Category: Cryptocurrency

Gold on the blockchain

INFINIGOLD: Perth Mint Gold Token


Those of the Financial Awakening appreciate two things – the first is GOLD; the second is BLOCKCHAIN. The merging of the two was simply a matter of time. How this merging would take place was all that needed to be determined.

We thought it would have stemmed from the US. New state based precious metal depositories have been built over recent years. We assumed one of the depositories would have then established themselves on a blockchain. Allowing citizens to transact in gold and silver backed tokens, convertible for the metal held in the depository.

We have no doubt that this will still take place. However, it appears that the first institution to take their gold vault to the blockchain may be Australia’s PERTH MINT.

INFINIGOLD has released its Whitepaper 1.1. In collaboration with the Perth Mint they are taking the GoldPass digital certificate to the Ethereum blockchain, as an ERC20 standard token. The token has been aptly named the Perth Mint Gold Token – or PMGT for short.

Each PMGT token is backed by a 1 ounce GoldPass certificate, which is in turn redeemable for 1 ounce of physical gold at the Perth Mint.

Whilst stored physical gold is not allocated to each certificate, the Perth Mint claim that they have the gold available to meet any redemption request. It is also noted that the mint is guaranteed by the state Government of Western Australia – providing addition credit security.

So what do we make of this?


The PMGT is a terrific development for the cryptocurrency industry!

Tokens backed by physical assets will enhance public perception of cryptocurrency generally, as the tokens are now without doubt, a store of value. In time this should encourage more adoption of the tokens as a medium of exchange, outside of the failing fiat systems.

The PMGT could be good investment vehicle for some – just buy and hold. Though if you want to buy and hold gold – wouldn’t it be better to just buy and hold physical? Perhaps.

PMGT will be available for purchase on selected cryptocurrency exchanges for account holders who have satisfied the necessary KYC identification requirements. This in itself will limit early take-up. Once purchased however, these tokens can be moved onto the Ethereum blockchain to be transferred and traded within.

Redemption for physical gold would need to take place back at a selected exchange. This may not deter interest in the tokens though, as many would not be interested in converting anyway. Instead they may be simply looking to peg some of their cryptocurrency wealth to the price of gold – and the PMGT may be an ideal solution.

However, if the desired purpose of the token is everyday trade – forget it. A single transaction on the Ethereum network is costing as much as $US20 at present. The network is being pushed past capacity by the current exploding DeFi demand. The high transaction costs and network limitations will crush any chance of PMGT replacing fiat currency as an exchange medium.

In many ways it is a shame InifiniGold selected the slow and overworked Ethereum network to build their product on. There are so many other options now. In fact, one of our two favourite blockchains, Telos, is already capable of running thousands of transactions per second, with all transactions being feeless.

Furthermore, the Ethereum Virtual Machine (EVM) is built upon Telos, allowing token developers to continue to use their Ethereum style coding, on this profoundly more capable public ledger.

In the end…

the PMGT is certainly a step in the right direction, on the path to Good Money.

You can find more information on the PMGT here.

Have a wonderful weekend all.

GOLDSMITH



Looking for more information on GOLD, try…

And for more information on BLOCKCHAIN, try…

What is DeFi?

happy young couple doing purchase on internet together at home

And is it the hottest ticket in cryptocurrencies?


According to an article by Mr Jeremy Eng-Tuck Cheah, published in The Conversation, on 26 August 2020… it very well could be. Link here.

DeFi stands for Decentralised Finance and according to Mr Cheah, this financial industry has grown from US$2.1 million to US$6.9 billion in the past 3 years.

DeFi refers to and I quote…

… financial services using smart contracts, which are automated enforceable agreements that don’t need intermediaries like a bank or lawyer and use online blockchain technology instead.


happy young couple doing purchase on internet together at home
Photo by Andrea Piacquadio on Pexels.com


DeFi smart contracts began with the Ethereum blockchain network and have now evolved into much, much more – encompassing a wide range of blockchains and decentralised applications (Dapps).

