Cryptocurrency: Global currency or valueless vaporware?

The following article is offered by Green Comma as a discussion resource, especially for financial literacy and introductory economics, for use in grades 9–12 classrooms as well as in freshmen college classrooms.

The principal writer is David Haith, a digital media expert who began his crypto career in September 2014 mining MaxCoin. He is currently interested in the cultural and creative impact of crypto, digital collectibles and visualizing trading opportunities on crypto exchanges.​

Amit Shah, managing director, Green Comma, suggests that classroom instructors preview the post, the embedded links, and the glossary prior to suggesting the reading to students.

This topic is not only new to the world at large, the concepts are phrased in a language that is specific to the cryptoworld, rarely discussed in high school or junior college classrooms. The cost-benefits of the cryptoworld, including blockchain and supercomputing are currently hotly debated.

All opinions are solely that of the author.

The author will entertain comments and queries via this blog post. Please send us your remarks and comments and questions.


This work is licensed under a Creative Commons Attribution 4.0 International License.


This license lets others remix, tweak, and build upon your work non-commercially, and although their new works must also acknowledge you and be non-commercial, they don’t have to license their derivative works on the same terms.



Altcoin : Any cryptocurrency other than Bitcoin. e.g., Ethereum, Litecoin, Monero.

PoW : Proof of work

PoS : Proof of stake

Genesis block: A genesis block is the first block of a block chain

DRM (Digital Rights Management)



FOMO : Fear of missing out.

FUD : Fear, uncertainty, doubt.,_uncertainty_and_doubt

Introduction by Amit Shah

How did we get from bartering cows for food to worrying about the value of a piece of metal that says Bitcoin or a dime in the US?

The evolution of money (coins and paper) to denote values for transactions is an oft-told tale. From the beginnings of human society and barter to currencies in metals and paper to bitcoins is the story of transactional value.

A clear though rudimentary infographic can show you how money as we know it has value.

And what are the functions of money? (This is a simple set of flash cards)

And here is a pretty comprehensive video explaining how value is ascribed.

Earlier this year I read Paul Krugman, Nobel Prize winner and noted economist and a columnist for the New York Times and was struck by his dismissiveness of the cryptocurrency phenomena.

Then another of my favorite columnists, Charles Blow of the New York Times tweeted about his inability to understand what the Bitcoin phenomena was about.

That made two of us.

So, I went to David Haith, a friend, and asked him.


Remember the fairytale about Jack and the Beanstalk?

After a cruel winter, the gullible Jack trades the prized family cow to a butcher in exchange for “magic” beans. After the beans grow overnight into a huge beanstalk, Jack climbs to the top and discovers a castle, which is home to a ferocious giant. Jack soon steals the hen that lays golden eggs and a golden singing harp from the Giant and lives happily ever after.

The magic beans of the real world today are cryptocurrencies and they have already turned into gold for many crypto-believers.

Conceived in 2008 and implemented in January 2009 by the secretive and pseudonymous Satoshi Nakamoto, Bitcoin has revolutionized our concepts of currency and money.

One way of describing Bitcoin, (there are several ways) is that it’s a digital asset that sits on top of a public, distributed ledger of transactions known as a blockchain. (see below)

Cryptocurrencies have become popular (especially amongst Libertarians) as generally speaking a cryptocurrency is free from the influence of a bank or state. There is a rebellious spirit among the cypherpunks of crypto. Right now there are an increasing number of believers in the fairy tale game of crypto.

Cryptocurrencies are a novel decentralized money model using cryptography to keep transactions secure. Unlike emails and other digital content such as photos that can be copied, duplicated, modified and edited, cryptocurrencies are digitally teleported from one digital wallet address to another. Cryptocurrencies cleverly enable decentralized digital scarcity.

Cryptocurrencies are value systems and rewards are given to the computational participants or nodes who work to support and validate the system.

In the early days of crypto (2009–2013) coins were mined, meaning that computers solved (some say useless) computational puzzles using a hashing algorithm and rewarded them with fractional bitcoin units.

