How Ripple Plans to Take on Bitcoin Nov.1 (Bloomberg) -- Ripple Labs CEO Chris Larsen discusses how the company plans to take on Bitcoin with Deirdre Bolton on Bloomberg Television's "Money Moves."(Source: Bloomberg) Most Recent VideosBitcoin’s value is at an all-time high again.Following the hype peak and crash in 2011, many seemed to have thought it was just another dotcom fluke.But bitcoin was much more than that, and it has returned with a vengeance – its market cap is now twice what it was in the 2011 peak, and it is nowhere near its potential, which is four orders of magnitude above today’s value.In this, a lot of people are confused at the fact that bitcoin has climbed 200% since the start of this year alone, and wonder what to make of it.It is currently at $41.50 and climbing fast, and I see a lot of people just looking at the numbers and guessing from charts how things will pan out.I am seeing guesses of $50, $100, $150, even $1,000.These numbers seem pulled out of thin air from just looking at the charts – nobody seems to have done due diligence from the other direction, from the most fundamental observation of all: Bitcoin is a transactional currency.

As such, it is competing for market share on the transactional currency market.Talking about bitcoin value is not about happily watching numbers go up and down while having popcorn.This is about identifying a global market, looking at its size and estimating a target market share based on the strengths and weaknesses of the competing product or service under analysis.When you know the size of the target market, and have an estimate for your projected market share, you can estimate the value of your product or service as a percentage of the value of the total market.bitcoin dried strawberriesI haven’t seen anybody do that for bitcoin.bitcoin mining atomThe total size of the transactional currency market is hard to estimate, but has been pegged at about $60 trillion (the amount of money in circulation worldwide).ethereal band wiki

Seeing how this number is roughly on par with the world’s GDP, it is a reasonable enough number to be in the right ballpark.Based on my four earlier estimates (one, two, three, four), I think it is reasonable that bitcoin captures a 1% to 10% market share of this market.The low end of 1% would be if it captures international and internet trade.The 10% would be if bitcoin also manages to capture some brick-and-mortar retail trade, which we are already seeing strong signs that it might – operations provide a 3% to 5% extra profit margin on sales when you can cut out the credit card processors, so the incentive to switch is immense: those 3% to 5% cost savings translate to 50% to 100% increased profits, as margins are typically very slim in retail.ethereum notificationsFurthermore, some people will undoubtedly invest in bitcoin and keep their portion of bitcoin away from the transactional pool, like all people tend to hoard money if they are able.comprar bitcoin en bogota

This decreases the amount of bitcoin that must fulfill the market share, further driving up value for each individual bitcoin.As a rough estimate, let’s assume that only one in four bitcoins is actually used in transactions, and the rest are in some kind of savings or investment plans.This leads us to a target market cap of 600 billion to 6 trillion USD, to be fulfilled by about 6 million bitcoin, which makes for easy calculations.That means that each bitcoin would be worth $100,000 at the low market cap and $1,000,000 at the high market cap.sell litecoin for paypalIn the light of this, present-day projections of $100 that present themselves as “daring and optimistic” actually come across as rather shortsighted and almost dealing with peanuts.kraken ethereumSo is the projected market share realistic?ethereum miner debian

Bitcoin certainly has hurdles to overcome – scalability and usability being two of them – but it has done remarkably well in maturing in the two years since I started looking at it.My prediction of a mainstream breakthrough around the year 2019 remains, and it still depends on getting mainstream usability; a target market cap may be reached about a decade after that happens, as a technology typically takes ten years from mainstream breakthrough to maturity.Now, there are definitely uncertainties in this projection and its assumptions – but it does indicate what kind of ballpark we are talking about.ethereum t shirtThe author has a significant investment in bitcoin.Specifically, he went all-in two years ago after having run these very numbers.With bitcoin emerging from a shady past and setting new all time highs, it’s worth getting to know the king of cryptocurrencies.Here are ten things you may not know about bitcoin: Bitcoin (BTC) enthusiasts around the world will celebrate later this month with a slice or two of programmer fuel in honour of the first tangible bitcoin transaction.

In 2010, when bitcoin was less than a year old, programmer Laszlo Hanyecz paid a fellow Bitcoin Talk user 10,000 BTC to order him two Papa John’s.The value of those pizzas today?Over 17 million dollars!In 2008 a whitepaper was posted to a discussion group by a mysterious character called Satoshi Nakamoto.This document (which, by the way, is only nine pages long and, apart from the very last chapter, is totally accessible to the lay reader) captured the imagination of the cryptocurrency community, and the system it described caught on very quickly.To this day, no one knows who Satoshi Nakamoto is, nor whether he, she, it, is dead or alive – or whether they’ve simply lost their private key and are too embarrassed to admit it.The likeliest explanation is that the creator recognised that their anonymity was an important part of the attraction and a truly decentralised currency could not have a ‘leader’ or single entity in control.As the bitcoin story plays out, the work of Satoshi Nakamoto seems more and more like an act of generosity and genius.

