Bitcoin, the currency that was born of a mathematical algorithm

What goes up, down, and vice versa. This could be an apocryphal law of economics, is drawing charting fluctuations Bitcoin (BTC), the cryptocurrency whose unit went on to sell more than a thousand euros in early 2014. The day this article is written However, the unit price is 210.42 euros, it seems to be recovering from the meager 166 with which it began the year.

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Talking about it is fashionable, but electronic currency has been with us since 2009, year in which Satoshi Nakamoto probably, the pseudonym of a group of informáticos- created the Bitcoin Protocol, the algorithm underlying the currency and allows economic transactions online without mediators.

When two people interact with bitcoines, the buyer transfers to the seller an encrypted file and the keys to decrypt it. This file is the currency fragment corresponding to the value of purchase-for example, 0.1 BTC today amount to 21.04 euros. The coins can be stored in any computer or Bitcoin wallet, which is, in essence, an email address for receiving and transferring criptomonedas.

“The Bitcoin is not money,” says Pablo Fernandez to Sync Burgess, a practicing lawyer and expert on legal aspects of cryptocurrency in Spain. For this expert, buy this system has more in common with a trade with a monetary transaction. “It’s a ‘thing’ in the legal sense of the word. When a customer pays in bitcoines you not perform transmission fiat money, or electronic money or coupons, but only solutions to mathematical algorithms that respond to the bitcoin protocol. “

Bitcoines are available on the market for the sale of currency, or through a process of ‘mining’. In this case, the miner is a computer working overtime to decipher newly created bitcoines. Whoever finds are the remains. The algorithm takes written, as a prophecy that the day is reached to 21 million coins will stop production.

The price is set by supply and demand. Arguably value fluctuations respond in true masterpiece law of capitalism example, because they depend, exclusively, of what users want to pay for this currency, without any regulation. This causes invest in bitcoines is not at all without risk.

The underlying mathematics behind this coin are designed to prevent many of these dangers, but others do not depend on them. These fluctuations in bitcoin placed at the top of the roller coaster have left nursing a scandalous fall. The last thing contributed to prick the bubble was the closure of Japanese exchange platform bitcoines MtGox last January. The money lost by the closure is estimated at 350 million euros.

Moments of euphoria and depression are experienced in any market. The added problem is that this money belongs to a decentralized system and is not supported by any value, such as gold or oil; or by the national bank of any State, as legal tender, which could cushion his fall.

But the significance of Bitcoin goes far beyond the markets. Félix Moreno de la Cova, an economist and member of the Bitcoin Foundation, is based on a new concept of intellectual property. “Economic transactions involve only the minimum of what technology allows. The algorithm provides the technological solution to distribution of digital products. “

img_27728[1]The cryptocurrency was launched in 2009, the year in which the Bitcoin Protocol, the algorithm underlying the currency and allow online financial transactions without mediators was created. (Photo: Fotolia)

For Paul Uslé Presmanes expert legal aspects of Bitcoin and Abanlex lawyer who accepts payment by this currency, “also allows recording copyright works, set up companies or used as a means of sending information.”

The first thing you can think about this intangible currency is that it is fertile ground for speculation. The problem is that their fears instability creates users, speculators and banks. According to De la Cova, at least for now, the advantages outweigh the disadvantages. “Banks are also clients of Visa and Mastercard, and are interested in being Bitcoin clients. Maybe when this payment is widespread, its decentralized nature is in conflict with the interests of the bank; but in the short term, it saves them money. “

However, since the European Union echoes the fears are made. The European Banking Authority (EBA, for its acronym in English), it has prepared a document that analyzes the effects on the market of virtual currency. In the heat of the recommendations, the political party UPyD presented a proposition of law in the Spanish Congress of Deputies in which calls for state regulation of Bitcoin market.

Something we also have to tell, according Uslé are the computer failures, against which users are unprotected. “This creates an uncertainty that necessarily diminishes the value of Bitcoin, which can lose large amounts of money.”

There is still no international regulation that serves to minimize the risks of this market. “Create a standard that specifically regulate what would be ideal. However, it is not something that is just around the corner, “he adds.

