How to get into the box and take money

How Bitcoins workBitcoin is a digital currency that can be used like cash to pay for a growing number of goods and services. When someone uses Bitcoin to, for example, buy a pizza, that transaction is recorded on a “block,” or a file of data. Once a block is full (determined by time — on average every 10 minutes — rather than quantity), the next block to be created incorporates computer code that refers to the preceding block — thereby building a permanent string of records known as the blockchain. This is the technology that serves as the backbone of Bitcoin, which will be truly revolutionary. To begin using the cryptocurrency bitcoin, users must first download a free virtual wallet, which is an encrypted computer file used to store bitcoins. This wallet can be stored anywhere a typical computer file can be stored, and users can have multiple wallets, just like having multiple banking accounts. One of the key differences is that all wallets are publicly observable, though the owner’s identity remains hidden. You can think of the wallet as like looking into to a glass post office box. Anyone can see what is in there, but they don’t know who it belongs to and cannot access it without a key. Only the owner has the key to get into the box and take money out.David Andolfatto, a vice president and economist with the St. Louis Federal Reserve Bank compared the potential for losing access to the wallet to carrying cash in a physical wallet. Losing the key to opening the wallet or losing the wallet itself (for example, storing it on a USB drive and losing the drive) means no longer having access to that account, which is a serious concern for people with wallets containing large sums in bitcoins. He said, “What if you lost your USB drive? What would you do? If the security key was in there with the USB drive, the person who found it could use your wallet and spend it. If the security key wasn’t there … that money is gone. It will never be used.”Andolfatto explained that one way of guarding against this risk is to use an intermediary to store bitcoins, similar to how people who don’t want to carry large amounts of cash store their money in banks. SWOT Analysis of Bitcoin StrengthsInstantaneous transactions around the world at any given timeCompletely decentralized, meaning there is no central authority figure in bitcoinPayments in Bitcoin can be made and finalized without one’s personal information being tied to the transactions. With the blockchain technology, all finalized transactions are available for everyone to see and verify, however personal information is hidden.WeaknessesPeople need to be educated about Bitcoin to be able to apply it to their lives. Businesses are accepting bitcoins because of the advantages, but the list is relatively small compared to physical currencies. The bitcoin network currently uses more energy than New Zealand (42.1 terawatt-hours)OpportunitiesLarge companies such as amazon, may begin to accept btc as a form of paymentLamborghini dealership accepting bitcoinBitcoin price has risen 1222% in the past 12 months (2017-2018)ThreatsValuation of bitcoin to be a “bubble”Bitcoin has volatility mainly due to the fact that there is a limited amount of coins and the demand for them increases/decreases by each passing day.TransactionsThe experience of using bitcoins to buy something is no different from typical online banking. However, the processing of payments is handled quite differently. Volunteers called “miners” review individual transactions and approve or decline them. Once approved, transactions are added to a public ledger called the blockchain. This blockchain contains the historical record of all bitcoin transactions in the currency’s history. The blockchain does not, however, contain the identities of the transactors or a record of the items being purchased or sold. Only shows the amount in bitcoins that have been transferred from a specific wallet to another specific wallet.The future of replacing cash with coinMost experts agree that the current cryptocurrency is not sufficiently subject to government oversight to continue indefinitely in its present form or to replace fiat (government backed) currency. However, the concept of digital currency, validated by complicated digital algorithms that render it virtually impossible to counterfeit, does have appeal for many world governments. Better yet, due to the decentralized nature of digital currencies, there is no significant upfront cost for a government to switch to digital currencies. Similarly, there is no ongoing expense to maintain the currency.  