E-commerce, distributed payment systems and “magical internet money” – Ed Gotham

“money is a matter of functions four, a medium, a measure, a standard, a store”

Alfred Milnes (1844 – 1916)

What is money?  At present, by most economic standards, BTC holds up quite poorly as a form of money.  It can be used as a medium of exchange, however adoption rates (double incidence of wants) are still low, and due to the volatility in BTC price relative to USD, people are apprehensive about using it to pay for goods.  You may recall that the talk we had was actually on Bitcoin Pizza Day.  BTC is a usable measure of value, however most frequently it operates as a pair against alternative cryptocurrencies only, not as a measure against USD or commodities, though the USD pair is likely the most frequently traded.  That said, for practical purposes we must note that there are very, very few people who would walk into Starbucks in June 2018 and convert the prices from USD to “sats” or mBTC to make life easier, the same way an American expat might do with a local currency while on vacation.

As a standard, also, BTC’s properties are taking time to establish.  With the USD as an international reserve BTC has a lot of work to do to challenge something of that magnitude.  The changes, barring any sort of major international monetary collapse, would likely only come in inter-generational timeframes, as such trust takes a long time and significant reserves to establish.  Personally, I do not see grandparents using it as a benchmark for measurement of their personal wealth in my lifetime, though if I am proven wrong on this point, it will be happily so.

As a store of value, despite the robustness of the cryptographic code and software mechanism that protects the chain, it is not acting competing well, however the timeframe on this discussion is important.  The problem is not a technical one, it is a market one.  If you picked the right time to buy (almost any time before 2017), then it can be said to have increased in value, but to be a store, it is only required to preserve value, relative to another known alpha, such as USD or better still, a basket of currencies.  Specifically, it does not have to appreciate in USD terms.  The locked in 21,000,000-coin limit, with ~17,000,000 already mined and a virtually unknown amount lost on old hard drives also means the final store value is unclear.  Sadly, discussion of whether it is actually deflationary needs far more space than we have here.

So, can BTC really be a global currency?  The many solutions offered by BTC and alt-coins are a promising start to a very young industry.  Measurements like transactions per second (TPS), security and relative ease of use by even the lowest common denominators of society seem far fetched in 2018.  The advent of off-chain solutions like Lightning Network (LN) albeit controversially resolve many scaling issues as we saw in the two videos.

Perhaps the most fundamental issue that is rarely explored, perhaps eschewed by the technical discussions; is that of trusted third parties.  So far in this century we have witnessed several governments exhibit irresponsible, or simply unwise, behavior in respect of their responsibilities for monetary supply control.  It is in places like Venezuela where they are seeing inflation figures passing 16,000%, that even after the BTC/USD pair dips hard, that they are still making a significant Bolivar gains in terms of spending power.  When one also considers the benefits of passing wealth on to subsequent generations, in such a simple way as remembering a private key, then it puts confiscation, by taxation or other means such as inflation safely out of the reach of greedy persons.

Just a little reminder here, and I know I stressed this during the talk, but it bears repeating: NEVER share your private key.  NEVER.

Other things we discussed, that we do not have time to cover fully here are:  (i)  The relationship between market capitalization and number of transactions, which should give you a good impression of how quickly BTC is being adopted as a cryptocurrency standard, versus “certain other pretenders to the throne”.  (ii)  The fact that government regulators are still unsure of how to treat BTC, is it an asset, a commodity, a security, a currency?  Each respective department is vying for legislative control over the cryptodomain, which should also tell you something about how important it will become.  (iii)  The totally open nature of the BTC ledger that lays all accounts bare.  This makes it extremely unwise to use BTC to commit fraudulent or illegal activities, though some aspects of this are subject to change with LN offering routing over TOR type networks.

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51 Responses to E-commerce, distributed payment systems and “magical internet money” – Ed Gotham

  1. Edward’s intervention was very interesting and I learned a lot about digital currency. Indeed, at first I didn’t know that there were so many different digital currencies, I thought that only the Bitcoin existed. It is true that I have never been interested in this currency and we had never previously discussed this topic in my others class, so I learned a lot about this currency. I thank Edward for sharing his knowledge, the course was very interactive and rewarding.

    Liked by 1 person

  2. Hà Phạm says:

    Despite a lot of limitation as a decentralized and electronic currency, bitcoin, along with other cryptocurrencies, is being developed by brilliant engineers around the world to enhance their performance as money.
    A 3 hour class was nowhere near enough to cover every aspect of bitcoin. But Edward successfully drew an overall picture and make it comprehensible to undergraduates like us. I hope we can have more additional lectures like this in the future!

    Liked by 1 person

  3. 簡熙洹 says:

    Well balanced course analyze deeply about Bitcoin and E-commerce. There is still a long way to make E-commerce or bitcoin everywhere, but sooner or later, E-commerce is going to stand an important role in coming decades. Thx for Edward’s course, gained alot ideas.

    Liked by 1 person

  4. Although the probability for Bitcoin to become a global currency might be small. However, the technology behind Bitcoin will sure be the next mainstream technology and reform multiple industries, which is Blockchain. In order to let the new technology grow, the government has to change their policies. Therefore, I believe for blockchain to become the mainstream service, our government has to change the policies first.

    Liked by 1 person

  5. After Edward’s class, we have more understanding about Bitcoin. Bitcoin becomes extremely popular in recent years, and the price of Bitcoin rose dramatically fast, this digital currency gained its popularity by several features, it doesn’t need intermediaries, it is limited and it doesn’t be interfere by money policy. Although most countries’ government still refuse to admit Bitcoin as currency, maybe in the near future Bitcoin will be regard as a kind of currency.

    Like

  6. 羅可馨 says:

    I learned about what Bitcoin, the appearance of Bitcoin shows us that the tech community is now finding other potential uses for the technology. And Like the internet, we don’t need to know how the blockchain works to use it. However, having a basic knowledge of this new technology shows why it’s considered revolutionary.

    Like

  7. I would like to comment on speaker Edward’s class about bitcoin. It gave me the basic background about how bitcoin works in real life and what danger it involves that required our attention. Although there are some section that is not that easy to understand, Edward’s lecture lit my desire on digging into bitcoin.

    Like

  8. 林育暄 says:

    Be honest, I wasn’t that into E-commerce in the beginning, but somehow Edward’s class really inspired me to know more about it!After looking for more about bitcoin, I found out the definition of bitcoin,”Bitcoin is a peer-to-peer version of electronic cash that allows payments to be sent directly from one party to another without going through a financial institution. ” Bitcoin is definitely a future tendency that it will role the whole market soon! It is so beneficial to learn it earlier!

    Like

  9. entr.pywu says:

    Edward has an extensive knowledge and expertise in the field that he explains the profound theories in simple language. He walks through how cryptocurrencies are created, the pros and cons, and tips on how we can engage in own due diligence before investing. It was truly a fascinating three-hour talk that helps us have a better understanding of this digital asset of the future. After the lecture, Edward also offered me some useful suggestions to look at options and futures through emails. I hope Edward can offer more courses like this in the future!

    Like

  10. I had heard about bitcoin before, but I have no idea what it is and how to make use of it. After the 3-hour Edward’s course, we learned that bitcoin is one of the digital currency and it is not backed by any country central bank or government, it is a P2P network. Edward also talked about the bitcoin mining— how the bitcoin transaction works. Overall, Edward used an interesting way to explain what the bitcoin is, it makes me gain lots of interests in it, even though I haven’t completely understand yet.

    Like

  11. 劉佳芳 says:

    When I heard of bitcoin, I thought it’s a currency of one country. But after the class, I realized I was wrong. It doesn’t belong to any country ,and it’s not regarded as a real currency. The class helps me to get knowledge of the trend which is really important in our lives. Besides, I was impressed by a thing—- ledger nano s. It looks like a normal USB stick, but it’s a wallet of bitcoin. I couldn’t imagine that till I searched for it! Even though I couldn’t fully understand how does bitcoin work and the way that people use it, I’m glad that I had the class which gave me a chance to learn from.

    Like

  12. I have heard about Bitcoin before, but never truly get so much understanding about it. However, after hearing Edward’s lecture, it gave me more understanding about how Bitcoin works. Even though it would be hard for Bitcoin to become a global currency, I am sure that it will gain more popularity in the future. Although there are some parts that I still do not understand, Edward’s lecture inspire me to search more about Bitcoin. I hope we have more lectures like this in the future.

    Like

  13. I have heard about Bitcoin before, but never truly get so much understanding about it. However, after hearing Edward’s lecture, it gave me more understanding about how Bitcoin works. Even though it would be hard for Bitcoin to become a global currency, I am sure that it will gain more popularity in the future. Although there are some parts that I still do not understand, Edward’s lecture inspire me to search more about Bitcoin. I hope we have more lectures like this in the future.

    Like

  14. Anne Chang says:

    I learned a lot about e-commerce today. I’ve heard of bitcoin before but never had a deep understanding of it . Learning about how the transactions of bitcoin works and hearing about the bitcoin history and pizza joke is really interesting. Edward explained a complicated digital asset and currency in a simple way so after the 3 hour course I gained a lot of knowledge in such a short amount of time.

    Like

  15. wu winnie says:

    Well, I learned about e-commerce today. I have heard about bitcoin before, but I still don’t understand what it is. For today’s lesson, I have known lots of information about transactions of bitcoin and its history. At the first time I heard about bitcoin, I thought it may be boring, but after listened to Edward’s explaining I becoming to have interested in course. I’m glad that I had the class which gave me a chance to learn about bitcoin.

    Liked by 2 people

  16. I ever heard about Bitcoin but I never really understand how it works, I’ve heard a lot of people becoming crazy because of Bitcoin. Edward’s class gave me more understanding about how Bitcoin works. Right now, for making Bitcoin as a replacement of money I think it is still hard. Still a lot of people doesn’t understand about Bitcoin and the value of it. Maybe in the future it will works.

    marcushaliman
    s03910045

    Like

  17. In my opinion, bitcoin could be the future’s currency where every single transaction could be done through the internet with this currency. However as of right now, it is a very risky way to do transaction or to have an asset in because it still doesn’t have a clear standard regulation, and the price of it hasn’t stabilized yet. And last, its security hasn’t reached a level in which it is safe to trade using such method. There are a lot of brilliant hackers outside who could grab a sum of money from stealing of these bitcoins. In conclusion, I believe that it will be the future but even though a lot of people has known about this bitcoin phenomena, only a few really understand the risk and how it works from the inside.

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  18. CHIEH-YU CHEN says:

    The bitcoin peer-to-peer network stores all transaction history in the blockchain. Bitcoin transactions are “accounted” on the blockchain account, which is usually done with Bitcoin client assistance. The paying party needs to digitally sign the transaction with its own private key to prove ownership and approve the transaction. Bitcoin will be recorded in the address of the recipient, the transaction does not require the participation of the recipient, the recipient may not be online, or even does not exist, the source of payment for the transaction, that is, the cost, called “input”, the whereabouts of the funds , which is income, is called “output.” If there is an input, the input must be greater than or equal to the output, the input is greater than the output part of the transaction fee.
    We’re starting to realize that institutional trust wasn’t designed for the digital age. Conventions of how trust is built, managed, lost and repaired — in brands, leaders and entire systems — is being turned upside down.
    It forces many of us to have to rethink how trust is built and destroyed with our customers, with our employees, even our loved ones. In the same way the internet blew open the doors to an age of information available to everyone, the blockchain will revolutionize trust on a global scale.
    One of the reasons why Blockchain is so powerful is that it has almost no transaction costs; it is also a simple and intelligent way to automatically transfer information from A to B. The approach is as follows: The party that initiated the transaction first establishes a Information block (block), then this block will be verified by thousands, even millions of computers on the Internet.After verification, the block will be added to a link on the network. In addition to creating a record, this action will also have a history of changes in the record; therefore, if someone tampers with a block, it is equal to Changed millions of other records on the link. It is almost impossible to be able to tamper with a particular record without affecting other information. Because of this feature, Bitcoin uses this mechanism to secure the security of money transactions; but in addition to Bitcoin, the same model can be applied to many other things.
    Joyce Chen s05910032

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  19. Sharon Chris says:

    I think there is a lot of potential for Bitcoin. But I think the problem for Bitcoin is its instability of prices which make it difficult for vendors to set prices. Moreover, no one regulate Bitcoin and no one can control it. Any one can create an artificial market crisis and the Bitcoin price can rise. I think these uncertainties hinder people from using Bitcoin. However, I do admire the brilliant engineers who contributed in making this cryptocurrency. This might be a start of new mainstream financial instrument.

    Like

  20. Imelda Bella says:

    I have heard of BTC before. I was kinda interested in trying to invest on it. I had no background on economics and all I knew was that it was somehow profitable for the increase of value can change drastically anytime. Until, this class of E-commerce that brings me the whole new insights of BTC. 3 hours of super interesting class triggered me to learn more and be my base understanding that BTC is not as simply as okay.
    I got the point that many institutions and individuals still disagree with BTC. In spite of it’s easiness and fluctuation value that may be beneficial for certain individual at some moment, BTC risks are so big. Virtual currency has no on duty authority, no official administrator, no underlying asset to lock or be the base of its value. It has the risk for money ‘bubble’, money laundry and other funding for possibly crime projects. I could not say a lot on BTC moreover in USD or global broader aspects as the use of it, is illegal in my country. However, I believe, this ‘internet money’ somehow will be developed. And I hope it will have solution not to injure financial status/condition of any parties including the government.

    Like

  21. 陳瑋婷105 says:

    陳瑋婷(Seavus):BTC is a new product, and it has some uncertain things like circulation,exchange rate,popularity and so on. I think it will take us a long time to use in the international market and business. When BTC as a store of value, it has more uncentrain things, like we are not sure whether it will inflation or not, and some countries will implement a new policy to control and potect the their currency. So I think the BTC whether will be used all over the world is still unknown.

    Liked by 1 person

  22. Yen Chu Lu says:

    I am glad to join the Edward’s presentation, this lecture gives me a chance to learn more about Bitcoin. Edward used humorous verbal response and clear PPT to guide us step by step to understand Bitcoin. In addition, he always patiently answered all kind of questions and discussed further on our issues. Lastly, thanks for your vivid speech on digital currency, I learned a lot.

    Like

  23. My brother told me about bitcoin before, he told me to invest if I have money.He said better to invest on bitcoin than buying stocks. When he told me about bitcoin that day, I was searching about bitcoin more. But I still don’t really understand. I don’t know how it works and how to buy the bitcoin. After Edward’s class i have more understanding about bitcoin. about how the transaction and etc. It’s really useful for me, if in case I get a chance to invest on it in the future. Thanks a lot for the lecture!

    Merry
    S03910043

    Like

  24. 林怡瑄104 says:

    After Edward’s class, I have more understanding about bitcoin and e-commerce. Not only gives us the basic background about how they work in our daily life, but also notices us need to be careful when using them. So glad to have this lesson and get a chance to learn from.

    Like

  25. Really interesting topic. I wonder whether cryptocurrencies will ever be a medium of exchange for the masses rather than just a store of value and investment opportunity for few people. In my opinion, cryptocurrencies as a widely used medium of exchange will not happen within the next decade, but I’m certain that the methods of payment will evolve quickly and towards more electronic and internet-based payments. However, I think that third parties within the payment process like paypal or Alipay will still have lots of influence in the future time.

    Like

  26. 呂季芳 says:

    When I heard of bitcoin, I thought is the currency which is from bit. But after the class, I learned that Bitcoin is a type of electronic currency that uses P2P networks to track and verify transactions. Bitcoin gives people more choices to buy goods, not just the Internet but the real world. Edward’s courses let me know more about what Bitcoin is and how it works. I am very happy to get a lot of knowledge in this class.