Bitcoin mining rig

Miners expend huge effort and resources having invested capital in mining equipment to mine mainstream cryptocurrencies. Miners make the investment in computing and electrical power to solve the increasingly challenging (varying in difficulty) proof of work-PoW algorithm (e.g., SHA256, Groestl or Skein) to try to get a match.

Currently, generating a single block on the bitcoin blockchain requires a very large number of hashing operations that requires enormous energy.

Mining nodes on the bitcoin network are used to verify transactions and validated transactions are stored into a block and are sealed with a lock (hash) for which they get a reward.

The largest number of nodes is in the United States. The least in countries such as Qatar and the US Virgin Islands.

It is a race and mining power has a direct impact on the result.

Many new cryptocurrencies reward nodes using a “proof of stake” method where wallets get rewarded based on their weight (account balance) compared with the overall weight of the online network. Coins are minted instead of mined and like an APR (annual percentage rate) in conventional banking, the more coins you have, the more you benefit over time.

Proof of stake rewards are considered more environmentally friendly because of less computation and consequently less energy being consumed.

But you don’t need to mine or stake to own crypto. If you want to own some you can purchase bitcoin with Fiat currency on an exchange and then trade your bitcoin for any other cryptocoin that is on the market. In this sense, bitcoin is a “gateway” to other Altcoins.

These exchanges may require some basic identification verification and may limit your trading capabilities until you have provided more biographical detail.

As of May 1st, 2018, the combined value of all cryptocurrencies in global circulation was thought to be over $400 billion, which is astonishing because these currencies have no intrinsic value, they are just information that has gained value over a relatively short time.

Cryptocurrencies attain value by being traded on exchange markets in pairs, where bitcoin, ethereum or litecoin can be purchased with a Fiat currency such as US dollars.

What is Blockchain?

Blockchain is a novel foundational technology which is a distributed ledger of synchronized permanent digital records saved in a chain of units called blocks and this technology underlies all cryptocurrencies.

The first ever block on the bitcoin blockchain or “Genesis Block” was created on or shortly after January 3rd, 2009.

Bitcoin Genesis Block

A new block contains cryptographically hashed data and is built upon the previous block in the chain, ensuring that the data in the blockchain cannot be compromised and once confirmed by the network, the data in any given block cannot be altered retroactively. This is termed immutability.

The blockchain is an excellent way of securely tracking digital assets such as medical records and music and even endangered animals.

Media Industry & blockchain

A blockchain could store the required identification information to ensure users could watch the products they purchase, even if a third party goes out of business or there is a DRM server failure according to the filing of a patent by Sony.

DRM systems refer to technologies that limit access to copyrighted materials only to those who purchase access. Sony cites UltraViolet, a cloud-based locker for digital rights, as one example.

The application was filed jointly by Sony and subsidiary Sony Pictures Entertainment, and the document specifically cites movies as an example of the type of media the system could be applied to.

However, Sony also argues the blockchain-based system could manage rights to “various types of content or other data, such as movies, television, video, music, audio, games, scientific data, medical data, etc.”

In a recent article on Medium, Dr. Alex Cahana makes a very good case for the use of blockchain in healthcare.

Chairman of the Internet of Blockchains Foundation, Matteo Gianpietro Zago details fifty-plus examples of blockchain use in a recent article on the Medium platform.

Amazon Web Services now offers a blockchain-as-a-service option, underscoring the acceptance of the technology and the revenue potential.

Sovereign currencies : Lakota Maza, the Venezuelan Petro, and FedCoin

The search for new sovereign currencies to stabilize weak economies have already begun.

MazaCoin, created in 2014 by Payu Harris and now known simply as Maza, is a digital currency described as “the first Native American cryprocurrency” and presents a creative solution to many of the social issues surrounding the Pine Ridge community of the Oglala Lakota tribe, one of the poorest communities in America. The coin could combat corruption in the tribal government and could be a weapon against alcoholism. Parts of the code could supplant the complicated tribal ID system, or maybe even find use in the State Department’s passport system. The Maza logo and its underlying philosophy, mitakuye oyasin, means “all are related.”

