Crypto First
The main artery of Imperial College London is an ugly throwback to the 1960's, a time when concrete and dark brown bricks were all the rage and buildings were rectangles with endless rows of linear glazing. Half way down the cantilevered concrete gangway. across a short bridge is the entrance to the Data Science Institute.
I was there a couple of weeks ago with my partner Tom and one of the high street banks demonstrating the visualisations created by the brilliant team of postgraduate students there. We had been there for an hour or so when the fin-tech man from the bank said "'Barclays have broken rank". It was at that moment I knew we had crested the wave that had started as a mere ripple in 2008, when Satoshi Nakamoto, posted a paper on a cryptography mailing list describing how to create the first digital currency called Bitcoin.
But who was Satoshi Nakamoto and what exactly is Bitcoin?
Well in 2008 it was illegal to create your own money - pretty much everywhere in the world. Why? That's a long story. The short version is to protect the richer economies. (For a more complete explanation read the conclusions that I came to in these 6 blog posts at the time).
So to answer the first question - who was Satoshi Nakamoto - actually to this day no-one knows. It may have been a single person or more likely a group given the complexity involved. I can only assume that exposure would have landed the individual or group in prison as a result of explaining how to create a new currency.
Bitcoin - is a cryptographic currency that exists on a peer-to-peer network. That was a lot of technical words so let me break it down. For those of you who remember when Napster originally came out and everybody said "Wow, I can get as much music as I want for free!" - that was a peer-to-peer network. It is essentially lots of individual computers communicating with each other. Together this group of computers are the network on which Bitcoin runs. There are no trusted intermediaries between them like the ones that give us access to the internet.
So in order to create trust Bitcoin employs cryptography and a technology called blockchain which is a database shared by a large number of computers across the network. The database is the same on every single computer and is essentially a history of all of the Bitcoins that have been created so far as well as every movement of every coin. That is actually a very brazen summary but will suffice for now.
When it was first implemented, Bitcoin was very cheap. By the time I heard about it in 2013 one Bitcoin was worth around $100. Today they trade at around $8,500 each, and the price is very volatile. It has taken a decade to get here - but today the market capitalisation (that is to say the total value of all the Bitcoins in circulation) is around $140 billion and its growing. So what was once an experiment in creating new money is now big business.
Which brings me back to Imperial College. At first a lot of people wrote off Bitcoin as a fad that would die out. In fact in December of last year the price was just shy of $20,000 and even though it fell back to where it is now - it's clearly no longer just a fad - which is why "Barclays broke rank" (and did a deal with one of the exchanges which allow you to convert Bitcoin into regular money).
The truth is that all the major banks have been following crypto-currencies for a while now and many institutions (including the banks) have been looking to repurpose the blockchain technology (no doubt I will cover this in a future post).
The wave, which started as an illegal ripple, is now being legitimised - the U.S. Government not only recognise crypto-currency as a new class of asset this year - they are also seeking to tax it. I predict within 5 years they will also regulate it and that the market for cryptographic assets will be larger than the currency markets are today. We are riding the crest of a wave that will no doubt be a tsunami very soon, with adoption like no other than we have seen since the birth of the internet.
Which brings me to the title of this post. If I am correct (and I am pretty certain that I am) then we should already start looking at things the other way around - not how much Bitcoin costs, but how much US dollars cost in Bitcoin and other crypto-currencies.
I am saying that we should start thinking about putting cryptographic currencies first which is what Tom and I have dubbed Crypto First.
I was there a couple of weeks ago with my partner Tom and one of the high street banks demonstrating the visualisations created by the brilliant team of postgraduate students there. We had been there for an hour or so when the fin-tech man from the bank said "'Barclays have broken rank". It was at that moment I knew we had crested the wave that had started as a mere ripple in 2008, when Satoshi Nakamoto, posted a paper on a cryptography mailing list describing how to create the first digital currency called Bitcoin.
But who was Satoshi Nakamoto and what exactly is Bitcoin?
Well in 2008 it was illegal to create your own money - pretty much everywhere in the world. Why? That's a long story. The short version is to protect the richer economies. (For a more complete explanation read the conclusions that I came to in these 6 blog posts at the time).
So to answer the first question - who was Satoshi Nakamoto - actually to this day no-one knows. It may have been a single person or more likely a group given the complexity involved. I can only assume that exposure would have landed the individual or group in prison as a result of explaining how to create a new currency.
Bitcoin - is a cryptographic currency that exists on a peer-to-peer network. That was a lot of technical words so let me break it down. For those of you who remember when Napster originally came out and everybody said "Wow, I can get as much music as I want for free!" - that was a peer-to-peer network. It is essentially lots of individual computers communicating with each other. Together this group of computers are the network on which Bitcoin runs. There are no trusted intermediaries between them like the ones that give us access to the internet.
So in order to create trust Bitcoin employs cryptography and a technology called blockchain which is a database shared by a large number of computers across the network. The database is the same on every single computer and is essentially a history of all of the Bitcoins that have been created so far as well as every movement of every coin. That is actually a very brazen summary but will suffice for now.
When it was first implemented, Bitcoin was very cheap. By the time I heard about it in 2013 one Bitcoin was worth around $100. Today they trade at around $8,500 each, and the price is very volatile. It has taken a decade to get here - but today the market capitalisation (that is to say the total value of all the Bitcoins in circulation) is around $140 billion and its growing. So what was once an experiment in creating new money is now big business.
Which brings me back to Imperial College. At first a lot of people wrote off Bitcoin as a fad that would die out. In fact in December of last year the price was just shy of $20,000 and even though it fell back to where it is now - it's clearly no longer just a fad - which is why "Barclays broke rank" (and did a deal with one of the exchanges which allow you to convert Bitcoin into regular money).
The truth is that all the major banks have been following crypto-currencies for a while now and many institutions (including the banks) have been looking to repurpose the blockchain technology (no doubt I will cover this in a future post).
The wave, which started as an illegal ripple, is now being legitimised - the U.S. Government not only recognise crypto-currency as a new class of asset this year - they are also seeking to tax it. I predict within 5 years they will also regulate it and that the market for cryptographic assets will be larger than the currency markets are today. We are riding the crest of a wave that will no doubt be a tsunami very soon, with adoption like no other than we have seen since the birth of the internet.
Which brings me to the title of this post. If I am correct (and I am pretty certain that I am) then we should already start looking at things the other way around - not how much Bitcoin costs, but how much US dollars cost in Bitcoin and other crypto-currencies.
I am saying that we should start thinking about putting cryptographic currencies first which is what Tom and I have dubbed Crypto First.