Lending, trading, cross-platform trading, derivatives, currency pegging and hedging are all being done within smart contracts; and, are but some of the use cases.

In a recent announcement by the Telos blockchain – they will be providing the infrastructure to tokenise a EURO 30 million property in Croatia. In partnership with Dapp development platform Katalyo and other stakeholders, they plan on tokenising both the property ownership and the rental revenue income. Another new example of DeFi in action. Article here.



In a YouTube broadcast last week (embed below) we discuss both the above articles and the financial opportunities that continue to arise in the blockchain and cryptocurrency industry.

Enjoy the video and remember the term – DeFi. For you will be hearing it more over the years to come.

GOLDSMITH.




What is Blockchain?

Check out one of our recent blogs on just this topic.



Cryptocurrency Tokenomics

Understanding the economics of the blockchain.


Previously we have discussed the characteristics of Good Money and the reasons that Cryptocurrency could be considered Good Money.

The value of a cryptocurrency is derived from what has been coined, its ‘Tokenomics’. A portmanteau of the words ‘Token’ and ‘Economics’.

The tokenomics of a cryptocurrency consists of a large range of inputs, all of which impact its value in the decentralised market place. Inputs with respect to the characteristics of Good Money include:

  • Number of tokens in existence – Scarcity.
  • Energy inputs into token creation – Difficult to create.
  • Number of users / transaction frequency / future use potential – General Acceptability.
  • Security of chain and code – Indestructibility.
  • Level of annual token inflation – Scarcity.
  • Level of decentralisation – Trustless (level of third party risk).
  • Wallets and associated infrastructure – Portability / General Acceptability.
  • Quality of the development team who are driving the use cases and chain growth – General Acceptability.

For various reasons blockchain will change their tokenomics and in these cases, you, the Financially Awakened – will sit down and work through the changes.

Increasing inflation will place downward pressure on token prices. Burning tokens on the other hand, (permanently removing tokens from circulation), will have the effect of increasing the price of the remaining tokens.

Let’s take a look at a current scenario – the Taurion Burn Sale.



Last night we examined the proposed tokenomics changes for the XAYA blockchain in a Goldsmith Money YouTube review. Embed below.

Whilst it is not possible to put an exact price on a token, now or in the future – it is possible to get an understanding on how different stakeholders will be impacted and the possible directions the token prices might take – ceteris paribus (all other things being equal).

Enjoy the video. And if you feel you would like to discuss the matter of blockchain tokenomicsl or, the XAYA Taurion Burn Sale – please drop a comment below. You can also read more about the Taurion Burn Sale here.

Otherwise, warm up those gaming chairs, because things are about to get rather hectic in the blockchain gaming space. Final testing on Taurion and Soccer Manager Elite is merely days away – and then human mining will begin.

Be well.


GOLDSMITH.



Become your own bank –

from your home PC!


Who says you need to be reliant on the banks?

Since the invention of the Bitcoin, people have had the ability to be their own bank – without the need to rely on any third party.

It’s a giant, trustless, decentralised spreadsheet – and you hold the key. At least you do when you establish a cryptocurrency wallet on your PC or smartphone.

Using your cryptocurrency wallet you may be able exchange goods and services directly with like minded individuals from across the globe – 24 hours a day and 7 days a week.


Introducing – XAYA Electron Gaming Wallet

Electron – for all your XAYA gaming needs

In the latest Goldsmith Money YouTube video (embed below), we take a whimsical look at the XAYA Electron wallet. Fast, stylish and completely decentralised.

And when Electron is running on your PC. you are actually contributing power (hash power) to the operations of this whole new financial ecosystem. All outside of traditional banking infrastructure.



We have a preference for XAYA over most other blockchains because of its specialised blockchain gaming design. You however, can start looking at cryptocurrencies wallets for any blockchain of your choosing. The point we make is – start looking!

