Bitcoin Billionaire / Bitcoin & Blockchain Wealth Creation
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About this ebook
Jeremiah A. Coffey takes the reader to major Bitcoin and Ethereum conferences around the world, where the global economy is being reshaped by these new blockchain technologies. Legal considerations like the United States SEC regulations, and Chinese policies on cryptocurrency coins and token investments, are explored in depth. Whether your
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Bitcoin Billionaire / Bitcoin & Blockchain Wealth Creation - Jeremiah A Coffey
Bitcoin Billionaire
Bitcoin & Blockchain Wealth Creation
Jeremiah A. Coffey
Bitcoin Billionaire/ Bitcoin& Blockchain Wealth Creation
ISBN 978-1-98-035554-0
Publisher – CreateSpace
© 2018 Jeremiah A. Coffey
All Rights Reserved.
This book is Dedicated to
Dr. Matthew Flisfeder
Dept. Rhetoric Writing & Communications
University of Winnipeg
Contents
Introduction
Glossary Buzzwords Defined
Chapter 1 Bitcoin is here to Stay
Chapter 2 The Bitcoin Phenomenon
Chapter 3 Vitalik Buterin & Ethereum
Chapter 4 China & Ethereum Mining
Chapter 5 Open Source Mindset
Chapter 6 A Trustless Society
Chapter 7 Mining & the Exchanges
Chapter 8 Top Coins & Tokens.
Chapter 9 Smart Cities & IoT
Chapter 10 Bitcoin & the Dark Web
Chapter 11 American Law & the SEC
Chapter 12 Modern Business Ethics
Chapter 13 Bitcoin Today
Chapter 14 Bitcoin & Blockchain’s Future
Chapter 15 Tips on Getting Started
Chapter 16 Mistakes to Avoid
Photographs of key players
About the Author
Introduction
Writing Bitcoin Billionaire, was very challenging due to the extreme speed that blockchain technology is being adapted worldwide. There was such important progress, and so many developing situations to report on. One half of a trillion dollars is now invested in blockchain based ventures, and the sector is starting to pull investment capital out of gold. The rapid development in Bitcoin and Ethereum that took place in 2017, will no doubt set the stage for unfathomable progress in 2018, and beyond. This concise business primer will quickly bring the reader up to speed, on Bitcoin, Ethereum, Dash, Ripple, blockchains, smart contracts, and cryptocurrencies. All areas of importance from Bitcoin and Ethereum mining, to making investments and using digital wallets , to the open-source philosophy, and new government regulations, all are covered in meticulous detail.
When I began writing this book in January of 2017, Bitcoin was priced at about $1,000 USD. Now, during the last week of the year, Bitcoin has gone up explosively, by 1,878% to just under twenty-thousand dollars. Since then it has fallen back down by six-thousand dollars to the fourteen-thousand-dollar levels that we see this week.
Since August 1, 2017, Bitcoin has had an identical twin named Bitcoin Cash. The new coin may well supplant and replace the original Bitcoin known either as Bitcoin SegWit, or Bitcoin Core, because it sends transactions for pennies instead of ten to twenty-dollars, and it is fast, usually in minutes instead of hours. The coin has only existed five months but already has around twenty-percent of the old Bitcoin’s value. The situation is paralleled by Ethereum, and Ethereum Classic, which set a precedent when Ethereum forked, after the DAO hack.
Nationally three big cities in the United States are vying for dominance in the new economy. San Francisco has the talent, the largest exchanges, venture capital, and a strong user base. New York has large consortiums of investment and commercial banks buying into blockchain technology, and sophisticated financial markets. There are a handful of new exchanges and ETFs, and plans for Bitcoin futures trading, on Wall Street; but these New York players will think like brokers and stock analysts, who are only familiar with seeing very little change from quarter to quarter, and being able to survey up to fifteen professional stock analyst’s reports that predict earnings down to the very last cent, for most the major listed companies.
Next there will be a screengrab of a ‘Down Day’. This is the first big bear market since futures trading has made short selling on margin possible for so many more investors with the opening of new exchanges in the United States. This looks bad, and I have not checked around to find out the cause. Observe the roller-coaster ride that you are on while day-trading cryptos. Remember the maxims, You have to lose your nerve, before you lose your shirt.
And, Don’t try to catch a falling knife
. Many of these cryptos that are taking a serious beating today as indicated in all of the red we see, will be stronger for it after they show their resilience and survive. They did, the sell-off was blamed on government intervention in South Korea.
Chicago is last into the game with the entry of the Cboe or the Chicago Board of Exchange, and other commodity exchanges poised to start Bitcoin futures trading. Agricultural commodity options are very volatile, and change dramatically daily due to weather calamities such as a frost affecting orange juice futures, or a drought affecting wheat prices. Because of the everchanging crises in commodities, with limit-down days, and circuit-breakers in trading, these commodity brokers in Chicago will have a much better grasp of how best to function in the volatile world of cryptocurrency markets. For the first time ever there will be new pressures on the price of Bitcoin, as people, and big investment banks, and brokerages will have the ability to short Bitcoin, and profit from any downward movement
There are no compulsory ‘quiet periods’ as with listed stocks for the week before the quarterly or annual earnings reports come out. There is no Sarbanes-Oxley oversight of these largely international overseas online markets. Promoters are free to flagrantly ‘pump and dump’, tokens and coins, as they please. Market manipulation is rampant, and goes on entirely unchecked so its presence must be factored into decision making. There are no refunds, and there is no customer service desk, or 1- 800 phone number to call if things go wrong, and you lose your keys, or send funds to the wrong account, or send the wrong amount. Maybe that will come later as things develop, but for now you are entirely on your own, and you are responsible for your own security.
