6 Things Bitcoiners Are Talking About That You've Never Heard Of

A recent interview with a Bitcoin enthusiast revealed six interesting topics about Bitcoin's value and future functionality.

Jan 12, 2014 at 11:00AM

Not five minutes into the interview, and Ryan Findley -- the Principal of Neominds Labs in Philadelphia, Pa. -- had already bulldozed through what I deemed my most difficult question. 

I had asked Ryan, "Does Bitcoin makes sense for businesses?" To which he simply replied, "Bitcoin works if you're interested in putting the time into it to learn about it."  

It was the perfect answer. I could have ended the interview right there, but considering I had Ryan on the line -- and he's forgotten more about technology then I'll ever hope to understand -- I asked, "What do you find interesting about Bitcoin?"

Strap in, because Ryan took me down the Bitcoin rabbit hole. Here are six of the most interesting topics he touched on.

Down The Rabbit Hole

Source: YouTube.

1. This is what gives Bitcoin value
In a counter-piece to Krugman's, "Bitcoin is Evil" -- in which Krugman suggested there isn't a clear value for Bitcoin -- Coindesk.com published an article that proposed Bitcoin holds value as a collectible, similar to gold or baseball cards.

The best answer seems to be a combination of everything. Bitcoin has value as a means of transferring currency, its peer-to-peer network, the technological innovation that it is, and Bitcoin, like gold, has buyers willing to use it and merchants will to accept it.

2. "Bitcoin is fractally interesting." -- Ryan Findley
A fractal is a mathematical phenomenon discovered by Benoit Mandelbrot in 1979. The basic idea is that patterns in nature repeat themselves. Think of, for example, a tree. The base of the tree will grow branches, and those branches will grow branches in a similar pattern -- and so on and so forth.

Fractal Youtube

Source: YouTube.

Mandelbrot theorized that financial systems exhibit fractal-like patterns. A theory that is much more eloquently explained in a blog post by Jonathan Wigley in "Of Bitcoin, Fractals and a New Economy."

The article suggests that while the current economic environment behaves like a river system flowing wealth into the pockets of "the one percenters" -- Bitcoin's peer-to-peer network could turn this system on its head. 

There've also been advocates who suggest the Bitcoin market can be timed using fractal mathematics. While we don't believe in timing markets here at the Fool, nevertheless, the article "Bitcoins and Fractals" makes some interesting arguments. 

3. Bitcoin solves the Byzantine General Problem
Imagine there are a number of generals who want to attack a powerful city. To be successful, a majority of the generals must attack simultaneously -- however, since none of the generals trust each other, several plans are written and sent out by horseback. The generals are to sign the plan they agree to follow.

Now, the problem is, there's nothing stopping the generals from signing off on more than one plan -- in the Bitcoin world, this is referred to as "double spending."

I won't pretend I fully understand the complexity of the issue. I will, however, suggest Bitcoin's block-chain is considered a significant breakthrough in solving a problem many thought was unsolvable. For those interested in learning more, enjoy the full example of the Byzantine General Problem on Bitcointalk.org.

4. "Bitcoin might be relegated as the Linux of currency."
An article published on ValueWalk.com suggested that "Linux is the plumbing of the Internet," and that perhaps the same will be the future of Bitcoin and payments.

Linux Youtube

Source: YouTube.

What if we stopped thinking of Bitcoin as a currency, and starting thinking of it as a vehicle for moving currency?

The article would go on to explain that if you bought $50 worth of Bitcoin, then transferred it to a buyer who converted it immediately back into $50 -- excluding the possibility of extreme volatility -- the actual monetary value of Bitcoin is moot.

5. Transactions are slow, and zero confirmation transactions are dangerous
Bitcoin transactions can take up to 20 minutes to be fully confirmed. Which, as I'm sure you can imagine, would gum up the line at a coffee shop.

So, some merchants are approving purchases without receiving confirmation. These are referred to as zero confirmation transactions -- and while it speeds up the transaction, it opens the merchant up to significant risk.

It's been suggested that Bitcoin transactions can be revoked, but this doesn't help the coffee shop owner whose latte someone just walked out the door with.

6. Green addresses work in theory, but have some drawbacks
There have been several stabs at making zero confirmation transactions less risky for merchants. One of the more intriguing is green addresses.

The idea is that instead of person A sending his Bitcoin directly to person B, he uses a trusted intermediary. So far, mtgox.com and instawallet.org are two of the early adapters of the process. 

However, it was suggested in Bitcoin magazine that these "greenlists" are potentially dangerous to the Bitcoin ecosystem. The article explained that anonymity is important to many Bitcoiners, and those who choose not to be greenlisted are likely to see a decrease in the value of their Bitcoin because merchants are more likely to accept Bitcoin from the trusted addresses.

One more big change for the financial system
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand new company that's revolutionizing banking, and is poised to kill the hated traditional bricks-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers