What I learnt about Bitcoin?

I was late. I rushed to the boarding gate to catch my flight only to be told that it is delayed by 45 minutes.

It was 9 pm and a delay announcement was not a welcome piece of information. It never is.

I looked around to find a place to sit and just a little away, there was – one seat, next to a gentleman. He was a Japanese.

Politely, I asked him if there was someone occupying the seat. He gestured I could sit. I quickly plonked myself.

I had a good amount of time to while away. I first pulled out my phone to check messages.

“Bitcoin is selling at Rs 78k today.” Piyush pinged me.

“I heard it crossed $1000. Are you buying?”

“Yes, it has crossed $1000…I am mining bitcoins. Mining generates a small amount of bitcoin daily. I have about Rs 2k  worth of bitcoins now.” Piyush was a techie and an explorer.

“Oh yes, you had told me.”

“I think the price will keep increasing till the next 4 years.” Piyush made a forecast.

“Why so?” I was curious.

“Because after that the pace at which new bitcoins generated will be far less. There is a cap to the total amount of Bitcoins generated. It is about 21 million out of which approx. 17 million have already been mined. That makes it valuable.” Scarcity does play a role in increasing value.

He continued, “Now in India you can even pay bills, do recharges by Bitcoins. As people start to accept it as currency, its’ value will only increase.”

“Wow!” I was slightly surprised to know about the increasing acceptance of bitcoin.

“How can I do mining?” I was eager to participate in the creation of some original ones.

“For mining, you basically need to allocate a certain amount of computational power to the Bitcoin network. For every successful computation, you are rewarded a fraction of a Bitcoin.”

“Oh Ok.” I didn’t feel too enthused with this tech part coming in.

He continued. “Earlier the network was pretty small so you could start mining even using your computer. Imagine keeping a running computer and it generates money!

Anyways, now the network is large and there are too many miners. People even mine in groups, which results in better chance of success hence more bitcoins.

There are companies which offer bitcoin mining services hosted on cloud with optimised hardware and software. It comes at a price much lower than if one had to set up on one’s own.” Piyush explained to me patiently.

“Are you using such a service?” I asked Piyush.

“Yes. I purchased a life time plan. The plan remains active until the mining is profitable. That is, until the cost of running the computers is less than the value of the Bitcoins generated.” This was a smart method.

“Awesome! There seems to be a huge industry working out there catering to Bitcoins.”

“Yes. As I said, payments are accepted in Bitcoins these days. These movie tickets booking site and another payment gateway accept Bitcoins.”

“Seriously, I didn’t know that.” This was quite a news to me.

Piyush went offline as he had to go for a meeting.

Now I have been following this whole bitcoin phenomenon for sometime. I have thought several times about buying a few but for some reason held back.

At one point, I wanted to accept my fee in bitcoins. But there wasn’t too much clarity about its future. So I dropped the idea.

I switched to checking my twitter feed and lo I see a tweet from Brian Chesky, CEO of Airbnb.

Thanks for the 2,000 submissions. Most popular: Bitcoin, Guest Loyalty, upgraded homes & services, group travel, things to do, and Mars https://t.co/DbrBSTDlCl

— Brian Chesky (@bchesky) December 30, 2016

The top voted request for a new feature on Airbnb is Bitcoin acceptance.

My quick thoughts were “is the world moving to a new currency? is the currency in my pocket going to be worthless soon?”

I shook my head. “That can never be true.”

I turned to the person sitting next to me, the Japanese fellow.

“Excuse me, if you don’t mind can I ask you something?”

He looked at me surprised for a few seconds, then smiled and said “Sure.”

“Do you use Bitcoins?”

“Quite a bit.” was his considered response.

Whoa! I couldn’t believe that.  I ask the first guy and he says yes.

“Since when have you been using it and what for?” I was super excited and  shot out my next question.

“From its earliest days. It wasn’t so popular then but lately I have been using it for several things. Hotel Bookings, Recharges, including payment to certain vendors for their services. There is greater acceptability now.”

