Bitcoin and the Netherlands…
Curious about Bitcoin and the Netherlands? Here is a quick review of what Bitcoin is and how it could change life in Holland in the near future.
What you already may know. This is not financial advice.
You’ve undoubtedly heard of this thing called “bitcoin”. Perhaps even “blockchain”, and “cryptocurrency” have snuck into your life like an all-too-genuine social media picture of your crush at a party you missed. Never fear, tomorrow is here, and it’s full of opportunity for each of us. And like swimming or riding a bike, it’s remarkably simple once you understand it. Patience, however; remains the great obstacle both when comprehension and application seem like distant, even foreign, ideas. Treat that like a good thing. You’ve skipped a chance at victimhood during beta testing. As for any general sense of ‘lost’; it’s ok, this will be a simplified, and manageable explanation for beginners.
The very basic basics.
It will serve all of us to first get on a page with some kinship to our universal ignorance. Namely, what exactly is Bitcoin? Is it a digital coin? Is it made of ‘bits’ like megabytes, or terabytes? If so, why is “bitcoin” with an “i” as opposed to a “y”? Did Apple make it? Is this Steve Jobs’ lasting legacy? Maybe…no it isn’t, the thing your reading this on is. Bitcoin was created by an unknown person, or group named “Shitoshi Nakamoto” as a response to the 2008 financial crisis.
Hang in there.
Bitcoin is like money. Unlike “fiat” money/currency (from Latin: ‘fiat’ means “let it be done”; as coins and paper bills are merely an agreement of value between all of us, not of any intrinsic value), bitcoin is as invisible to you as the money on your credit card. Bitcoin – BTC for short – is the currency which was first to operate on the monumental technology called “blockchain”. Think of blockchain like your bank account on a universal banking app, and bitcoin is the money on it. The biggest difference: everyone can see it. But they only control their account, and best of all, we only control our own portion, the bank doesn’t. Transparent, ideally cheaper, and decentralized.
A “block” on the “blockchain” is a ledger. Nothing more than a chronological collection of transactions like you would see on whatever banking app you use. Instead of your national currency, on the “block”, bitcoin is the money. All transactions from everyone using bitcoin to transact value go on that same ledger (or block) in the order they were made. When the block is full, a confirmation process starts so the transactions can be verified thereby finalized. This process is called “mining”, and that will come later.
Since blockchain is a technology that only exists digitally, the money must also be digital. That is why you need to exchange your fiat currency for cryptocurrencies like bitcoin, in order to have it live on the blockchain.
No more banks? Is that a good thing?
With blockchain technology we technically no longer need banks. Banks are by nature a financial business structure which is “centralized”. This is both the point, and one of the strongest arguments for cryptocurrencies and blockchain’s universal use in transact-able exchanges, filing, and services ranging from anything to everything. It’s unfortunately also where mainstream adoption of the technology faces its greatest challenge…the “money” team – banks etc. – aren’t exactly excited about their extinction.
What that means for consumers
From a consumer standpoint, it’s great! No middlemen, no one to call furiously for an overdraft fee, or to block the card you left at the bar last night. You’ll find these localized retail applications of crypto transactions like buying coffee and shoes are the very foothills of mount blockchain. For instance; if an expense hits your account, that you didn’t make, it’s not your word against Visa/MasterCard/Maestro, because blockchain functions like a window everyone can look into. They can’t see each itemized purchase, but rather that one happened, and how much it was. It can’t be faked, just like your fingerprint can’t, and the money only moves per your initiation and the reception of said money on the receiving end. Therefore the proof lies with all of us not one party over the other.
Reversing a transaction
So how would there be a transaction that needs to be reversed? There wouldn’t that was just an example of how much less we all need to worry about how someone else handles our money. We don’t actually need banks any longer, they need us. With cryptocurrencies, we don’t need vaults of bills and coins, due to their intangible digital nature.
If you’re thinking of PayPal, you’re on the right track, and also why both PayPal creators, Peter Thiel, and Elon Musk have been suspected to be Shatoshi.
The reason it’s called “blockchain” is in order to ensure it can’t be faked. The ledgers/blocks form a chronologically linear chain which each require a confirmation to be processed. Once found the block is added to the chain, and revolves around the digital economy one more cycle through the blockchain, and the chain is now one block longer. This confirmation comes in the form of a massive number which must be guessed by an immense amount of computing power.
Mining for Bitcoin
Remember the action movies from the 90’s, where the crew/bad guys/good guys or James Bond must guess a million combinations one digit at a time while a massive gun battle ensues in the lobby? Mining is a bit like the strangely calm tech-savvy crew member waiting as one digit at a time is guessed by the homemade scanning device they placed over the vault lock. The people who do this are called “miners”, as they are “mining for bitcoin”, as opposed to literal miners in a mine mining for gold or gems.