It is no secret that nearly everyone who was involved in any way with cryptocurrency or blockchains in 2017, made out extremely well financially. Thousands of smart young programmers and developers became millionaires and multi-millionaires last year; because nearly every coin soared in value to unexpected heights. The situation can be compared to when young athletes in the professional sports leagues are suddenly drafted to play for a team, with massive multimillion-dollar salary contracts. Last year’s wild gains in cryptocurrency was probably the first big break for many young first-time entrepreneurs, who had their ship come in, so to speak. Now they have the capital that they have always wished for to fund their bold blockchain ventures, and they will build some amazing new things for us. This is a return to good old garage innovation at its best, like in the early days of Apple and Dell, or later Google, and Facebook.
Depending on one’s age they may remember how slowly home computers were adapted by the public. It was not until from 1997 to 2001, that there were finally sufficient numbers of home computer users for companies to begin designing applications to sell. There was a so-called Dot-Com bubble taking place where investors threw money at half-baked Internet ventures that were listed on the Nasdaq. Many companies had so much cash on hand, and so little work done, that they bought completely unnecessary, and totally irrelevant comedic style advertisements on the nations highest rated television broadcast, the 2000 Super Bowl XXXIV football game. There was a total of twenty-two different Dot-Com companies advertising with thirty-second spots that cost an average of $2.2 million dollars each. That is just to air, and does not count production costs. It seemed at the time that the Dot-Coms were simply waving the flag for their legions of investors to see, for want of any other real business activity done by these companies. There are only five of those companies around today. When those companies did not produce as much profit as expected the Dot-Com bubble burst, and a great number, estimated to be 281, of Nasdaq tech stocks had serious meltdowns. A major financial crisis, and serious recession which followed, was blamed on the irrational exuberance
that Federal Reserve Chairman, Alan Greenspan had warned about the three-trillion-dollar Dot-Com bubble.
Does cryptocurrency at today’s valuation of one half a trillion dollars total capitalization have room to grow? Keep in mind that the Dot-Com bubble took place in a financial environment that had an inflation rate of 3.4%, which is fifty-percent higher than today’s rate of 2.2%. People back then had the choice of investing their money in secure ten-year government backed bonds, at 6.3%, for a spread with a gain of 2.9%, over inflation. That interest rate was over two and a half times higher than today’s rate. The ten-year government backed bond annual interest rate is now 2.46%, a mere 0.26%, over inflation. That is less than ten-percent of what was available then.
Consider as well the total money supply in the United States. On January 1, 2000, the M2 money supply in the United States was $ 3.8 trillion dollars. Now on January 1, 2018, it is $14 trillion dollars. Officially the US Federal Reserve has pumped $12 trillion dollars into the economy with its ‘Quantitative Easing’ stimulus package. On September 20, 2017, Janet Yellen the retiring Chair of the Federal Reserve announced an end to the program. Real estate and the stock markets have hit all time highs because so many dollars are in circulation. There seems to be a clear potential for a six-hundred percent increase in crypto capitalization if the Dot-Com investment bubble that swept Nasdaq, was a harbinger of the crypto craze sweeping the world today.
Largely irrelevant naysayers are pointing to the Great Tulip Bubble that happened in Holland around the year 1630. To me the comparison is absurd; but that criticism comparing Bitcoin to tulips is heard over, and over again, from the media and the press these days. People who have apparently not bothered to study blockchains at all, like the aging Saudi Prince Alwaleed bin Talal, are going to the media, and saying that Bitcoin is based on nothing, and that cryptocurrencies are worthless.
I know what gives things value, or worth in dollar terms. Just a few words about me. I completed the Canadian Institute of Financial Planning program. I have a Bachelor’s Degree from the University of Winnipeg, Administrative Studies (1990). I recently obtained a Certificate in Residential Valuation from the Sauder School of Business, at the University of British Columbia (2016). I am a former member of the American Society of Appraisers, and the Appraisal Institute of Canada. I understand what gives things value, such as in real estate and land values, stocks and bonds, gold, and Bitcoin. My company smartpropertyblockchain.ca focuses on intergenerational wealth transfers, and blockchain based property registries. I am trained and certified with the Canadian Institute of Certified Executor Advisors (2017). I have a lot of personal trading experience, buying and selling stocks, options, REITS, and physical silver and gold bullion, and commemorative coins.
I hope that this book influences many people to get involved in the movement. This is a chance to take a stand and be part of something much bigger that it now appears. The decisions managers, college department heads, judges, and voters like you make in the next decade will determine the shape of the world economy for the next century. There is potential here to make great strides in eliminating poverty worldwide by empowering billions of people who are presently excluded and non-participating.