“I know. I just had a quick exchange with a friend who mentioned the same thing. In facts he mines bitcoins. (pause) How do you get your Bitcoins?”

“I mine them too.”

As soon as I heard this, I had a feeling of being left out. The whole world seems to be mining Bitcoins, why am I not doing it?

“Do you think Bitcoin is going to stay, or is it just another fad?”

“I don’t know the right answer on this one. It is better if you look at the history of Bitcoin a bit.”

“Since you said you use Bitcoins from the earliest days, you would know some of this history, right?”

He smiled. “Bitcoin was born in January 2009, 3rd Jan to be precise, almost a year after the financial meltdown, which was the reason it was born. The financial system and the Governments had failed the common man. Their excesses and greed led to the Financial Crisis of 2008. It was difficult to trust them and the money they print. There is no one to stop them.

Till 1971, every piece of currency could be exchanged for Gold. That’s not the case anymore. Countries have printed paper currency freely without anything to back up its value. Our currencies stand on shaky ground. It has value as long as the government says it has value. If they declare otherwise, it is worthless.”

The recent Demonetisation episode quickly flashed in my mind.

My cynic self returned. “Are you saying that Bitcoin is going to be the alternative to other currencies?”

He smiled faintly. “I hope that is the case. Though I am not sure. With what has happened so far, the Bitcoin has only become stronger. Its awareness and usage has increased.”

I couldn’t disagree and mentioned. “I just saw that the top most voted request for a new feature on AirBnB is payment via Bitcoins.”

“You see, that’s the point. And the advantages with Bitcoin are several.”

“Tell me some.” I leaned forward.

“Bitcoin is an electronic crypto currency, which means that a computer code generates it and manages it. And before you think it can be copied, let me clarify it cannot be.”

He almost read my mind. “OK and how is that possible?”

“Every time a bitcoin is created or transferred, it gets confirmed in a network by several participants and results in a permanent record with a unique key and a timestamp. The network is the clearing mechanism and is real time, almost. Each of the confirmed transactions becomes a block and the entire network resembles a blockchain. ”

I was still not able to get my head around this phenomenon completely.

“Ok, what if someone breaks into this network and destroy all records.”

“It has been tried many times but the framework has defended itself against some of the most vicious attacks.”

“What about privacy?”

“Bitcoin is a crypto currency. Also, while the transaction records are completely open, the identities of the participants are hidden. No one can control or regulate bitcoin. It is self controlling, self regulating.”

“The governments will kill it. They will not like something they can’t control and poses a threat to the currency they issue.” I said it with a cynic authority.

“It’s like saying that the governments will kill the internet.” he retorted instantly.

Now this got my head spinning. This guy is equating bitcoin to the internet. Has he gone crazy?

“This is not crazy. You see there are all the reasons it might work. There is more uncertainty than ever before. Paper currency or those issued by governments is not as sacred as it used to be, specially with the Gold Standard going away. And simple, Governments cannot be trusted.

Bitcoin has all the potential to be the new world currency. It doesn’t suffer from Gold’s weakness – it can be sent across instantly, it’s electronic and it’s encrypted. It has got everything that people can trust in.”

“Hmm. This almost sounds like a revolution in the making.”

He just smiled.

The boarding for my flight was announced. I got up to go.

“My name is Vipin. Thank you so much for this learning.” We shook hands.

“I am Satoshi. It was a pleasure.”

I hurried as my name started to be called out. Suddenly, something struck me. “Satoshi!” I turned around. The guy had vanished.

I scratched my head. “Had I just met Satoshi Nakamoto, the one who invented Bitcoin.” I was overjoyed.

No one has ever seen Satoshi Nakamoto, the creator of Bitcoin and who was responsible for this entire conversation.

As soon as I get back home, I am going to start mining bitcoins for myself.

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Interested in reading more about bitcoins? Here are a couple of links:

The Crypto Currency –

Wikipedia –

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Between you and me: What is your view on bitcoins? Do you mine them? I would love to learn more from you.