The blockchain and cryptocurrency industry is filled with financial opportunities for the Financial Awakened. And your first step into this industry… a digital wallet!

Happy transfers.

GOLDSMITH




Blockchain: It’s just a spreadsheet.

Well it is – and this is what makes it so special.


A group of us were discussing blockchain technology, when one member of our party dropped a bomb into the conversation…

I don’t see what all the fuss is about… blockchain – it’s just a spreadsheet.

Well you could have heard a pin drop. It’s just a spreadsheet! Just a spreadsheet!?

We were dumbfounded. How could our hopes and dreams of a new and liberated financial system be crushed by this simple throwaway line? It was time to do some soul searching.


Photo by Pixabay on Pexels.com

There would be very few in the blockchain space who would refer to this technology as ‘just a spreadsheet’. Regardless though, our friend was correct – blockchain is ‘just a spreadsheet’.

So why are we all so captivated by blockchain and cryptocurrencies; and, why has Bitcoin captured the imagination of libertarians the world over? Then the answer occurred to me – ‘It’s a spreadsheet’.

Though to truly understand this answer – I need to first understand the enormous importance of the spreadsheet’

The marvellous spreadsheet

“Whatever you think of the spreadsheet, don’t dismiss it as trivial.”

— Mike James, “Spreadsheets are special

A spreadsheet is simple and functional in design – horizontal rows crossing vertical columns and where the two meet, a single cell is born. Beautiful! And into the newly born cell the author may attribute anything they like. A person, a place, an asset, a liability, a balance.

Spreadsheets have not always looked the way that do now, spanning the width and height of a computer monitor. No – before Microsoft Excel there was IBM’s Lotus. Before Lotus there were paper spreadsheets, often referred to as worksheets or accounting worksheets.

Worksheets themselves have been used for many hundreds of years. It is known that in 1494, the first book about double-entry transaction recording was published by Luca Pacioli – and this gave birth to what we now call Accounting. Pacioli did not invent ‘Accounting’ as such, he merely detailed the manner in which the merchants of Venice would record their business transactions on worksheets, these pages combined into journals.

Prior to this there have been records uncovered of transactions inscribed on ancient timber, stone and clay tablets recording inventories, barter trades, assets and liabilities – again early forms of spreadsheets.

So the spreadsheet has been around for a very, very long time. Over this time it has served mankind very well. These spreadsheets were records of financial transactions and asset ownership. They enabled free market trade to flourish.

There was one proviso in all of this however – you had to TRUST the person who administered the spreadsheet. And many a war, both internal and external, has been fought for the right to administer the spreadsheet. Whilst currency wars are outside the scope of this blog post – know that those who control the spreadsheets, control the economy.


The days of stone tablets and accounting worksheet are long gone. Banks, Central Banks, Exchanges and Governments around the world maintain massive computerised spreadsheets, journals and ledgers, which record asset ownership, liabilities and transactions.

However, spreadsheets are not just being used for currency control. The combination of spreadsheets affects every aspect of our life now – business management tools, logistics, manufacturing, supply chain distribution, engineering, client management systems, social media and basically all computer based software. At the heart of all computer software – is a spreadsheet.

A computer based game – again, at its heart is a spreadsheet. Recording moves, points accrued, levels gained; plus, setting the rules of the game, along with running the algorithms which control the artificial opponents.

Computerised information databases – again at their core – a spreadsheet.

So… ‘just a spreadsheet!’ There is no ‘just a spreadsheet.’


Spreadsheets are everywhere. Spreadsheets are in nearly every modern technology. Spreadsheets are ‘spectacular!’

Regardless however of how important spreadsheets are, both historically and at present – the issue of TRUST remains.

Until now – ownership and control of spreadsheets has be centralised. One entity would own and administer the spreadsheet and could do with it as they pleased (at least as far as laws would permit). Create new assets. Create new liabilities. Transact on accounts. Create new currency, diluting the value of the old.