“Mining for bitcoin” is a bit misleading though. As a reward for discovering the confirmation number, like finding the gold in a mine, they are awarded a set amount of bitcoin, the gold is actually the block and the bitcoin is the cash they get for finding it. Don’t go too far with that analogy. There is a limited amount of Bitcoin available to be mined, and like gold, the scarcity grinding up against demand generate value.
Let’s review.
I take 100 euros, buy/exchange them for bitcoin on an online exchange. Every transaction I make with that bitcoin is listed on the online ledger, called a “block”, which everyone can see (so no one, including major corporations, or banks can move money in the night).
Upon the confirmation’s discovery – by a miner, you’ll never meet – the transaction is complete. Another way to look at this would be if all the things we needed were in one store, like the movie Wall-E, and we all have a gift card to the store. The tokens that company (buy’n large) turns our euros into, in order to be used on the gift card, are what bitcoin is. Eventually, we would simply be paid in Buy’n’Large tokens since it’s the only place we buy anything. This is both a fear and an ideal. Technically we already live like this as your money is only good in the places that accept your currency. Try paying with Euros in Texas.
Why do we need it? Why isn’t the system we have good enough? How did it come to be?
As a response to the 2008 financial crisis, an entity called Shatoshi Nakamoto created the technology known as Bitcoin. It remains unclear who Shatoshi is, or if it’s a group of people. They do not control it though. Blockchain was the true gift to us all, as bitcoin is merely the currency used on the blockchain (remember that gift card analogy? It’s about the gift card not the tokens on the card).
Per definition, Bitcoin is a transparent, peer-to-peer payment system which doesn’t necessitate a bank, and is equally available to all; those in the first world who have used banks forever, and those in parts of the world without access or economy. The most important part of all of this is to understand the fundamental difference between “centralized” and “decentralized”.
Banking, as it stands today, is centralized. All the money is in the bank and it has a fixed point, leaving us all vulnerable to attack/theft/hack/robbery, and the increasingly common bank shut down, because there is only one place where everything is held. Decentralized is the opposite. The bank’s vault is effectively with all of us, equally. We can only access our bitcoin, but can see all transactions on the blockchain. If I suffer any of the above consequences, you have the same vault and I can simply reboot and I’m back up to speed.
Getting your identity stolen
For anyone who’s had their identity stolen; you’ll understand the catatonic shift in that little tidbit. It’s not years of reclaiming your financial life, it’s simply (and ideally) “off” and “back on”. When a housing bubble bursts, because everyone you don’t know is controlling your financial future got busy cashing checks – written by their ego down at the ol’ country club of braggarts and egomaniacs – only they go down…not all of us.
What this does is inject responsibility into a fiscal exchange. You can easily imagine why those moving massive amounts of other peoples money around don’t like it. Because now we can see exactly what they are doing. Say nothing of the immense amounts of money we no longer need to spend on transfers and transactions (if you want to lose sleep, look those up, its staggering).
So what about Bitcoin and The Netherlands?
We’re fortunate to live in a nation which is incredibly “crypto” friendly. Crypto, as you now know, is the name of digital currencies as a genre of money. Like bonds, stocks, coins, paper bills and gems are genres of value or money, crypto is a type of currency. Hence the name cryptocurrency. If you want to make a severe amount of money, rather quickly, develop a blockchain based business or even mining company on Dutch soil you’ll live a luxuries tax-free business life till 2023. Given the volatility of crypto value that can be a massive gain if you’re careful. Again, this is not financial advice.
In the past month, the cryptocurrency market has fluctuated over 100 billion euros. In context, that’s a 31% movement in about as many days. It doesn’t feel like only 1% a day either as watching the hourly charts will make you seasick. Try looking up how many Dutch businesses already have “blockchain” in their name, and that feeling of missing your crushes party will come right back.
The possible future of Bitcoin and the Netherlands
Use of blockchain in agriculture might be an intriguing development for The Netherlands to continue to propel the self-sustaining and indoor agricultural fields forward, as consumers can track the entire life of the product they consume. A growing desire among average consumers, and a must for the health conscious.
With the transparency of blockchain ledgers, integrity once again becomes a leading quality in business and innovation. There is no financial advice in this article or the links below. If you choose to invest do so wisely, and on your own terms. All decisions are your own.
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So there you have it. What is your opinion on cryptocurrency and do you see Bitcoin progressing in the Netherlands, or anything on Bitcoin and the Netherlands? Let us know in the comments below.