Just as computers have changed every job; blockchains, and cryptocurrencies will eliminate many jobs done by intermediaries, clerks, and agents. Smart contracts will replace mid-level managers, and general office staff. Where are all the stenographers, and travel agents, telephone operators, and layout artist jobs today?
Understandably people do not want to be fooled into believing that a Ponzi scheme is a genuine business, and thereby be cheated ; so of course reasonable skepticism, and due diligence is warranted. Although, a stubborn refusal to listen, or keep an open mind, will only result in those same people fooling themselves. Condemning Bitcoin without understanding it, makes one look foolish to everyone who has bothered to educate themselves in the computer science training that is required to participate on the blockchain, and understand this new economy.
We Bitcoin enthusiasts do not have to work very hard at getting converts. The very first time that they hear that exciting beep, when their wallet receives some digital money, they will be thrilled and hooked on crypto forever.
You will hear the term ‘down the rabbit hole’, that expresses the way that this exciting new concept pulls people down an uncertain path into a whole strange new world. I was studying hydrology at the University of Winnipeg in the geography department. I was researching a book on the current global water crisis, with pricing models for Canadian bulk water usage and exports. At my recommended price of one and a half USD per tonne, Canada should be able to manage the resource and raise substantial revenue, but that will be another book.
A professor from the computer mapmaking course that I was taking recommended the MGUG conference. This was the Manitoba GIS Users Group conference, which attracts geomatics technology specialists, academics, professional surveyors, and map makers has several large industry sponsors. In an exhibit there I saw my first raspberry pi mini-computer, which sells for about forty-dollars, hooked up to a ten-dollar, 1080i video camera. I went home and ordered one online that night. While researching all the things that this little garage-door-opener sized box could do; I read that in Paris, a raspberry pi was even being used as a blockchain node for Ethereum. That led me to ask my first question, What is a blockchain?
, and I was pulled headlong down the rabbit hole from which I will likely never return.
Glossary Buzzwords Defined
Address- is a precise, 33 or 34-character, case sensitive string of letters and numbers in the Base58Check format which has several confusing characters removed, such as o, I, l, 0, and it also has a checksum built into the last character which functions like a error-checker. Addresses are not wallets or accounts. They do not carry a balance, although the GUI graphical user interface of the app might make it look like they do to the user. Addresses are just an identifier, that should be a single use token, and there are no ‘from’ addresses. Sometimes there can be a last address sent to, that looks like a from address. It is easy to cut and paste long complex addresses.
Blockchain- is a chain of connected digital files called blocks, that are linked by hashing the preceding block’s final Merkle hash with the hash of the block that follows it, in a sequential linear and progressive order. The blockchains are designed to maintain a target speed of fourteen-seconds per block for Ethereum, and ten-minutes per block for Bitcoin. These block speeds are regulated by the ‘difficulty’. The Bitcoin blockchain was the original blockchain, but it has been ‘forked’, or identically copied and then modified, to create a new line of blockchains with different features.
Coin- a tradeable asset that is sustained by one of many blockchains. There are around fourteen-hundred coins on the market today with values ranging from a fraction of a cent to twenty-thousand dollars.
Consensus- means that a number of remote distributed peers have examined the blockchain and independently agree that it is correct, and up to date, and that it appears identical to every node.
Cryptocurrency- is a new form of digital money that is secured online by cryptography or mathematical encryption. There is now half a trillion dollars worth of cryptocurrencies issued worldwide.
Difficulty- is a long string of numbers after a decimal point that begin with up to thirty zeros. The difficulty value is used in mining, and is determined using probability statistics. A difficulty value is found that will result in mining one block every ten-minutes. An automatic difficulty adjustment is achieved by adding or removing, one single zero, after every 2,016 blocks in Bitcoin, which is about every two weeks. Ethereum adjusts its difficulty every 1,000 blocks, or just under every four hours.
Ethereum- is Vitalik Buterin’s second-generation cryptocurrency that goes well beyond Bitcoin’s mere storing and transferring of value to functionalities such as smart contracts, and a virtual world computer called the EVM, or Ethereum Virtual Machine.
Fiat Currency- is money that is backed by a government or state. The money’s value is set by a declaration from the government as to it’s value. For example, a one dollar bill, or a ten dollar bill.
Hard Fork- is a change to the blockchain protocol that will necessitate that every node and miner must update to the new protocol.
Soft Fork- some new tighter measures are to be processed by newer nodes with the updated protocol, while older nodes continue to process as usual minus the new functionality.
Hash- is an encryption technique where data is run through one of many available hashing algorithms, such as ethhash for Ethereum, or SHA256, and RIPEMD-160, for Bitcoin. The hashing algorithm always results in a code with the same number of characters, usually sixty-four, regardless of the size of the content being hashed. The entire record of lottery winning ticket numbers could be hashed. If even so much as a period is omitted, or a single letter is changed, or omitted, in the second hash the resulting output string of characters will have every single digit in the string display completely different from the first hash. But if the data