Why Jersey needs TO PLAY A LEADING ROLE IN THE EMERGENCE OF CRYPTOCURRENCIES
By Jonathan Day, owner of Carpe Diem Accountants and founder of Jersey Digital Currency Association.
My personal journey started four years ago, first encountering Bitcoin through an online article. With my interest sparked, my desire to
increase the profile of cryptocurrencies in Jersey began. The article described people mining their own Bitcoins with their personal
computers, creating electronic tokens that held real world value, albeit a rather low one.
22nd May 2010 saw the day a couple of famous pizzas were purchased for the princely sum of 10,000 bitcoins. At today’s prices, those pizzas cost a cool £2.5 million and that date is recognised as the first real world transaction using Bitcoin.
I dabbled with mining bitcoins myself when mining had moved to graphics cards and then on to dedicated hardware built purely for mining. The hardware landscape was changing rapidly and the technology was evolving at break-neck speed with four new generations of mining hardware developed in under eighteen months.
I first presented on Bitcoin mining to a Jersey technology audience in July 2013. My concerns were primarily around my own personal knowledge coming from a financial background now presenting to the tech savvy. I was somewhat surprised to find there was very little understanding of the technology and a lot of credulity at the concepts.
Generally, discussions were split into two camps. Either presenting a lack of knowledge, or a strong view making reference to the mainstream media articles covering the use of Bitcoin on the Dark web on sites such as the Silk Road or the demise of the Mt.Gox exchange and the ensuing arrest of Mark Karpeles.
My mining adventures stopped as my electricity bills rose, however I continued researching all things crypto. There was something fundamentally game-changing about Bitcoin and its underlying Blockchain concepts in spite of the media scare mongering.
Understanding the Blockchain and how it works came next Page 14 A Digital Jersey
and more importantly it led me to realise that in comparison our existing financial systems are exceedingly complex, outdated and inefficient.
So what is a Blockchain? It is actually very hard to provide a clear definition as there are two camps presented by the media with very divided opinions that suit their own agendas.
Most of the constituent parts that make up the Blockchain are tried and tested technologies: public key cryptography which has been used to secure email for decades, peer to peer sharing and decentralised databases which gave birth to music sharing and the death of the much loved CD. The ‘eureka’ moment was the combination of those technologies with a consensus mechanism that solved the Double Spend problem that plagues existing financial systems. In Bitcoin, this is the distributed mining that provides a mathematical consensus mechanism that proves all transactions are valid and locks them into an immutable database that is copied to thousands of peers. The final ingredient added by most cryptocurrencies is that of scarcity. For Bitcoin, the number that can be created, 21 million, and the rate of creation, currently 25 per 10 minutes, were ‘baked’ into the genesis of the currency.
When reading recent articles about banks now embracing, if not actually Bitcoin, then the Blockchain, or at least a ‘permissioned’ version of a Blockchain, I wryly smile and think back to the quote from Andreas Antonopoulos:
“It is kind of like the difference between Che Guevara and a Che Guevara T-shirt being worn by a hipster in Brooklyn. So what do (the banks) do? They look at Bitcoin and say “Let’s see. It is an open, borderless, decentralised,
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