In the weeks before Brexit, bitcoin crashed, plummeting to -23%. Immediately after the victory of the Leave, a small there was on the contrary a small boom while the pound collapsed.
That of cryptocurrencies – in fact, of bitcoin – has become a real parallel market, regulated by the same dynamics as that of the “real world” but based on new digital dynamics, where coins have real features .
The market is preparing for a new turbulence: from today the number of bitcoins generated will be halved. What will be the effects on the value of bitcoin are still to be seen.
We talked to one of the first Italian miners, white rabbit, about bitcoins about their role as a safe haven, and about the future of the internet.
The Submarine: How long have you been involved in bitcoin, how did you get into the world of bitcoin?
White rabbit: We approached bitcoins on the advice of a friend, passionate about the internet and video games – at the time bitcoin was widespread especially on the deep web, and he was talking to me about that. I discovered this parallel world on the internet where bitcoin took root and developed because it allows guaranteeing a level of privacy that a centralized currency cannot allow.
Let’s step back, what is bitcoin?
Bitcoin is a virtual currency, which is distributed through mining – the coins are mined, exactly as if it were a gold mine.
To guarantee the work of extraction, a set of data is used which is called Proof of work, proof of work, which allows to guarantee the validity of the extracted coin.
This system was developed because, in a context of decentralized money production, a verification system is needed.
In the context of an encrypted transaction – and this occurs in a way that is not particularly different from how, for example, mails can be encrypted with PGP – a block of data is exchanged that contains not only the addresses of the two parties and the amount, but also how much necessary for miners to confirm that the exchange is taking place with legitimate bitcoins to spend.
Today, a few hours before halving, each miner earns from the extraction of bitcoin in proportion to the computing power it offers to his group of miners to earn with crypto
What does it mean that they are divided by their power?
The mine is public, so anyone who owns a high-performance computer can extract the coin. Having said that, to date the operation cannot be performed from home, with a small investment: the extraction is now entrusted to large pools of computers that are in countries where the activity is cheaper and a return on investment is easier.
Isn’t that something a person at home can do with their laptop?
Now no longer: there is no more room for those who, like early adopters, started out as a joke, as a game. So much so that bitcoin early adopters didn’t even know what to do with it. At least until pizza day, the day of the first bitcoin transaction: ten thousand bitcoins paid for a pizza in America.
Today is six million dollars, ten thousand bitcoins?
Exactly those who started in 2008, in 2009 today find themselves with a considerable amount of money – the algorithm, by design, extracts money on a logarithmic curve. Bitcoin has a total of 21 million coins.
Is it as if it were a gold reserve?
Yes, it is useful to think of bitcoin as if it was a precious stone that has limited availability over time, and its value depends entirely on the demand that is produced around it.
Bitcoin’s first speculative bubble started during the Cyprus bail-in. Cyprus was threatening forced withdrawals from current accounts. Bitcoin, being an electronic and encrypted currency, allows you to keep money in your computer instead of in the bank, and nobody can touch that economic reserve.
So when we got to last week’s referendum there had already been episodes that saw bitcoin become a safe haven asset.