Unlike government-backed ‘fiat’ currencies, that can be printed or quantitatively eased by those in power, the supply of bitcoin is fixed.New bitcoins can only come into existence as rewards paid automatically to ‘miners’.The reward will halve every few years until, by approximately 2140, the hard limit of 21 million will be reached.So far, nearly 80% of available bitcoins have been mined.This scarcity is one of the reasons why the value of bitcoin against all other currencies has skyrocketed.In the early days of bitcoin, it was possible to ‘mine’ on a laptop.As things progressed, specialist hardware using dedicated processors took over and now it is only feasible to mine if you have ASIC (application specific integrated circuits) hardware, cooling systems, and access to a cheap supply of electricity.The economics of mining, complex and volatile, is an essential component of the bitcoin ecosystem.However, according to not-well-known Bristol-based cyber security expert ‘Zach’ (not his real name), “Satoshi never meant mining to be big-business profitable.

The hardware arms race of recent years has meant that only well-funded businesses can mine, but now that race is reaching some limits.All the main advantages have already been exploited, so the price of ASIC hardware will fall and become affordable, in line with Moore’s Law.We may in the future be able to buy ASIC heaters from B&Q to secure the world’s financial systems while keeping the home at a comfortable 21 degrees celsius.” Bitcoins definitely don’t look like this image: The ‘bitcoins’ in the images heading every bitcoin news story are just a fancy way of keeping the currency in cold (offline) storage.These physical coins were a novelty project by bitcoin user Casascius, available pre-loaded with bitcoin until 2013.Each one contained a piece of paper with a tamper-proof hologram protecting a unique, redeemable private key.They made a nice present but, if they’re too ‘bling’ for your tastes, you can make your own simple paper wallets.Paper wallets and goldy lookin’ coins are one way to store bitcoin but, if you want to actually use it for transactions, you need some kind of hot (online) wallet.

There is a huge range available, from the Bitcoin Core client – which can be compiled from source code and will take several days to synchronise with the network when you first run it – to hardware wallets for those with significant funds to store, to a new breed of ‘lightweight’ SPV (simplified payment verification) smartphone wallet apps (all free) that make good use of modern devices’ security features and offer a sensible trade-off of speed with ease of use and prudence.Don’t sweat it too much, particularly if you’re just looking to get started.You can always change your mind, and you can (and probably should) have multiple wallets.I recommend breadwallet (now available for iOS and Android).Unlike conventional financial transactions, which contain sensitive information and need to be transmitted over secure institution-owned networks, a bitcoin transaction is simply an instruction to the network.This means that you can send it via SMS or email and, if for some reason you needed to conceal a transaction, you could even encode it as a series of smiley faces, or in a single picture, as described by bitcoin guru Andreas Antonopolous in this presentation, Money as a Content Type.

This makes bitcoin almost unstoppable, even if a government decides it wants to shut it down.Most of us take access to financial services for granted but it’s worth noting that approximately 2 billion people worldwide are ‘unbanked’ and therefore excluded from playing a part in the global economy.Some countries, like Ghana, are leapfrogging third-party banking and embracing bitcoin as their primary means of transacting with each other – and their only means of trading with the wider world.Smartphone ownership is predicted to reach 6.1 billion by 2020 with a whole new population joining the party for the first time – on fairer terms than was ever thought possible.At the moment, the transaction fees for bitcoin transactions are high.The fees (separate from the mining rewards) are paid per byte, so for small amounts, the fees can be higher than the value of the transaction.This is disappointing because a lot of the early excitement was about bitcoin’s potential for ‘microtransactions’, such as direct tips for bloggers and Things of the Internet paying each other.

Bitcoin is currently a victim of its own success; the transaction blocks (limited to 1MB) are full, so the laws of supply and demand are in effect and only higher value transactions make economic sense.However, there are solutions to the scaling issue in the pipeline, and after much squabbling in the community about which one to implement first, a leaner way of handling the data, called Segregated Witness, is being rolled out across the network, which should make a higher volume of low-fee transactions possible.The bitcoin blockchain is a ledger of all bitcoin transactions since the very beginning when Satoshi Nakamoto gave the first bitcoins to itself in the ‘Genesis’ block.New blocks are added by the miners approximately every 10 minutes, and the file is now over 120GB.You can download it, or inspect it via a browser, such as blockchain.info.Numerous ‘altcoins’ exist, each with their own blockchain, and there is also much research into using the technology for other types of value, for example, the right to vote, health records and land registry.