Venezuelan President Nicolás Maduro announced their national cryptocurrency the petro in a televised address on December 3, 2017, stating that it would be backed by Venezuela’s reserves of oil, gasoline, gold, and diamonds.

Maduro stated that the petro would allow Venezuela to “advance in issues of monetary sovereignty” and that it would make “new forms of international financing” available to the country. This coin debut which raised $6 billion is in part to offset Venezuela’s economic turmoil, due to the falling value of the Venezuelan bolívar, its fiat currency, and $140 billion in foreign debt was viewed by the Brookings Institute as a means of circumventing U.S. sanctions.

Ironically, Venezuelan citizens experiencing the brunt of economic instability cannot purchase the petro and consequently may see no relief from the cryptocurrency.

President Maduro has offered a 30 percent discount for Venezuelan oil to the Indian government if paid for in petro and is collaborating with the Russian bank Evrofinance Mosnarbank that is currently defying US sanctions.

Russia secretly helped Venezuela launch the oil-backed cryptocurrency.


Kevin Warsh, a former U.S. Federal Reserve governor proposes the idea of a “FedCoin” that would not replace cash but would be a means to conduct monetary policy when the next crisis occurs.

A distinguished visiting fellow at the Hoover Institution at Stanford, Warsh said blockchain technology would be helpful for enabling the transfer of trillions of dollars between banks.

Warning, this is experimental software

Crypto Crimes & Cowboys

Since there is no central authority for regulation, crypto resembles the lawless “Wild West” since its inception and has drawn criticism because of its purported use in illegal activity. There have been many instances of fraud, hacking of exchanges and exploitation of experimental and naiive software code.

Silk Road

One of the early instances of bitcoin use in criminal activity was as a payment method for drugs on the online black-marketplace known as Silk Road This was convenient for criminals to deliver their services through the network without detection.

The creator of Silk Road, Ross Ulbricht, was ultimately convicted of seven charges including engaging in a continuing criminal enterprise, narcotics trafficking, money laundering, and computer hacking. Over the course of the investigations, the FBI seized over 26,000 bitcoins from accounts and computers that are periodically sold for dollars, causing a drop in the price of bitcoin.

Recently, crypto enthusiasts have been victims of thieves intent on exploiting the anonymous and untraceable transactions that crypto offers. Since many crypto enthusiasts carry large amounts of crypto value on their smartphones and use their phones for 2FA (two-factor-authentication) security measures, scammers have tried repeatedly to convince phone service providers to re-assign phone numbers to new devices to gain control over the device security and the crypto funds.

One key aspect of crypto is that transactions are peer-to-peer and don’t require any contextual clues as to what the trade is for.

Unlike regulated banks, coin communities are not required to KYC (Know Your Customer). With cryptocurrencies, there’s no sensitive customer information to collect and store. Customers simply send bitcoin or any altcoin from their computer or mobile device directly to a payment address.

Many popular coins focus on privacy, such as monero, PIVX and the Winklevoss bothers’ favorite, Zcash incorporating zero knowledge transactions, which due to their untraceable technology, could potentially lead to more crime. Some new businesses are forensically tracing bitcoin transactions in a bid to track arms dealing on behalf of government entities.

Social Good versus No Social Benefit

As far back as the drafting of the US Constitution one of the Founding Fathers and the fourth president James Madison argued that “nothing but evil” could come from “imaginary money.”

But why hasn’t bitcoin taken off so readily as a global currency since its creation in 2009? One reason has been the high level crypto-skeptic criticism from leaders of the “old money” system.

Another problem has been that these coins and token launches have provided US investors with very few protections unlike conventional investment products.

