Even as news cycles usher in financial news that topples itself before it rolls off the page, bitcoin still has an air of mystery to those who were not classified as members of the group of early adopters. This is especially true within the context of holiday shopping and consumer interest. And yet, bitcoin is so much more than the sum of its parts or a simple definition involving consumer interest.
A deeper analysis provides an articulation similar to a qualitative methodology in a psychology research paper. The qualitative methodology provides a description or definition of that which is studied, in this case encompassing the financial industry.
Starting with the Definitions Inherent in Bitcoin History
In order to properly understand all of the terminologies that fit into the broad category of cryptocurrency, there needs to be a trip back in history. Fortunately, it is a very short history and it shares commonalities with other facets of a shared industry.
Back when ATMs (automated teller machines) came on the banking scene, they were all the rage. Now a person was able to obtain cash during non-banking hours. ATMs released the tethers that bound them to banks and long bank waiting lines. It did not take very long for ATMs to become commonplace and existing as if they had always been a part of the personal (and business) banking scene.
To some extent, it may be said that fintech began, even then, at the inception of the ATMs. Yet, the word, ‘fintech’ has its own history and evolution of definition. For more on fintech, read this interesting bit of fintech history.
Fintech, like it sounds, represents financial technology, at least to an extent. It would be similar to the way that a carpenter would view his tool belt or a concierge doctor would view his medical bag. Fintech represents the technological financial tools necessary (or at least desired) for managing a modern banking presence.
In its simplest form, fintech would involve using a computer, internet connection, and the ability to move money between accounts, even at different institutions. PayPal is representative of all that is modern in the area of fintech and yet there is more to be discovered than even what PayPal represents.
But, fintech is more than that, representing a required stage on which a cryptocurrency dance takes place.
Wealth Management and the Wealth Industry
Wealth management, as it sounds, is the management of wealth. It isn’t as if the stockbrokers on Wall Street (or their counterparts in Century City, California) hang shingles that say “poverty management.” As if predicting the future, the idea behind the management of wealth is also the growth of wealth. In doing so, there is the investment portfolio, the stock market analysts, and whomever is found to do it best (resulting in the largest net worth and the most impressive wealth jumps). Hollywood Hills joins with Beverly Hills to stare down the cocktail parties produced as a behest of the stock market directives of Wall Street.
While the wealth marches forward on both coasts of the United States and now around the globe, thanks to the inception of such wealth opportunities as cryptocurrency, there are the stodgy, proven methods of investment portfolios of the past. There are also the bygone stories of the Great Depression and the not too far distant Madoff Madness. The world was ready to listen, to partake in what might be new and might make a larger jump into super-wealthdom.
The culture was ready for it. The culture was ready for something.
Weaving the Future into the Present
Explaining what bitcoin is, is almost as difficult as explaining ATM to those who lived in the 19th century.
A visualization of something like a blockchain might include a picture along the lines of an abacus laden DNA strand building upon itself, into the near and yet far off future. The picture helps but does not define the bitcoin or blockchain.
Bitcoin is like virtual money, existing in the cloud as if it doesn’t exist and yet not existing to a point where it is used more and more in virtual transactions. It is a contradiction and yet an intriguing mystery. Bitcoin offers freedoms from the known. It presents questions, as well. Bitcoin lends itself to the mystique of the Swiss bank account concept.
The Simplicity of Two Aspects
Two aspects of definition that help to label the understanding of bitcoin in its simplicity are the following:
- Exchanging bitcoin demonstrates bitcoin value. If no one accepts bitcoin as payment for products or services rendered, bitcoin has no value as virtual money. Value is reverse-engineered. It provides an algorithm that defines cryptocurrency value.
- The second part of this equation is the ability to assess how many bitcoin are in possession. While bitcoin is anonymous and it is virtual money, it would be too easy (or too difficult) for people to make up an amount of bitcoin that is owned without some sort of proof that it is owned. Even virtual money, unless it is on a game board, needs to have a backing that supports its existence or everyone on earth could make themselves billionaire bitcoin owners and there would be no value in any exchange. This is where blockchain comes into the picture (again).
The BlockChain Bank Statement
When opening the mail and specifically the bank statement, a consumer (or business owner) may desire to follow his or her banking activities line by line to see the incoming and outgoing money trails. Similarly, there are the inroads and outroads, the incoming and outgoing of bitcoin. Since it is cryptocurrency, involving a language of cryptography, it still requires some sort of proof, as mentioned above, of its existence and acquisitions and spending. That is where blockchain enters in as a sort of bitcoin bank statement but in cryptographic terms. It is proof of bitcoin acquisition and spending. The blockchain is like the DNA strand of the bitcoin transaction chain.
Hitting the News As It Happens…
In the news, companies are helping to bring about the best of both worlds, that of the financial world that has evolved into something that is understood and managed and that of the new cryptocurrency that promises growth opportunities in wealth and wealth management.
Everyone has an opinion, including Cyril Fazel, in this Forbes guest article discussing the ICO 2.0 and history repeating itself, “dot com style.” Keep in mind that history does repeat itself and even paper money has its gold-based counterpart. So, with all of these new (and old) technologies, where do you see cryptocurrency going in the next year? So, can you see what companies are doing when they attempt to bring some level of normalization, without destruction of what is new and exciting? And, are you going to be a part of the next generation of cryptocurrency investors yourself?
