There is no doubt our current financial system is long overdue for an overhaul (will a royal commission actually change anything?) – some say it should have happened back in 2007 and 2008 with the Global Financial Crisis (GFC). However, we are entering one of the biggest new economic reforms since the early 1900s, all starting from the lack of control and transparency of the GFC – This new economy is challenging the global financial systems and markets.
Let’s begin with a few quick facts about the fast-changing market place of crypto currencies and the financial world;
- Eric Ly - former CTO of LinkedIn launched ICOHUB to eliminate ICO (Initial Crypto Currency Offing) scammers (see below in glossary).
- Surfer Silvana Lima becomes the World’s first female athlete sponsored by Crypto Currency.
- Australia's consumer watchdog reportedly received over 1,200 complaints about Crypto Currency scams in 2017.
- Royal commission into Banking and Financial Services begins and reveals how major banks and financial planners have broken the law, forging over 2500 client witness signatures (a lot of ink used).
- Bitcoin was coded to a limit of just under 21 million bitcoins that can be created. Once the limit is reached, no more bitcoins can be made.
- However, a single bitcoin can be subdivided as far down as the eighth decimal place (0.00000001BTC) to buy smaller goods using just a fraction of the coin.
The advancements of blockchain, its applications and platforms are driving massive change across the globe, specifically within financial markets. So to further investigate and explain some of the jargon associated with the new economy I have undertaken to writing a blog series. Originally it was to be just an outlining article, however as things are moving so fast and I am being swamped by questions from all angles it has required me to step-up the pace!
The biggest question floating about at the moment is “how do I get hold of this bitcoin crypto currency thing?” And of course “What does it cost?”
Generally, you can get a crypto currency by using 4 ethical methods;
- Go to a crypto currency website – get a digital wallet and begin. Have a look at https://www.ethereum.org/as a good starting point.
- Mine a crypto currency using a super computer (not a shovel or backhoe).
- Create an account on a crypto currency exchange and buy some as you would any other asset class, shares or derived securities.
- Start up your own crypto currency and undertake an ICO.
- Hack an online exchange, plundering all the coins stored there (the pirate life isn’t for everyone).
You can store and send digital coins from an encrypted digital wallet, which is run as a program on your computer, sometimes through a specialised browser. The wallet works with two keys — a private key and a public key — which appear like a large random string of numbers and letters. The private key is kept secret by you and acts as a password that unlocks the wallet and lets you send any bitcoins associated with it. If anyone gains access to that key they can easily steal your funds – no different to your personal online banking details. The public key is like your bank account number, and you give it to other people so they know what address to send their bitcoins to.
If you were to wonder what cryptocurrencies are worth in USD have a look at https://www.coinspot.com.auor https://coinmarketcap.com/
Both sites are excellent reference for pricing guides. Please consider one important detail, all these crypto currencies are digital – they are code and provide many advantages over common cash.
If you want to start out with bitcoin or Ethereum, there are a number of websites or programs you can freely use to generate a private and public key for a new wallet.
Glossary of Terms…
(many thanks to block geeks - https://blockgeeks.com/guides/)
Blockchain- is a vast public ledger, where all confirmed transactions are included as so-called ‘blocks.’ As each block enters the system, it is broadcast to the peer-to-peer computer network of users for validation. In this way, all users are aware of each transaction, which prevents stealing and double-spending, where someone spends the same currency twice.
Bitcoin– Is first and foremost a currency; this is one particular application of a blockchain. At its most basic level, is theexchange of digital information that allows you to buy or sell goods and services. The transaction gains its security and trust by running on a peer-to-peer computer network similar to Skype, or BitTorrent, a file-sharing system.
Ethereum– Like Bitcoin, Ethereum is a distributed public blockchain network.
Ethereum is the open software platform based on blockchain technology that enables developers to build and deploy decentralised applications.
ICO– Initial Coin Offering - It means that someone offers investors units of a new cryptocurrency or crypto-token in exchange against crypto currencies like bitcoin and Ether. Since 2013 ICOs are often used to fund the development of new cryptocurrencies. ICO enables every individual and every company to release freely tradable tokens to raise funds. It could be used to completely reconstruct the financial system of shares, securities and so on. ICO’s decentralized not just money, but stock creation and trade.
Wallet – Crypto Wallet– Can be Software or Hardware that is connected or not connected to the internet – Wallets store the public and private keys and used to receive or spend the crypto currency. A wallet can contain multiple public and private key pairs.