At a recent hearing of the Subcommittee on Capital Markets, Securities, and Investment (Committee on Financial Services) which, for the first time, examined Cryptocurrencies and ICO Markets, Rep. Brad Sherman (D-Calif.) opened his remarks by stating, “cryptocurrencies are a crock. They allow a few dozen men in my district to sit in their pajamas all day and tell their wives they’re going to be millionaires.” He went on to say that cryptocurrencies offered “no social benefit.”

Nouriel Roubini, the former Clinton administration economist nicknamed “Dr. Doom” due to his prediction of the 2008 financial collapse, criticized cryptocurrencies on Twitter. Just prior to a Senate Committee hearing on cryptocurrencies, he wrote, “Cryptocrazies are also criminal Cyber-Terrorists,” and alleged that his consulting firm, Roubini Global Economics, was targeted in a 2015 denial-of-service attack because he criticized bitcoin.

Nobel Prize-winning economist and New York Times columnist Paul Krugman has described cryptocurrencies by simply stating “Bitcoin is evil.”

Jamie Dimon, the JPMorgan Chase chief executive who once criticized bitcoin as “a fraud” has recently softened his tone and has said that blockchain, which is being used by an increasing number of Fortune 500 companies for record keeping, “is real.”

Further problems have beset the rise (and adoption) of cryptocurrencies by social media giants Facebook and Google who are banning all ads that promote cryptocurrencies, including bitcoin, in an effort to prevent people from advertising financial products and services frequently associated with misleading or deceptive promotional practices. That means no advertiser, even those that operate legal, legitimate businesses will be able to promote things like bitcoin and other cryptocurrencies, and initial coin offerings (ICOs). The ban has gone into effect from June 2018.

Ironically, at the same time that Facebook is clamping down on crypto scams, they are also investigating the use of blockchain technology for decentralized social media and possibly creating their own cryptocurrency.

Led by former PayPal president, David Marcus, Facebook could be working on a mainstream blockchain project, possibly for its 200 million users identifying themselves as “single.”

If successful, it could create a seamless payment platform on the site that could be accessible by millions of people who are unbanked.

And with 2 billion active users per month, Facebook could be an effective means to get global adoption of cryptocurrencies, as long as users continue to trust their assets to a social media business that has been selling user data to the private sector.

The German online bank Bitbond have already profited from the bitcoin blockchain by facilitating fast international loan payments that are cheaper than using the SWIFT system.

Crypto for a good cause

(Want to help cure cancer and earn crypto?)

Scientists at Stanford University utilize donated computer time to better understand and develop cures for some of humanity’s worst diseases. Simply by running Folding@Home (F@H) software, research for Alzheimer’s, Huntington’s, and many cancers is made possible.

Laptops and desktops from all over the globe, currently donate the unused power of over a quarter of a million computers, forming the world’s most powerful distributed supercomputer.

Some crypto communities such as EliteCoin reward folders every Friday (crypto payday) for folding as part of the EliteCoin team.

How do you liquidate your trade?

Supposing an investment in bitcoin turns out to be one hundred times what it bought for and the investor wants to buy that Lamborghini that all those crypto memes refer to. How easy is it to go the other way back to Fiat and why bother if and when the price is going “to the moon”?

There are several Bitcoin debit cards available (subject to state approval) that allow you to spend your Bitcoin on Main Street.

BitPay for example, converts bitcoin to your preferred currency and adds the full amount of the payment to your BitPay account. Funds are then deposited to your bank account, BitPay Visa card or bitcoin address.

There are even pawn shops that will buy your bitcoin for a 10 percent fee.


One of the common crypto memes #HODL.

Hodling is a term originated as a meme with the misspelling of the word holding by the individual known as GameKyuubi on the bitcointalk forum. The term later obtained a much deeper significance as many people sold their bitcoin at low rates of return and regretted this as bitcoin soared into the $10K range.When you start seeing enormous spikes on percentage of returns on your investment you may be tempted to take the profit and close your position in Bitcoin. Those who sold in 2011 missed the huge 10000 percent extra returns of the following years.

