Double exposure portrait of young woman and computer board with golden bitcoins. Golden bitcoin lying on microscheme. Bitcoin mining.
If the terms Bitcoin and Ethereum sound like a foreign language, you are not alone. As mysterious as they may sound, they have become increasingly popular around the globe. This totally digital currency, frequently referred to as crypto, is used as a peer-to-peer payment system and as an investment. For online security, the currency uses encryption technology. This is how its name originated.
Bitcoin is also referred to as BTC and Ethereum as ETH, abbreviations representing their value. For example, 1btc is the same as one bitcoin; much like one dollar is written as $1.
Stored in a virtual wallet of sorts, Bitcoin and Ethereum are the most common and most recognizable but aren’t the only forms of this currency.
“There are at least 10,000 types of crypto,” said Bill Evans, founder and CEO of Liberty Fox Technologies, LLC, a software consulting firm based in Huntingdon Valley, Pennsylvania.
Some of Evans’ consulting work focuses on blockchain technology. “It is this same blockchain technology that creates the opportunity to have unique and scarce assets in a digital world,” explained the 35-year-old Lansdale, Pennsylvania resident.
Blockchain enabled the creation of cryptocurrencies and non-fungible tokens (NFTs). To put it in the most basic terms, Evans described this software technology as the opposite of being able to copy and paste limitless words and documents on a computer.
And although Bitcoin, in 2009, was the first implementation of blockchain technology, the software is based on something called a Merkle Tree. “Merkle Tree was patented in 1979 by a Massachusetts Institute of Technology (MIT) student, Ralph Merkle,” said Evans.
Ever since Bitcoin officially kicked off worldwide in 2010, it has created quite the buzz. Millennials were the first to jump in on the strategy, but they’re not the only ones. Its reach has evolved and expanded exponentially.
The cryptocurrency market became more mainstream in 2017 and, observed Evans, is drawing people from a broad population and age range—from 15 to 65 and beyond. Although minors may be greatly intrigued with crypto, it is their parents who partake in the investments.
Evans, who has been dabbling in crypto since 2014, is quick to add a disclaimer. “I don’t offer advice on the investment,” he said. He does, however, have a plethora of knowledge on the topic as he’s been reading books, articles and abstracts for the past decade. He’s also involved in the crypto community and attends events on the subject.
His company, Liberty Fox Technologies, with about 20 employees, works with a variety of clients, including mid-sized and enterprise companies such as healthcare organizations and Fortune 500 businesses like Verizon, AT&T and Caterpillar.
Because of Evans’ work with businesses and relationships with community organizations like chambers of commerce, he is often invited to speak on the topic. His presentations, called Blockchain in Practical Applications, are typically about an hour in length and serve as a basic primer to groups of investors. The educational component also addresses what various companies are currently doing with the currency.
According to Evans, the international currency is a global phenomenon and unlike other currencies. For example, to be of equal value, a U.S. dollar must be converted to a euro. This is typically done at a bank or international money exchange. Yet cryptocurrency has the same value everywhere in the world. A bitcoin is a bitcoin no matter the location!
“People cannot touch or hold any coins or bills,” said Evans. The currency, however, is not regulated by banks or the United States government. Evans emphasized that most financial advisors in our country must be fiduciaries; the crypto market has no such requirement. The government, he said, is still trying to figure out if and how the currency can be taxed and regulated and what its future may be.
“The crypto market is very volatile and moves in substantial percentages every day,” said Evans. “The Bitcoin market moves faster in a month than the stock market does in a year. One bitcoin today is worth about $40,000, but they can be purchased in fractions. People can invest as little as $5.00.”
Evans added that a myriad of factors can affect the market: world news, U.S. news, politics, people, businesses announcing their stance on the currency.
For anyone interested in getting started and learning the basics on investing, Evans cited two reputable websites: www.coinbase.com and www.gemini.com/cryptopedia.
“There are many websites, but these are the safest and the easiest entry for U.S. citizens,” he said. “The sites are set up like an exchange; they let you trade dollars for cryptocurrency.” Evans added that more and more companies are starting to accept crypto as a method of payment. These include PayPal, Tesla (Bitcoin), overstock.com and Venmo (coming soon), to name a few.
Evans first became familiar with the currency in 2014. “At the time, there was a new buzzword called ransomware,” he said. “We were trying to understand how to write better software to protect our clients from a cybersecurity perspective. Hackers back then were demanding bitcoin. So, I wanted to learn more about that technology.”
Cryptocurrency transactions are made directly from one user to another; there is no bank or financial institution involved, no middleman. Admittedly, according to Evans, one of the things people often struggle with is that the currency seems intangible. Evans, however, underscored that only about 10 percent of U.S. money is cash. “We all just look at bank balances these days and swipe plastic cards,” he said. “We never really hold the money anymore.”
It is also no secret that people have become multimillionaires investing in crypto. “A good piece of these investments is purely speculative,” said Evans who believes their value is also driven by companies and industries that announce their affinity for the currency. “Bitcoin climbs, for example, when a big company announces that their using or investing in it.”
One example Evans cited was in Tesla’s recent quarterly shareholder’s report. The electric car manufacturer reported $1.2 billion in Bitcoin holdings. This announcement caused a surge of excitement.
The answer to this question is somewhat cryptic. The person who created the currency has never revealed his/her identity, but took on a pseudonym, Satoshi Nakamoto. It is not known where this person lives nor their motivation for being secretive. What is known, according to Evans, is that this person created billions of dollars of wealth and has never touched a cent of it.
Interestingly, blockchain code is an open-source technology. Evans explained that it can be shared with the world, anyone can use it. “If someone proposes an update and more than 50 percent of users agree to enact that change, it becomes the next version of cryptocurrency,” said Evans, adding that this happens on a regular basis.
NFTs are gaining in popularity but may seem even more abstract as they are in the early stages of development. Evans explained the concept: “Fungible just means that if I have a dollar bill and you have a dollar bill, they are basically the same. But if my dollar bill has Pablo Picasso’s signature on it, then it’s going to be worth a lot more.” Thus, it is non-fungible.
NFTs can represent a variety of assets, such as art, collectibles, real estate. “Each individual NFT is solely unique in its own right,” said Evans, giving the example of original artwork where NFTs are gaining ground. “One piece of art can be sold at Target for four dollars; another piece of art can be sold at Christie’s Auction House for four million dollars. NFTs create scarcity and uniqueness. Artists, musicians and photographers can take their work product in a digital world/space and secure it in a way that it can be uniquely sold and not copied and pasted.
“A song could be an NFT,” continued Evans. “The NFT is the copyright; the creator owns the rights to it.” Recently, the well-known rap artist, Snoop Dogg, purchased Death Row Records and announced that he is converting the entire record label to an NFT organization. Evans noted that going forward, the company will be producing all music as NFTs.
NFTs will create new opportunities for digital artists, explained Evans. “They will allow digital artists to secure the uniqueness of what they’re producing. In the past, people could copy and paste digital artwork as opposed to analog artwork that is created on canvas.”
Evans predicts that NFTs—already a multimillion-dollar business—will increase in popularity as more and more people realize their value.
“Crypto could shepherd in a future economy for the world,” said Evans. “The technology is fully there, but it would really depend upon whether governments and people are ready for it.”