    Like

  27. 甘淑玲 says:

    Through this speech, i can briefly know about e-commerce, also, BTC is more and more popular now, nowdays, we can notice that many merchant use BTC to earn more money, and i think this is the big tendency, after Edward’s class, i would like to know more detail abou this kind of trade and tri it in the future, thanks Edward for giving this special course!
    甘淑玲

    Like

  28. 游鎮瑋 says:

    To tell the truth , I had no idea what exactly is Bitcoin before the introduction , all I knew was thet Bitcoin is a digital currency that people are super crazy about it , and it cant be used during our daily life . After the introduction of Edwards , I realize that Bitcoin is a currency that full of potencial in our future . Also , after Edwards help , I also the use of Bitcoin how valuable it is . Thaks for his explaination , now I can finally have some basic knowledge of it and hoping oneday can gain some of it .
    游鎮瑋 西文4B 410325155

    Like

  29. 蔡欣雲 says:

    I think E -commerce course is very practical because in Modern era, we are effected by electronic products, by this course i can know E commerce is important and convenient for us. Thanks for Edward’s share it.

    Like

  30. 周晴 says:

    Thank for Edward’s speech. I’ve heard about bitcoin before. I think bitcoin is an useful virtual currency. It can help e-commerce fluently, and I learned a lot bitcoin and e-commerce. If we can use more concept of bitcoin, the relationship between customers and businessman will be closer.

    Like

  31. 邱韋瀚 says:

    In Edward’s class , I understand a lot of information about digital currency. Also, Edward talk about Bitcoin. I watched some video introduce it, but I can’t understand completely. After Edward’s course, I believe I have a lot of knowledge about bitcoin.
    I think it will be the strong currency in the future!

    Like

  32. 何Eating says:

    This is a very interesting and meaningful speech. We can all know that Bitcoin is widely used in e-commerce, and how to effectively use it is a big issue that we face. So in this speech, we can know all kinds of information about Bitcoin .Thanks for sharing the useful information to us.

    Like

  33. Melody says:

    In fact, I have no research on e-commerce. However, I heard that Bitcoin has become more and more popular in recent years. After Edward’s speech, I learned more about what Bitcoin is and Bitcoin will become a global currency. Thanks to Edward for giving me more knowledge about currency.

    Like

  34. Liao “Joby” Joseph says:

    Bitcoin is one of the most debatable and in the same time the most expensive currency ever in this new generation. If we can use BTC to buy everything on earth, it should be a huge change for all if us. In my opinion, it’s hard to say that BTC is a reliable currency, but for sure it’s a representative for a new era change that influence all the industries. I really like the perspectives that Edward provided, it gives me a lot of critical thinkings for BTC and E-Commerce. thank you a lot!
    410309507 Joseph Liao

    Like

  35. Sabrina Chiu says:

    It was my freshman year when I heard about Bitcoin. And I only knew that people use Bitcoin to invest, and did not understand it at all. Despite Bitcoin is not that common as current currency, it is a trend. Knowing its concept is important for us as well.

    Like

  36. Sabrina Chiu says:

    Before the class, I didn’t know anything about Bitcoin. I’ve learned a lot through Edward’s class, of how exactly does Bitcoin works and also many information of e-commerce. The trend of Bitcoin is going to grow, whether it will eventually become a global currency or not, I believe the importance and the idea of Bitcoin is unprecedented.

    Jess Huang S05910033

    Like

  37. Yaya Chen says:

    In the class, i learned a lot of informations on emarketing. For example, different social media impacts on marketing. As nowadays social media becone more and more important to the consumer and the company. And also the teacher invited some speaker to talk to us, it is intersting to us and alsl make us gain a lot of knowledge.

    Like

  38. I’ve heard about BTC before but I never know about how BTC can be used in the real life, but I heard some of companies already accepts BTC in payment. Furthermore, by encouraging people to invest in BTC would lead to a higher value of this cryptocurrency. I think this cryptocurrency is quite risky to invest since we don’t know whether bitcoin is truly worth that amount or not and it has a high fluctuation overtime but I believe BTC would lead to a new business opportunity and a new method of payment in the future. Also, the technology that support BTC which is called the Blockchain, where it can lead us to a whole new level.

    Like

  39. Lee Nancy says:

    With Edward’s presentation about Bitcoin and E-commerce, I learned more about the relationship between Bitcoin and E-commerce. But I think people should make more concern on the risk of depend on E-commerce. Anyway it’s a very good chance learn knowledge of Bitcoin.

