Demystifying Blockchain and Cryptocurrency
Cryptocurrency is a mystery to a lot of people, and we got a detailed explanation of what it is and how it works from Adam Swick, Vice President of Strategy for Marathon Digital Holdings (and Mike Swick's son) at Monday's meeting. Adam told us that a blockchain is simply a distributed public ledger/record of all transactions that have ever taken place; the Bitcoin Blockchain is a distributed public ledger/record of all Bitcoin transactions that have ever taken place. These ledgers are distributed, meaning that there is no central authority, like a bank, needed to certify ownership and clear transactions. Bitcoin is mined by computers racing to solve a difficult math problem while simultaneously listening to all transactions being broadcast. The computer that solves the math problem broadcasts the answer and latest “block” of transactions to the network and the computer's owner gets Bitcoin as a reward. The arguments for cryptocurrency include: it is uncorrelated with other assets, it is a hedge against currency inflation, and it is a global trend towards independence. The cons of cryptocurrency are that it is volatile, has “no value,” is a regulatory threat and a theft/hack threat. Adam says due to the length of time it takes to make a transaction, cryptocurrency hasn't made it to mainstream retailers yet, but he thinks it's only a matter of time.