A weekend of Blockchain and Bitcoin

So, this weekend I have been venturing into the world of Bitcoin, Blockchain, Ethereum and all that jazz.

Now, I'm a tecchie for work. I mean, I develop software for a living, and I primarily focus on the Financial sector. So, I am probably very late to this game for someone in my field. But, hey, come on, give me a break, I've been busy ;)

So I guess, the first question to answer is, why now? Well, this is easy. My wife said "Hey, I just read an article in the FT that the new big thing in software is something beginning with 'B'". I know, non-tecchies eh?

This got me thinking a few things: "firstly, what the hell is my wife reading the FT for?" Secondly, "beginining with 'B', cmon, give me at least a hint!" And finally "Why are banks and hedgefunds getting so wound up about blockchain?"

Now, you might find all this obvious, but I honestly knew very little about bitcoin, or its bed-fellow; blockchain. I felt like I had buried my head in the and a little on this front, and I don't like feeling like that, so I thought "C'mon Rich, let's get stuck into this."

So what have the past couple of days taught me. Well, let me summarise all that for you :

1> The banks really ought to be very afraid. As soon as the world catches on, the banks are going to become almost pointless. I don't need someone to store my money for me, I have a wallet, and get this, I don't even need to worry about the stupid £75000 guarantee on my balance, my wallet can't be hit by a bank's trading errors, or "a run on the bank". It's up there for good! If I want to send bitcoins to my mum in Patagonia (my mums actually in Birmingham) then I don't need 15 banks involved all charging me their 4% along the way, I just send her the coins.

2>Speaking of when the world catches on, once I can get my employer to pay me in Bitcoins, and I can do my Shopping with Bitcoins, buy my car etc. it's not a big leap to start imagining taking a mortgage from a consortium of lenders and paying very reasonable rates.

3>This started me thinking: "Why the hell am I paying that witch Theresa May and her fellow evil-doer Phillip Hammond taxes?" If I could set my business up offshore and then blah, blah, blah - yada yada yada. Yep, that's right; potentially I could use Bitcoin as a way of hiding my income from the Government and then I could end up being like Google, Starbucks and Amazon and pay bugger all tax and be a complete scumbag too. So yeah, regulation is going to have to become involved at some point. I don't like the fact that the countries going to the dogs, but if we all stop paying taxes (like big business does) then we aren't going to help.

4> Enough about Bitcoin, what about blockchain? Yeah, I'm not totally convinced where this is heading yet, but hey, it's been 2 days, give me a break! I've started playing around with Etherium, I've written my first "Smart Contract" and I can kind of get that it could be quite cool, but I'm not getting how a really slow moving, write only distributed, peer to peer, consensus algo driven database is going to be world changing. Maybe it could replace the need for the intermediaries? Do we remove the Exchanges from the trading equation? If I can write a smart contract, does this mean that I can create my own future, option or whatever without the need for clearing or any intermediary? Blockchain doesn't deal with liquidity issues, no counterparty, no trade. More research needed here, but I know hedge funds are looking for people who know this space, so I am missing something.

5> Ooooh, Bitcoins are expensive to buy! I don't mean the price, I mean the spreads! Crickey! I tried to buy £50 worth of Bitcoins, and they wanted to charge me £2 for the privilege! That's 4%! OK, if the in and out fees are 4% at either end, then it's still cheaper than Western Union for sending money to my fictional Patagonian mother, but come on! I am clearly going to have to earn Bitcoins, they are way too pricey to buy from the likes of Coinbase.

6> But distributed DBs are really cool for bettering things like LinkedIn, Facebook etc. Take this site, awesome! No central corporate nasty gathering my info on their servers and selling it on to the highest bidder, this post is distributed baby! It's everywhere! And for some unknown reason, I get paid for writing it! Not sure how that works, but it's cool! I'm in!

7> I forgot to mention security. Doh! Silly me! The blockchain and therefore Bitcoin are not easy to hack. But I can't be bothered to go over all that again, because absolutely everything I have read or watched over the past couple of days has rammed down my throat how impossible it is to hack them. So I'm guessing you know this, if not, read absolutely anything you can find on the internet that mentions Bitcoin or blockchain.

So that's my two days two pennies worth! I'm going to keep researching over the next few months and I'll probably post more, as I love writing :)

If you like this, please give me a big thumbs up, if you don't, please give me a big thumbs up anyway. If I am miles off the mark, missing the point or just delusional, please give me some comments to point me on the right path.

For more about me or my business please visit ActiveWorksConsulting.com

A weekend of Blockchain and Bitcoin

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