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Bitcoin and blockchain

I became interested in the world of cryptocurrencies in 2012, when bitcoin traded at $5, more or less. Not taking it seriously, I mined about 10 and I forgot about them. After less than a year, the price went up to 50 dollars. Awesome. Tenfold.

Then, the skeptic sirens began to ring. Sham, Ponzi scheme, fraud, hoax, etc. Eventually, the seed of doubt grew and I sold what I had and made a profit of about $500. Then I saw the explosion of 2013, when the price reached $1,000, and I began to sense my mistake. To understand the real value of the instrument. To invest. During this adventure, I heard the sirens sing the same song, again and again, but I have not fallen for them again. I have seen the bitcoin rise and crash with an impressive volatility, even going down to 200 dollars after the MtGox scandal, but I have always continued to believe in the project. Those sirens continue to sing unperturbed, monotonously, and continue to do so today, even with the bitcoin at $20,000.

In my opinion, the two criticisms I can honestly find in bitcoin are as follows:

1. Over time, it could be replaced by a better product.

2. It can be legitimately boycotted by official governments.

It was these two critiques that led me to sell the ones I had due to the “incredulous, exaggerated, disproportionate” price of $50.

Regarding the first issue, bitcoin technology is not currently the best and actually has several defects. In fact, there are already qualitatively better products. Despite this, it continues to thrive. This is partly because it was the first of its kind, it is used as a reference, and it is used as a comparative term with respect to any other concurrent. In the world of cryptocurrencies, every one of them is compared with bitcoin, either in terms of the possibility of buying and selling, than in terms of evaluating its value. It has become a standard, and as a result, it is becoming increasingly difficult to replace. It is continuously gaining strength. The attention it receives allows a continuous improvement. Because it has been, is, and will be, constantly improved thanks to the cooperation and coordination of a sufficiently large number of supporters of this cryptocurrency. And, above all, if in the end bitcoin were to be replaced by a better product, a meticulous and continuous diversification of the investment in cryptocurrencies could easily reduce the risk on any currency, allowing investment in the "new era of finance" to remain solid.

Regarding the second criticism, it is necessary to know what bitcoin consists of. It is based on a technology called "blockchain", which is nothing more than a file, structured in sequential blocks, present in an identical fashion in the computer of each user. This file contains not only each personal currency "mailbox" (which in practice is a simple memory register), but also records every transaction that has occurred and cannot be manipulated or manufactured with mathematical certainty, thanks to cryptography. The algorithm that manages the blockchain typically, as in the case of bitcoin, is open source, meaning that it is available to anyone who wants to know and verify it, guaranteeing further quality.

In practice, whoever owns cryptocurrency has nothing other than the key of a mailbox in this file called blockchain. This key, called private key, is a very long code composed of numbers and letters that allows, only those who know it, to spend the currency present in the mailbox. That code represents our purse in an exact manner. Then, another uniquely associated code, called a public key, allows us to enter the coins in our mailbox, in the same way as if it were a banking IBAN.

These structural components makes it very difficult for an eventual government that seeks to obstruct this technology to do so effectively. Its strong decentralization makes it almost impossible to block it, especially if it is intended by an individual entity. The strongest and most powerful governments have failed in their attempt to control drugs, tax havens, evasion, and protection of copyright, just to name a few. Therefore, I see it extremely difficult that they could manage to block a similar phenomenon.

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