    Liked by 1 person

  40. I think the presentation about bitcoin was important for us students. I heard about Bitcoins, but I did not really inform myself about it. It wasn’t just the presentation itself, I was my behavior after the class what I was impressed about. My classmates and I, we were discussing about buying bitcoins and the pro and cons during lunch. I talked with friends of mine about this topic was really catchy for me. In my opinion, it was important to speak about this new currency. In the future it will change our banking system, income distribution and payment methods.

    Like

  41. 陳羿廷 says:

    I thought Bitcoin was a hard thing to understand, but after Edward’s presentation, I learned more about its background and how it functions. It was a great and valuable lesson.

    Like

  42. S04910063 julie chen
    After Edward’s class, I have more understanding about bitcoin because he has an extensive knowledge and expertise of bitcoin, although bitcoin will be hard to become a global currency,but I believe it will become more popular and more and more people will be more focus on this field.
    I hope we can have more this kind of presentation in the future.

    Like

  43. This is Febie Valentia (S04910047) from your Internet Marketing Class in Tunghai University.
    The first time I heard about Bitcoin (and the way it was advertised), I thought it was a scam; similar to Ponzi Scheme scam. I never thought that over the years, people seriously consider Bitcoin or cryptocurrency as the future of global currency. My opinion about this: No, absolutely not. I don’t think so, Bitcoin.
    I don’t really understand the functions and benefits of cryptocurrency other than being a medium of exchange or speculative tool (like Forex). I did hear that some of my acquaintances have made a great profit from this trend. However, looking at the lack of security (and lack of privacy) on the internet, I don’t think now is the right time to use cryptocurrency. Even as simple as online shopping, people are still suspicious and cautious on buying something from e-commerce websites, how can I trust a currency that I cannot see, that has no form and so prone to hackers.
    But it is still nice to listen to lecture about the future of global currency. With the development of advanced technology, we all need to learn about cryptocurrency in the future. But looking at today’s internet, my opinion will remain the same.

    Like

  44. Tan Cong Kean says:

    I have heard of cryptocurrencies few years ago. It causes a lot of controversy in financial realm and it’s value are defined by block chain . During Edward’s speech, I have finally understand how it really works and I can link it with e-commerce . But still I think we should be more concerned about the risk that could caused by bitcoin.

    Like

  45. Joanne Hong says:

    I would like to take this opportunity to thank Edward for spending time in class to share about cryptocurrencies. All this while we’ve has a confused mindset about currencies and financial realm. My first impression towards Bitcoin was bad because people are always telling that bitcoin would be a scam and so on. But eventually, after this speech, I had a clearer mind of how Bitcoin works and how it would change our world and create a new revolution. I believe Bitcoin will one day become a medium that represents cash and money.

    Like

  46. Siizo says:

    I believe bitcoin will become a trend in future business world. As the world now keep changing and there’s a lot of new way to run business. And I think that this kind of currencies will replace the currencies we are currently using and change the way we look at money.

    Like

  47. 江承諭 says:

    I found Edward’s speech very interesting and helpful. I’ve gained a lot of knowledge about e commerce and relative information such as bitcoin. It wasn’t easy to understand but Edward explained it clearly and very detailed. I must say that I now understand More about Bitcoin through Edward’s speech. Thank you Edward for the amazing speech and Daniel for arranging this for us.

    Like

  48. 莊富傑 says:

    After Edward’s lecture, I have learned more information about e-commerce .Also, I learned more things about bitcoin and realized the risk caused by it.Thanks for Edward with his lecture!

    Like

  49. Ryan Lee says:

    Thanks for Edward with his lecture, I have learn lots of new things about e-commerce

    Like

  50. 李玫萱105 says:

    I deem that BTC would change our life in the future. The digital coin connect to block-chain, therefore more companies,shareholders and investors are used it to doing this deal. Without government’s interference, it has public organization. It’s a potential currency in e-commerce.
    Thanks for Edward’s sharing! My student ID:410528850

    Like

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