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Monday, November 18

Cryptocurrency - Bitcoin and Litecoin Explained

There's been a lot of talk lately about cryptocurrencies (most widely discussed are Bitcoin and Litecoin). Unless you're a fan of TOR (The Onion Router), torrents, encryption, Second Life, or MMORPGs (Massively Multiplayer Online Role-Playing Games), you likely don't have a clue what a cryptocurrency actually is. If you've heard of Bitcoin, it was only in passing, and Litecoin is gibberish to you. How could a digital currency have any value if it's not backed by the gold standard? How can a self-policed and unregulated denomination possibly maintain a sustainable economy outside of politics?

Is this the future of currency?

Actually it's the present...and it's been this way for a long time...we were just never told because the people monitoring our economy are the people in power who want to keep their power. They'll continue droning on about the dangers of a currency that's not backed by a gold standard, but the reality of the situation is that both the American and global economies have long veered from the gold standard, although gold itself (along with other precious metals) do still retain value in and of itself. Think of it as you would a stock splitting, except it's not happening to a single stock, but rather the entire global market.

Sustainable Digital Economies...


In order to answer the question of whether or not a sustainable digital economy can exist, all you have to do is examine and compare the economies within each server of World of Warcraft, a popular online game developed by Blizzard (I was a Night Elf Rogue; don't hate). The guys at Blizzard understand how to give items value. In the plain vanilla version of the game (the original game sans add-ons), players gained extremely rare drops and sets by spending every night for weeks to months working their way through ten-man raids. In addition, players could engage in several time-consuming side quests to level skills (lockpicking, herbalism, alchemy, mining, etc.) to produce a wide variety of items. All of this came together in the auction houses, where the players determined the value of each item.

In the WoW auction houses, players bought and sold any items that weren't bound to their account. The structure of the auction houses were the basis of what drove the WoW economy, and, although occasional item values fluctuated, most general-use items remained stable across all ~200 servers. Things got even more interesting once the Alliance and Horde were able to trade between each other in Goblin auction houses, which were located in certain neutral areas. This created interesting dynamics. I was one of many people who scoured all three auction houses in order to make a huge profit with as little effort as possible. In short, I was an investment banker.

Click here for a list of places Bitcoin is accepted...

The WoW economy seems like it doesn't matter much to our real economy, and I'd initially counter that by throwing our global economy in your face. If our global economy is real, it'll hurt a lot more than this rock I'm picking up to throw at your face since it's much larger, right? Size matters not, young Jedi - and in case you're unaware, very real people went through some very real things (and spent very real money) to obtain WoW gold. The only difference between WoW Gold, Bitcoin, and the US Dollar is how much work you have to put into converting it into goods and services relevant to your life (or how creative you have to be).

The Value of Gold and Other Precious Metals...


The shift to digital currencies doesn't devalue gold; in fact, the value will become much more stable. We've never existed on a platinum standard, nor a diamond standard, yet these commodities retain value. Jewelry is still one of the most secure and effective analog ways of transferring money under the radar. Why do you think there are more jewelry thefts than fine art thefts? You can't exactly break a Van Gogh down into its components and expect it to maintain any worth. Many investors still profit off their gold investments, and jewelers are still pumping out amazing creations using diamonds.

Many people still keep precious metals and gemstones as collectibles, and they're stored in bank vaults and secure boxes throughout the world. There will never be a point in time where human beings are no longer impressed by shiny objects or the value of rare items. There's no need to fear the transition away from the gold standard to digital cryptocurrencies - your gold and other precious metals will maintain value. Both currencies can coexist. The only reason governments and corporations want us to maintain their currency is because it's covered in their propaganda. No matter what country you live in, look at your currency - it's stamped with political and religious imagery and messages. Cryptocurrencies are Anonymous...and I'm coining that phrase... ;)

The Mechanics of Bitcoin and Litecoin...


Just like precious metals, Bitcoin and Litecoin are obtained through a process called mining. Instead of sending Tweety Bird with a team of immigrants to mine them, however, CPUs (your computer's brain) and GPUs (you computer's ego) are tended to by data miners. Advanced mining rigs have already been designed to specifically crank out Bitcoin hashes (it's complicated), so there's nothing you can purchase on the consumer market that could produce a Bitcoin in your lifetime. This makes Bitcoin digital gold (G), and, in order to sustain this value, Litecoin popped up to the digital silver (S) throne, and we're still looking to coin a copper standard.

Plenty of global merchants and organizations accept Bitcoin (and Litecoin is quickly gaining popularity), so you're able to use them as a secondary currency, but, until you can pay your rent and utilities, it's not a viable primary currency. In order to start collecting Bitcoin, all you have to do is choose a wallet at bitcoin.org. You can also get a Litecoin wallet. The programs walk you through installation and setup, so I won't waste your time here.

The wallet is basically just a digital encryption signature key that you set up on your computer, and you're assigned a signature code in order to receive money. It's similar to exchanging Wii friend codes if you think this is all a game, or, if you're ready to accept digital currency into your life, it's like your own personal bank routing number. Your send signature is equivalent to your account number.

Why the Backlash Against Mario Coins?


So now that I've brought a little transparency to the idea of cryptocurrencies, I'm going to blow the whistle on why governments and corporations don't want you using it. Pull your money out of your wallet and look at it; it's covered in political and religious ideology. There's a picture of your leader, your flag, and your country's symbology - that kinda stuff can't be engraved on a digital currency. They can't stamp George Washington's face on a Bitcoin, Thomas Jefferson's on a Litecoin, and Obama's mug on whatever the lesser coin ends up being; our leaders hate that they can't advertise in our lives anymore unless we choose to allow them.

If you don't believe cryptocurrency has any value, I'd be more than happy to take any off your hands. You can transfer Bitcoins and Litecoins to my wallet using the below codes:

Bitcoin: 1HY183529xwuAbZ2SXefZz1mkq27QcQLFr

Litecoin: LiMH7XPkYFZuGdXr7t2oge6Wm4ChMBMnuQ

I look forward to taking those fake video game coins off your hands...

Brian Penny is a former analyst at Bank of America turned whistleblower, Anonymous supporter, consultant, and freelance writer.

1 comment:

  1. An enormous round of applause, continue the great work. noteworthy

    ReplyDelete