One of the risks of both organizations is warning against theft insecurity. The EBA considers that the lack of regulation of trading platforms makes them vulnerable to criminal attacks. It also indicates that although few cases are known, robberies private users purses may occur. Virtual currency payment “is not hosted security protocols or refund”.

However, Alberto Toribio Gomez, creator of Coinffeine First to become fully with Bitcoin, “the fact is that in many cases purses provide security measures that go beyond those offered by online banking.” For the expert, give much impact to isolated facts can affect the usability of the coin.

The most obvious risk factor is their volatility. It not expected to remain stable a currency whose value depends on what users want to pay for it.

“If you buy a unit for 900 euros and, after a while, someone wants to buy it for 1,900 thousand euros have won. However, if anyone is interested, you have an asset value of 0 and will have lost 900 euros,” explains Fernández Burgess in his informative blog.

So that its value will stabilize, according to the lawyer Uslé would require that different states will face its regulation and democratization occurs in use; namely that a significant number of companies, small businesses and suppliers began to use them.

Corruption is another disturbing cryptocurrency risks. The European body expresses concern about the fact that half of decentralized payment used to finance illegal activities.

But experts say than usual to acquire bitcoines amounts greater than 300 € is to go to a company like Coinbase exchange, Kraken or Bitstamp, and do so between individuals, which does not leave such a broad range of corruption.

Bitcoines transactions leave an indelible trace. Although personal data are not required, large transactions suspected of corruption can be traced, which, according to Gomez Toribio, is a difficult technical challenge.

“While it is true that you can not prevent bitcoines from person to person are transmitted, transactions are public and there is no banking secrecy, so in many cases it is possible to identify who transferred the money.” In fact, according to bitcoin.org website, “protecting your privacy with bitcoines requires some effort.”

With no previous method was possible to send money to an account of Twitter, who serves as a ticket to a friend. “The Bitcoin there because we need something similar to cash on the internet,” said Toribio Gomez.

Lastly, its nature causes uncertainties in the way they should be taxed. Paul Uslé believes that agencies such as the Tax Office should respond. “But they have decided to remain silent, which decisively affects many companies are choosing to establish itself as society in other states.”

In the experience of the creator of the first company incorporated in this currency, Toribio Gomez, payment is not tax exempt, and the companies that make Bitcoin billed it as they would any other physical goods. His company Coinffeine is an application that connects users to buy and sell digital goods.

But even the Bitcoin is not an official currency. Therefore, in bitcoin.org they warn: “It is your responsibility to ensure applying taxes and other regulations issued by the government or municipality.”

It seems that the future of this market created from a mathematical algorithm passes from the various agencies that agreement is reached on the regulation. “Its success depends on the trust users put in it. Is necessary to promote the creation of an office for the management of consultations on Bitcoin, “says Uslé.

The expert recognizes that in order to succeed, there must be more understanding by the general public, and is skeptical of the idea that someday as common as money well considered; but contends that, if it does not happen, “the Bitcoin would have been a very valuable to draw conclusions about how it should work a decentralized currency experiment”.

In Spain the Bitcoin walks slowly, but surely. Serrano de Madrid street is not only the most expensive in the capital. Since the end of 2014 is the longest in Europe ‘Bitcoin street’. Some 50 establishments, including luxury stores such as Louis Vouitton and Agatha Ruiz de la Prada, cafes and grocery stores accept payment with cryptocurrency. This street also is a cash Bitcoin, which immediately becomes a ticket euros in the equivalent in Bitcoins.

The experiment, which has not yet a success, provokes skepticism entrepreneurs. For Oscar materan, an employee of the candy store and telling OnlyUSA be excited about this change, the biggest problem is “the effects of currency, much larger now that demand is still very uneven”.

However, Félix Moreno de la Cova, one of the promoters of the initiative, is optimistic: “There are some 110,000 transactions per day. It is estimated that there are 1 to 2 million next year. ” Although not even notice at street level, the market

It is growing. (Source: SINC)

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