Blockchain Basics by Alexander Tsikhilov

Author:Alexander Tsikhilov [Tsikhilov, Alexander]
Language: eng
Format: epub
ISBN: 9781913340902
Google: JuOVzQEACAAJ
Publisher: Clink Street Publishing
Published: 2020-11-15T23:22:49.033970+00:00

Bitcoin as a means of payment

Once the digital coins of the Bitcoin network received a serious monetary valuation in the financial market, individuals with significant holdings of these digital assets became genuinely wealthy people – to the great surprise of the public (and perhaps to the surprise of the owners themselves!). Many of them possess cryptocurrency capital estimated at hundreds of millions – and in some cases billions – of dollars. Of course, as the creator of the Bitcoin project, Satoshi Nakamoto was the first person to draw attention. Being the first miner in the network which he created, he managed to get a large number of coins, since the initial level of complexity of the system was very conducive to such. At one point, people were conjecturing that Nakamoto owned approximately 1 million coins; more recent studies, however, suggest that this number does not exceed 700,000. Even so, current capitalization projections place his fortune around USD 3.5 billion. Thus, the mysterious inventor found themselves ranked alongside other world billionaires in the Forbes magazine, and during the heyday of Bitcoin’s price records, Nakamoto even edged close to the title of the World’s 50th Wealthiest Person.

For this reason, it is impossible not to recall the high-profile Winklevoss twin brothers – Cameron and Tyler. The former Harvard students and once Olympic athletes managed to sue Facebook creator Mark Zuckerberg for about USD 65 million in compensation for the idea of the social network which Zuckerberg had allegedly stolen from them. The brothers somewhat fortuitously invested a portion of their settlement money in bitcoin, when it still cost little more than USD 100 per coin. The presumption is that they acquired more than 100,000 bitcoins, which makes them the owners of a fortune close to USD 500 million (depending, of course, on the fluctuations of the market rate of bitcoin on the exchanges). There were rumors that the enterprising brothers had printed the secret keys to their bitcoin addresses on paper which was then cut into several parts, with each piece being separately place in bank safes in different US cities. This complex operation was carried out with the intention of protecting their digital assets from possible theft by network attackers.

And finally, it is worth mentioning once again the former owner of the Mt. Gox exchange Mark Karpelès, suspected of embezzling approximately 650,000 bitcoins, which he claims were stolen by hackers. If he indeed is secretly in possession of this treasure, its current appraisal would amount to more than USD 3 billion, which is comparable to the wealth of Nakamoto. As concerns the case of the inventor of the blockchain technology, however, the legitimacy of his purchase of bitcoins cannot be called into question, since they were obtained via entirely transparent mining processes.

A number of payment systems have been built on the basis of blockchain technology, where there is a significant number of active participants capable of accumulating certain amounts of cryptocoins. This begs the legitimate question: what goods and services could be

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