actually a threat to the banking industry because, right now, if you do a transaction the bank gets the commission,” he says.
“With Bitcoin, the bank doesn’t get the commission and hence, they are not the most willing supporters.
“However, if I’m selling a house, I can say to a possible Bitcoin owner ‘instead of giving me the down-payment in cash, give me the down-payment in Bitcoin’ in lieu of cash.”
WHY USE BITCOIN?
Chris Edwards, a professional online poker player and cryptocurrency analyst, initially invested in Bitcoin in 2014 following a recommendation from fellow poker players.
The cost of one bitcoin was $700 USD at the time and has since soared as high as $18,000 USD before returning to a current price of $7,000 USD.
Mr Edwards is now an avid advocate of cryptocurrency and is adamant it’s the way of the future.
“It’s almost the world’s answer to how bad the current state of Government taxation is and how money can be printed whenever the Government wants, which then puts them into more debt,” he says.
“The banks are worried because it’s a far better monetary system as you can send Bitcoin to whoever you want, whenever you want.
“It’s a bit absurd that in today’s age you can’t send people money on the weekend, you can’t go into a bank after 4pm and you also have to wait two business days for a transaction to clear through.
“Whereas cryptocurrency is instant and the fees are almost nothing.”
Professor Dutti says cryptocurrency can be especially useful to store value in unstable economies such as Latin America or South-East Asia.
“In an economy where the currency is getting devalued or there is high inflation, the purchasing power of money goes down after time and wealth is actually declining,” he explains
“Rather than keeping money in the local currency, you’d be better off keeping money in Bitcoin because it preserves its value.”
HOW DO YOU ACCESS IT?
Cryptocurrency is accessible world-wide as long as you have a computer, internet connection and are able to search on google.
Bitcoin operates by having a folder saved to the computer the account is created on and, unless extracted to an external device, it can only be accessed on that particular hard drive.
This can cause significant issues as a person’s Bitcoin would be lost as a result of a computer or hard drive crash.
Mr Edwards says there are ways to ensure your Bitcoin investments are secure.
“I originally printed my Bitcoins off to something called a ‘paper wallet’ so they weren’t actually on my computer at all,” he says.
“But now I’ve got a more secure hardware wallet called ‘Ledger Nano’ which you have to physically press a button in the location to access it so people can’t hack you.”
— Ledger (@LedgerHQ) July 24, 2016
WHY DO THE PRICES CHANGE SO MUCH?
Much has been made of the volatile nature of the Bitcoin market, with the price of a single Bitcoin rising $10,000 and then dropping $10,000 in the space of three months.
Professor Dutti says the market is driven purely by supply and demand.
“The initial part of volatility is, since it’s a relatively new thing, there are a lot of traders going into speculation,” he says.
“They are doing it from an investment or speculation standpoint by trying to make a quick buck on small fluctuations.”
WHAT IS THE FUTURE OF BITCOIN?
With the stability of Bitcoin dividing opinions around the world, Mr Edwards believes it is too early to know what the future holds.
“Any opinion is viable at the moment but no one has any idea what this thing is worth,” he says.
“It could be worth $1 million in 20 years but it could also be worth zero.
“It’s not like a stock, per say, because it is ‘decentralised’.
“There are no humans or companies that own this and it is all based off a mathematical model that works through algorithms.
“It’s like the internet.”
Mosaic will be holding its event at Tank Stream Labs on Mounts Bay road from 5.30pm tomorrow (April 13th 2018).