Version Espanol: Contacto del tercer tipo: conceptos cobran vida [ES]
Previous post Encounter of the second kind: seeing is believing [EN]
After that time, when my work colleagues tripled their "investment", all conversations about BITCOIN stopped. There was a mixture of feelings, satisfaction for this "easy" money, a suspicion and mistrust of this technology.
Even when the topic was no longer talked about, you could always see on the laptop screens how the price of BITCOIN was being checked. Every night when I got home and, for a few weeks, I tried to understand what made BITCOIN so special.
Many readings and news later, while I quit that job and moved to another company, I understood that BITCOIN was used to participate in illicit acts, let's not fool ourselves, it was the best way to exchange a "service" (we are not discussing if the service was for something good or bad) for "money", which both parties involved in the "business" accepted, in other words, the provider of the "service" proposed an amount of BITCOIN and the taker of the "service" accepted that amount, all while maintaining a high level of anonymity, therefore the use of BITCOIN.
The value of the BITCOIN was not established by anyone, but by supply and demand, which implies that if there were more people participating in these illicit acts, the greater the demand to buy this currency. It is important to remember what I said in the previous episode, the BITCOIN is not printed by anyone, but injected into the system to reward the "miners", therefore, if to get those BITCOINs I have to buy from the people who own it, then those people could speculate the price.
I confess, it was a bit disappointing to see how they were using this technology to make profit, but thanks to some, including the famous Vitalik Buterin, understood the BLOCKCHAIN... Wait, rewind a bit - seriously another concept, another name, another new word? Don't worry, assume that BLOCKCHAIN is the basis of BITCOIN, without BLOCKCHAIN we wouldn't be talking about BITCOIN, and you could think of BLOCKCHAIN as an essential part of the program that "miners" use.
Going back to the previous idea, those who understood BLOCKCHAIN came up with the idea that it could be used for something they called Smart Contracts. There you go again with another new concept - hey, hey, I said I would explain about CRYPTOCURRENCIES, not that it was simple.
Continuing with the idea of Smart Contracts, it is like a financial contract, lets say a "Bank Loan" or a "Company Stock", but instead of a "miner" validating a BITCOIN transaction, he would validate the creation and ownership of a contract that would be associated to a " wallet", as long as you are the holder of that "wallet" then you own a contract. But, in addition this contract could have some kind of Smart process which could do more calculations than just passing BITCOIN from one "wallet" to another, for example, calculating the interest rate or paying dividends on profits produced by a company.
Are you telling me that now not only I can transfer CRYPTOCURRENCIES from one "wallet" to another, but now I will be able to program/write a contract that applies business rules? Yes, exactly that is what they wanted to do by creating these Smart Contracts, and thus the ETHEREUM network was born and with it, a new currency the Ether.
I tried to understand this, but I didn't see how it would apply, it still seemed abstract, however, the concept of Smart Contracts in this new network called ETHEREUM managed to convince me more than, an idle BITCOIN waiting to be transacted back and forth.
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