I was about to write today’s blog but then I got reminded about the happenings of 8 PM, November 8, 2016. As we all know, Demonetization changed our lives forever. Earlier, we use to pay with notes, coins, Netbanking, Cards, and mobile wallets as tender. Now we pay with notes, coins, net banking, cards, mobile wallets and… Oh, actually nothing changed really. I might have been dreaming about utopia. Nevertheless, I also got reminded about 2 of my previous posts about the DeMo by Modi.
I tried to give a very quick and high level layman understandable speech about Bitcoins for my Advance Speech Speak to Inform Project 1. Some people got it, some who hadn’t heard much about it, didn’t get as much as I expected. Nevertheless, here’s the script:
Title: Money, money, money, it’s so funny, in the rich man’s world… (ABBA 1976)
Toastmasters and Guests, Good Afternoon!
Do you remember that last year, on the evening on November 8th, a man appeared on TV at 8 PM. And said,
“Bhaiyo aur behano…”
This one man talked, and left us mortals shocked,
and whatever money we had kept locked, was supposed to be getting blocked.
PM Modi had just announced De-Mo.
You all remember that day, right?
What if, I tell you that there’s a way, in which you can keep all your monies safe and secure, encrypted and out of reach of any government or bank?
Today I will tell you about 2 things: Bitcoins and Blockchains.
Don’t worry, these terms Bitcoins, Cryptocurrencies and Block Chains are not as dangerous as they sound. To understand these is like understanding Money? Easy, right?
So first.. Tell me, What do you understand by money? Any words which come to your mind?
Money is nothing but another name for Worth or Value. When you say I have Rs. 100, that means, the bank recognizes that this paper is worth Rs.100.
Thus, when I give someone any money, how do we know that the Transaction has taken place? We have eyewitnesses here, right! Or officially, we have Bank as the 3rd party which verifies all this.
So, today I am going to tell you about a way, a way in which there is no bank involved as third party.
You might or might not have heard about Cryptocurrencies but Bitcoins is the most popular as of date. Let me tell you that price of 1 BTC has crossed 7 thousands US Dollars recently. In 2011, it was a mere 2 Dollars.
I will explain the concept of Bitcoin in 2 steps.
First, what is a Bit-Coin?
Second, what is a block-chain?
So what exactly is a Bit-Coin? Where did it come from? How does it look?
Let me start by giving a very short history of Bitcoin.
On August 18th, the URL bitcoin.org was registered. Few days later, Lehmann Brothers filed for bankruptcy on September 15, 2008. Coincidence?
A person named Satoshi Nakamoto, whose real identity is, till date, unknown, came up with a White Paper in 2009 and he explained the basic concept of Bitcoin.
The concept goes like this:
In most simple terms, Bitcoin, is nothing but a currency. You can buy or sell thing by paying Bitcoins as tender. Like we store our physical money in our wallets, same way we store our digital money in digital wallets. Like Paytm or Airtel Money, Bitcoins are stored in Digital Wallets too.
A Bitcoin Digital Wallet is nothing but a string of 26-35 alphanumeric characters. The part which makes Bitcoin wallet different from your Paytm wallet is that:
Paytm knows your email ID or even KYC details. Bitcoin Wallet stores nothing else than the Bitcoins you have.
Now, the fun part, when you send some money from your Bitcoin Address to someone else’s Bitcoin address, the wallets gets updated digitally and anonymously. There’s no Bank in between to verify this. Like there’s a finite amount of Gold on Earth. Same way, there’s a finite number of Bitcoins present in the system. 21 million bitcoins to be exact. Not one less, not one more.
Fun Trivia: In 2015, Satoshi Nakamoto was nominated for a Nobel Prize in Economic Sciences, but of course, he didn’t win because nobody knows who he is. Also, Satoshi has probable 1 Million BTC himself. Right now, there are 15.6 million bitcoin in circulation .
Coming back to Bitcoin wallets. So, say I transferred 1 BTC to you. My wallet will have 1 less BTC than previously, and yours will have +1. So, how do we verify this has happened?
To verify that you have a certain amount of money with you, the Bank maintains a Statement which is nothing but a Ledger.
Like Bank, the one 3rd party maintains our account, Bitcoin ledger is owned by everyone in the BTC system. That means, each transaction gets transferred and written to everyone who is part of this system. So, this irreversible, writing of ledger is, in simplistic terms again, is called a Blockchain.
And what exactly is a Blockchain?
So, block-chain is the universally available ledger which has the list of all the transactions happening with bitcoins. It is irreversible so once the transaction is done, it is done. People who maintain these block-chains integrity, are rewarded bitcoins, hence they have to maintain same Blockchain copies everywhere there by making it almost impossible to fake.
So, how popular this bitcoin thingy is actually? Is it just a concept or is it something which is very much present in real life. Turns out, it is. Many countries have deemed it legal. Some countries are even accepting it as a mode of payment for their Visas. Many websites also accept it. Though, some websites, which have illegal stuff being sold, also accept it. And this makes it slightly in the grey area. For example, a drug selling website Silkroad was accepting it. As it is totally anonymous, it worked really well there. But that lead to it being banned in US. Eventually after arresting people and banning Silk Road, it was legalized again. Also, accepting Bitcoins is legal in India.
November 8 will come and go. Paper currency may come and go. Bitcoins are here to stay. They will evolve into something in future, we will be more comfortable with. Remember the name Ethereum. All revolutionary things take time to adjust. So will be this currency.