Then along came blockchain. Beautiful decentralised spreadsheets capable of doing everything a centralised spreadsheet can do. Yet running on servers around the world, simultaneously. Allowing for worldwide collaboration, new financial markets and new economies, with no single point of failure. Trustless. Instantaneous. International. Belonging to no one and yet… belonging to everyone.

Blockchains are not just spreadsheets – they are amazing spreadsheets. Journals and ledgers born out of cryptography, the internet and an untamable human spirit.

Blockchains are not just spreadsheets – they represent liberty and freedom. Well… they might one day. Watch this space.

GOLDSMITH


References

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2320658

https://www.i-programmer.info/professional-programmer/i-programmer/1452-spreadsheets-are-special.html

Taurion Teaser Trailer

A complete cinematic experience


The financial world is quickly awakening to blockchain gaming. More specifically, the roles that these decentralised, trustless and provably fair virtual economies will play in relation to our entertainment, social interaction, recreation and trade in the near future.

There is one blockchain however which is really setting the benchmark with respect to this new gaming phenomenon – a relatively unknown blockchain called XAYA.

Now it should be mentioned that Goldsmith Money did in fact stumble upon the XAYA team a few years back and we were suitably impressed. We did decide to invest monies accordingly, so we are not exactly unbiased in our assessment. Regardless, we were thrilled with the much anticipated Taurion Teaser Trailer, released less than 48 hours ago.


Many of us have been watching this true blockchain game develop over the past 18 months, bearing witness to an evolution. The new teaser trailer however, takes this association to a whole new level.

Through the trailer we are first introduced to this dangerous and arid planet via a view from space. From here the trailer pans into the vast, windswept dunes and razor sharp rocky outcrops.

Next comes an introduction to a solitary scout vehicle belonging to the Reubo House, one of three civilizations of Earth descendants, looking to establish themselves upon this harsh, yet plentiful world.

Shortly thereafter – the battle charge begins. Houses Ethrati and Jodon launch a simultaneous attack upon a Reubo outpost and the result is devastating.

In this 1 minute 30 second cinematic trailer, the XAYA team have managed to capture the full essence of Taurion – hostile and urgent; voilent yet rewarding; dangerous yet plentiful. The rewards for those who survive could be huge! If you survive that is.

Goldsmith Money has prepared a review of Taurion Teaser Trailer, included here for your viewing pleasure. Keep in mind however, the trailer itself may not be suitable for young children.

Congratulations to the XAYA team for bringing the planet Taurion to life in such a dramatic manner.

The next Taurion beta test begins in July and this is open to all, with prizes to be won. You should visit the taurion.io and xaya.io websites for further details.

GOLDSMITH


Taurion Teaser Trailer – Review

Games, Crypto and Lockdown

An Epic Combination!


According to CNBC, video game sales are soaring. They stated:

Sales of the latest video games have smashed records as millions are stuck at home after governments around the world locked down entire cities and pushed for social distancing measures to stop the coronavirus from spreading.

One example cited was Activision Blizzard’s free-to-play, Call of Duty: Warzone, which launched on 10 March. Within just 10 days it had attracted 30 million players.

It certainly makes sense that more and more good global citizens would be entertaining themselves through online gaming, as they abide by their coronavirus lockdown regulations. What however, if we could take it one step further…

What if we could earn tradable cryptocurrencies as we play?

This idea is certainly not new. In Ernest Cline‘s novel and Steven Spielberg blockbuster film ‘Ready Player One’, the citizens of Earth spend most of their days gaming within a virtual utopia known as the Oasis. Within the Oasis participants were able to earn Oasis Credits, which also serve the function of a reliable and stable real-world currency.

Ready Player One Movie Review Roundup: Another Spielberg Classic?
Ready Player One

In previous Goldsmith Money posts we discussed the evolution of blockchain technology and the advancements in functionality that were being made. One part of this evolution is the integration of games onto blockchains.

