Bitcoin, Cryptocurrencies, and Alternative Currencies

cryptocurrencies-600x450

Lately, a few people have asked me to look into “Bitcoin” and a few of the “Cryptocurrencies”. They all basically work the same way, and they all have poor vocabulary (using words incorrectly), myths, misunderstandings, and lies.

Below is:

  • A Very Basic Definition
  • Current Method of Bank Drafts
  • Cryptocurrency Transaction
  • The Concept of Alternative Currencies
  • The Book on Alternative Currencies

A Very Basic Definition

The easiest explanation is that there is no “bitcoin” – the term, and the associated “bitcoin mining” are misnomer. The terms are improper use of the english language and they convey concepts improperly. Said another way, by using the words incorrectly – they create misunderstandings about how things work. This is done repeatedly and it adds to the confusion.

Bitcoin and related “Cryptocurrencies” are nothing more than electronic ledgers. They are very similar to your checkbook ledger with one exception – other people validate your transactions.

To understand this better I will illustrate with two explanations. 1) Current Bank Drafts 2) Cryptocurrency Transaction. These illustrations are oversimplified.

Current Method of Bank Drafts

  1. Write a check (or bank draft)
  2. Give the check to the person you are paying
  3. Person with the check goes to bank
  4. Bank exchanges the check for cash
  5. Bank returns the check to you
  6. The bank receives a transaction fee

Cryptocurrency Transaction

  1. Two parties agree on a monetary exchange
  2. The party that is paying puts money into a “Bitcoin” ATM
  3. A set of “Bitcoin mining” machines validate the transaction
  4. The party receiving the money withdraws money from a “Bitcoin” ATM
  5. A set of “Bitcoin mining” machines validate the transaction
  6. The “Bitcoin” ATM and “Bitcoin mining” machines receive a transaction fee

The Concept of Alternative Currencies

Bernard Lietaer, the designer of the European Union currency – the Euro (€), put out a book in 2013 entitled

Rethinking Money: How New Currencies Turn Scarcity into Prosperity

That same year he and his coauthor did a speaking tour. They spoke to NPR’s Radio Program To The Best Of Our Knowledge. The program cannot be found on the regular website. It is on the archive at: http://archive.ttbook.org/shows-by-year

The radio program itself (audiocast) is available at:

http://archive.ttbook.org/book/alternative-currencies

The audio podcast is about 14 minutes long and is available at:

http://archive.ttbook.org/listen/68266


The Book on Alternative Currencies

Bernard Lietaer and Jacqui Dunne

RETHINKING Money – ISBN 10: 1609942965 ISBN 13: 9781609942960

Rethinking Money: How New Currencies Turn Scarcity into Prosperity
Bernard Lietaer; Jacqui Dunne

ISBN 10: 1609942965 ISBN 13: 9781609942960

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