The HODL strategy is to simply hold onto the crypto investment, instead of making bad trades, and wait for the value to soar. Simply hodling is much much harder than it seems as laptops storing small fortunes are easily lost or stolen. Passwords are often lost and sometimes decrypted by opportunist hackers.

To make matters worse, coin projects very often “fork” to include security improvements and efficiencies in the product and often a mandatory wallet and tedious data migration has to take place requiring novice users to get “under the bonnet” of their wallet folders and tinker around with configuration files and install fresh chains from repository snapshots.

Improving upon Bitcoin

One drawback to the global utilization of bitcoin for merchant transactions is speed. A typical on-chain Bitcoin transaction is transmitted, verified and stored by many thousands of nodes. This can mean significant fees and delays for users.

A recent development in improving bitcoin transaction efficiency is the implementation of the aptly named Lightning network protocol that enables both faster and cheaper transactions by using payment channels between two parties.

This allows both participants to transact between each other, without burdening the entire network with their transaction data.

The Lightning Network specification is not just the specification of a single protocol, but rather a full stack of protocols, each fulfilling its own responsibilities.

Expanding data on the blockchain

Blocks have a spare data channel that is controlled by the OP_RETURN feature. Though currently very small, the OP_RETURN feature in blockchain potentially could store all kinds of non-financial data.

Crypto piggy-bank : Peculium & Pigzbe

Peculium is a revolutionary savings platform that seamlessly merges the traditional savings economy with the cryptocurrency markets via the power of Automated Machine Learning, Artificial Intelligence (AML-AI), Big data analytics, and Smart-contracts over the Ethereum blockchain.

Peculium is a potential bridge between the traditional economy and the new era of crypto-economy, reducing barriers, decreasing volatility and increasing consumer confidence. Peculium is designed to achieve the best risk-benefit ratio for crypto-investments.

Within the Peculium marketplace and in other crypto exchange ecosystems, trading bots can be deployed to influence trading and potentially stabilize value volatility.

Pigzbe — The digital piggy-bank

The team at Pigzbe believe that a generation of children growing up with cryptocurrencies can be an enormously powerful force for change. Pigzbe harnesses children’s natural drive to learn through self-correcting and practical experimentation. Pigzbe doesn’t just aim at empowering families and children financially, but also at educating them about modern programmable money. Pigzbe has the potential to provide unprecedented access to the cryptocurrency ecosystem for entire families.

Whither Crypto?

If leading universities in the US are any indication of the interest in cryptocurrencies’ potential value and blockchain’s application to any number of industries, then it seems like the beginning of the Space Age.

Blockchain certification courses are sprouting like weeds and bitcoin forums and startups at the most prestigious universities are in the news. At MIT, in Cambridge, MA, there is a bitcoin club and its mission statement says: “Bitcoin lies at the intersection of several important academic research areas, including cryptography, distributed computing, graph theory, finance, and economics.

Blockchain software is evolving fast and many teams of talented people are working toward optimizing decentralized transactions and confirmations. Blockchain engineers are in demand and their salaries are high and new crypto-careers such as crypto community manager can be found at many of the viable coin projects websites.

Some regulation and reclassification will help deter crypto-criminals and increase public confidence and effectively boost global adoption.

Sufficient public interest in crypto could make the “giant” central banks take notice and free many people who are currently outside the banking world (worldwide) from the economic bondage so many in the world have been in since the Industrial Revolution.

The crypto industrialists will need to start building regulated and respected coin and security token projects that create revenue, not vague promises or speculation.

Crypto wallets on smartphones can be embedded into social media apps.

Crypto is still a “hill of beans” for many financial experts. Whether or not the bitcoin bubble bursts, this is the “bleeding edge” technology during one of the most exciting times in technological history.


  1. Taxation and the IRS:
  2. Bitcoin resources : Jameson Lopp



Fearless reader, fearful writer, optimistic traveler

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