By integrating games onto blockchain, developers are able to allow their customers to communicate, trade and transact both within a game and with other games, via a secure, trustless and decentralised gaming ecosystem. And in light of the coronavirus lockdown, the environment and timing for such an ecosystem, may be perfect.


When it comes to technology, nothing seems to happen in a hurry. Regardless, progress in the blockchain gaming industry is slowly being made.

A little known game called Angry Warlord, is now available on Google Play. This Android App Game is actually built upon the Telos blockchain – Telos being a decentralised, 3rd generation EOSIO blockchain.

Having been described as a casual and fun, platform style game, Angry Warlord, from developer Gems Lab, is merging blockchain and gaming and taking it to a massive worldwide mobile audience.

A possible attraction for this game is the ability for players to earn Gems, the game’s native cryptocurrency. These Gems are then able to be traded on the Telos blockchain for other cryptocurrencies and potentially local fiat currencies.

Angry Warlord is just the beginning though.

The team behind the popular Soccer Manager games are looking to take Soccer Manager to the blockchain with their new game Soccer Manager Elite(SME).

To be built upon the specialist XAYA gaming blockchain, SME will seek to take the popular sports management gaming genre to a whole new level, as it attempts to monetise an entire virtual soccer competition.

Soccer Manager Elite

SME beta testing is to commence soon – the team at Goldsmith Money are quietly hoping to be part of this.

To also be built upon the XAYA blockchain and now in the final stages of development testing is Taurion.

Taurion purports to be a fully-decentralised, massive multiplayer online role playing game (MMORPG), equipped for communication, trade and human cryptocurrency mining.

Set on it’s own virtual planet, with a backstory spanning multiple galaxies – Taurion includes everything from warring resource hungry factions to all manner exploration and mining, craft and trade, diplomacy and combat, heroes, ancient artifacts, buildings and vehicles, taxes and even in-game advertising billboards (just like the Oasis).

Taurion surely has the potential to keep gamers the world over, working feverishly for many years, to build, conquer and maintain their epic virtual empires.



These are but a few of what is likely to be a huge new trend of decentralised, blockchain based games promising to both entertain and financially reward users.

So coronavirus lockdown or otherwise, the time has never been better to feel like a kid once more – and get gaming!

GOLDSMITH


References:

CNBC
https://www.cnbc.com/2020/04/03/video-games-sales-soar-as-coronavirus-leaves-millions-trapped-at-home.html

Angry Warlords
https://medium.com/telos-foundation/mainstream-crypto-gaming-is-finally-here-with-angry-warlord-on-telos-53db866b56ac

Soccer Manager Elite
https://soccermanagerelite.com/

Taurion
https://taurion.io/

XAYA
https://xaya.io/


Good Money and Cryptocurrency

Could cryptocurrency be considered ‘good money’?


In our previous two posts on the topic of cryptocurrency, we learned what blockchain and cryptocurrency is and briefly examined the technological leaps it had made over the past decade.

In this post we shift our focus back to GOOD MONEY, by asking the question – does cryptocurrency really cover all the criteria necessary to be considered ‘good’ money?


Photo by Worldspectrum on Pexels.com

Let’s revisit the criteria – one at a time.

  1. A Store of Value

    This is the most contentiously argued point in regard to cryptocurrency being considered ‘good money’. 

    Some argue there is simply no store of value for a unit of cryptocurrency whatsoever, and its price is merely a result of speculation. I do not accept this premise.

    There is an inherent value in the computing infrastructure which runs the individual blockchains. There is value derived from the skills, efforts and energies of those actively maintaining and developing the capabilities of these cryptocurrency networks and platforms.

    There is value being created by those developing the applications to tap into these blockchains.

    There is ultimately value being derived from the use and adoption.