Physical money requires constant printing and monitoring for worn bills and coins and counterfeits. Thus, the digital currency of the possible future is much more financially and environmentally friendly.Still, predictions that digital currency will completely replace printed money within the decade may be a bit ambitious. Although digital currency is slowly growing in popularity, despite all of its various problems, there remains a certain psychological security in a currency held in one’s hand. Moreover, fears of hacking, viruses, and other attacks on the entire financial foundation of a nation via purely digital means will likely make most nations slow to adopt such a form of currency.But, the influence of Bitcoin is undeniable. While it may not replace physical currency entirely, it could easily lead the way for an interesting hybrid arrangement where printed currency coexists peacefully with physical currency. Steeple Analysis of BitcoinSocialTechnologicalEconomicEnvironmentalPoliticalLegalEthicalAlthough, bitcoin is beneficial in the way that anybody is free to use it anonymously, one of the larger problems with cryptocurrency is that it’s not quite fully understood by the general public yet.The blockchain technology utilized by bitcoin is absolutely revolutionary in the technological industry. With blockchain, we can imagine a world in which contracts and transactions are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision.What makes bitcoin different from fiat currency is that it is decentralized, which means that  it has no central management and has is not controlled by any entity.While bitcoin may not be using raw materials to create tangible currency, it still manages to use a lot of energy. Just one transaction can use as much energy as an entire household does in a week, and there are about 300,000 transactions every day. The current bitcoin network uses roughly 0.7 percent of total energy demand in the United States, equal to 2.8 million U.S. households.Bitcoin itself is political because no single government can control it. Owning this uncontrolled currency can be viewed as a form of political resistance.  While the trading of bitcoin has been outlawed in few countries, it is currently legal to own in the United States.The Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity in September 2015. According to the  IRS, bitcoin is taxed as a property. Bitcoin is just another currency. People give trust and value for it, so it is considered as currency. You can buy, transfer and sell as you would with any other money in the world. You do the same with hard cash too. No one asks your identity in the shop, you just hand over the banknotes. In shady business, the same happens in an alley, a closed room, or hidden area. Banknotes are anonymous too.Using Bitcoin as a banking systemBitcoin has enormous potential to help lift the world’s destitute out of abject poverty. Insufficient access to basic financial services is one of the biggest problems facing the poor in developing countries today. Jeff Fong observes that mobile payment services, like M-Pesa, are already wildly popular in countries like Kenya, Tanzania, and Afghanistan. An open, global system like Bitcoin will be a natural financial fit for the fiduciary needs of the world’s poor–and with the benefits of no middleman and more discretion. Additionally, Bitcoin’s capacity to cheaply transfer funds will save new immigrants the 20% fee that they currently pay to send money back to capital-starved relatives in their home countries. Already, citizens in Argentina are turning to Bitcoin as a way to escape the devastation of the 25% Argentine inflation rate. On the other side of the transaction, Bitcoin’s pseudonymity ensures that persecuted groups will not be blocked access to capital because of their ethnicity, gender, sexual preference, or disability.Table Comparing the Places to Purchase Bitcoin with Fiat CurrencyLocations to purchase Bitcoin AnonymousExchange RateRiskCash ATMYesHighLowExchange linked with bank accountNoMarket PriceLowIn person transactionSomewhatNegotiableHighRegulations Does Bitcoin Facilitate Illegal Trading?Andolfatto explained that the identities of bitcoin wallet owners are disguised, “so in that sense, they’re very similar to using U.S. cash in facilitating illegal trades.” However, the blockchain’s public availability means transactions could still potentially be linked to users. For example, discovering a wallet on someone’s computer would then allow transaction history to be viewed.”If I’m some government authority, you’re going to have some explaining to do. That’s not a property of a U.S. cash transaction.”Can Bitcoin Be Regulated?Andolfatto noted that some countries have banned the use of bitcoins and that banning currencies has been a common practice for countries aiming to protect their local currencies. However, the fact that bitcoin does not have a central authority makes regulating the currency challenging. “It’s like trying to slay the hydra. You cut off one head, and three other heads appear. I mean, it’s this distributed network out there in the world. How are you supposed to regulate something like that?”