    I will accept the argument that if the internet fails and the world stops producing electricity, and as such cryptocurrencies have no value. However, the likelihood of this happening in our modern world is so extremely minute – it is a poor argument. Besides, if for some reason we lost the internet or our ability to produce electricity on a global scale – we would have much bigger problems to worry about than how we access our cryptocurrency tokens.

    Finally, it is argued that the creation of new tokens at a rate in excess of the growth of the participation in that particular blockchain will be value destructive, similar to the destruction in the value of the dollar. However, unlike dollars,  blockchain currency expansion can be easily monitored and the market is able to adjust prices accordingly.

    So I would argue, YES, cryptocurrency can be a store of value. Especially those cryptocurrencies which end up being highly utilised and responsibly governed.
  2. Scarce and difficult to create

    Within an individual cryptocurrency network, all tokens can be seen and are only ever created as per the rules of that blockchain.  The rules of an individual blockchain can be altered. However, this is transparent for all involved and therefore the market can reprice tokens based on the changes.

    In cryptocurrency, inflation is measured in its true sense – as the expansion of the token supply.  So unlike dollars, where nobody knows how many dollars are actually in circulation – cryptocurrencies are very much a known quantity and inflation can be measured with 100% accuracy.

    It is true that new cryptocurrency blockchains can be created quite easily. Creation of a new cryptocurrency though is akin to the creation of a new monetary system, not inflation of the current. There is no guarantee that this new monetary system will be adopted though and  new cryptocurrencies do act as competition for the existing. Which is not a bad thing in that it is keeping the blockchain engineers and application developers busy constructing bigger and better financial ecosystems.
  3. Generally acceptable.

    Cryptocurrencies such as Bitcoin are growing in acceptance.  It is believed that over 20 million people worldwide are using Bitcoin and other currencies on a regular basis.  More and more desktop and mobile wallet applications are being developed to facilitate quick and easy trade. 

    Some countries are considered to be very friendly toward cryptocurrency based trade and business development. Some of these countries include: Malta; Switzerland; Singapore; Honk Kong; Japan Belarus; and, Estonia.

    We have had indications out of Russia and China that they are working on their own national cryptocurrencies, which in itself would compel acceptance.

    There has been speculation that Chinese and Russian cryptocurrency tokens might be backed by their national gold reserves – which would resolve any question around ‘Store of Value’. 

    The concept of a gold backed cryptocurrency would freely encourage mass adoption, quickly becoming an accepted and desirable medium of exchange. It is for this reason that I do not speculate in Bitcoin. A gold backed cryptocurrency, where say a single cryptocurrency token could be exchanged for a gram of gold, might end Bitcoin’s appeal very quickly.
  1. Trustless

    A decentralised cryptocurrency such as Bitcoin has no single point of failure as it is run on computers all over the world simultaneously.

    Furthermore, a Bitcoin held on the Bitcoin blockchain belongs only to the one who holds the private key to the account. Meaning the Bitcoin is not the liability of a bank or other third party. As such, we should consider cryptocurrency to be trustless.
  2. Durable and indestructible

    As mentioned previously, Bitcoin is the most powerful decentralised computer network on the planet.  It would be virtually impossible for a hacker, company or government to bring down the network. This makes Bitcoin virtually indestructible. There is no reason that other blockchains will not be constructed with similar or even enhanced durability and indestructibility features.
  3. Portable

    Accessing your cryptocurrency can be as easy as carrying around a unique 50 digit password in your pocket. This password can be easily carried anywhere in the world.

    To access the cryptocurrency you simply need a PC or mobile phone wallet. Establishing a wallet is now as easy as downloading a free Android or App Store app.  Try setting up a bank account this quickly.
  4. Divisible

    Yes! Generally speaking a cryptocurrency can be divided up into smaller units – often utilising between 4-6 decimal places.
  5. Homogenous and fungible

    Yes! Every Bitcoin is the same as every other Bitcoin on that blockchain. Other blockchains are similar in that their native tokens are identical.

It is clear that ‘cryptocurrency’ may have all the characteristics of ‘good money’, yet as established previously, ‘fiat currencies‘ do not. For this very reason it is possible that those in government, banking and finance will attempt to regulate cryptocurrency and/or discredit it.  Afterall, if you were allowed to print all the currency you wanted to – wouldn’t you try to put a stop to a competing system, which does not? 

Regardless, the world of blockchain is here to stay and the disruption to the established monetary and banking systems will be total.

Instantaneous and free international transactions will be available on trustless and infallible payment systems.

Public blockchains, private blockchains and national blockchains are all possibilities. Blockchains with physical backing of precious metals and other commodities and resources are likely to emerge.

The winners and losers with regard to blockchain is the unknown. However, over the next 10 years expect that the complete replacement of current systems will take place. And for the Financial Awakened – there will be a smorgasbord of opportunities.

In coming posts we will look at some of the opportunities which have already begun to arise. Please be sure to subscribe.

GOLDSMITH


Innovation through cryptocurrencies

Bitcoin and the blockchain – an introduction


Previously I mentioned that there may soon be a new medium of exchange which could one day be a ‘good’ form of money.  This money is what is has been named ‘cryptocurrency’ – a result of combining the internet, cryptography and currency. No doubt the first cryptocurrency to spring everyone’s mind is of course is – Bitcoin.


Photo by Pixabay on Pexels.com

Bitcoin (launched 2009) was the first cryptocurrency, built upon a decentralised blockchain. In essence, a ‘blockchain’ is simply a ‘spreadsheet’.  However, unlike a spreadsheet which is open and running on a single computer, this spreadsheet is run on computers all over the world – simultaneously, with no single point of failure.

Each Bitcoin (or part thereof) represents a unit of currency on the spreadsheet and each Bitcoin account represents a cell.

Only those who hold the password (private key) to an account are able to transfer Bitcoin from this account to others. This means that so long as an account owner keeps their private key safe, their Bitcoin will not leave their account. However, others may send Bitcoin to the first owner’s account if they know the account address (the public key).

Blockchain can be trustless, to the extent that responsibility for operating and maintaining the blockchain can be spread across multiple third parties, across multiple jurisdictions and can be kept outside the boundaries of any one government, regulator or bank.

Transactions are near instantaneous, are borderless and permanent. Compare this to the transfer of monies to foreign bank accounts which can take many days to complete the transactions. Bitcoin and other cryptocurrencies make transfers happen in minutes and with some, mere seconds.

Once a transaction has been made, it becomes forever written upon a single block within the blockchain. Each block is compressed, encrypted and verified by the miners or block producers. The ending ‘hash’ of one block then becomes the ‘header’ of the next, thereby forming the chain.  And the more blocks in the chain, the more difficult it becomes to alter earlier transactions.

Bitcoin itself is now the most powerful computer network on Earth and it is virtually impossible for any one organisation to hack and fraudulently alter transactions.


We are still in the very early stages of cryptocurrency, however blockchains are evolving rapidly. Bitcoin itself, whilst the most commonly used blockchain is only capable of a maximum 10-12 transactions per second. This is nowhere near quick enough to be a mainstream transaction platform – at least not in its current state. Visa for instance, processes thousands of transactions a second.

In addition to transaction limitations, Bitcoin also requires enormous quantities of electricity to maintain the blockchain.  The servers (called ‘miners’) which are running the Bitcoin blockchain, are said to be collectively using enough electricity to power a small country. Unless Bitcoin can overcome this inefficiency, its future again looks limited.

As I have said in the opening – Bitcoin was just the very beginning of blockchain and cryptocurrency – the 1st generation. The technological advancement of blockchain over the past 5 years though has been remarkable.

In upcoming posts we will discuss 2nd and 3rd generation blockchain technology. We will also examine cryptocurrency with respect to the 8 characteristics of ‘good money’. All part of your…

Financial Awakening!

GOLDSMITH