On March 4, 2015, the House of Bitcoin has organized an information session entitled: « Better understand the bitcoin » This meeting was held with the audience in form of questions / answers.
You will find below some of the questions that were asked during this interactive meeting.
What is the bitcoin?
The Bitcoin is the first ‘Peer to Peer’ decentralized payment network that works thanks to its users. The bitcoins are transmitted from an individual to another, so there is no public or private intermediary.
It is a digital currency that circulates on the Internet. It is at the same time an electronic currency and a free trade protocol. The bitcoin has no legal rate, no one is required to accept payment in bitcoins. It is a currency that ‘results from usage. ”
Who has created the bitcoin and when?
This virtual currency was created in 2008 by a person (or entity) known as Satoshi Nakamoto. But to date, we still do not know who created this currency, or where it comes from.
How can we obtain bitcoins?
Several possibilities are available to obtain bitcoins:
- You can buy it against common currency on exchange platforms (or marketplaces). Fifteen are available in the marketplace (Paymium marketplace in France). An account in euro and an account in bitcoin must be opened.
- You can receive bitcoins by actively participating in the monitoring of the currency. Therefore, we participate in the mining process. These network controllers validate the transactions and are paid according to the machine power provided by each miner to the network.
- You can also buy them or sell them on platforms from one person to another.
- Finally, the House of Bitcoin has a currency exchange that enables to buy bitcoins against euro.
How does it work concretely?
To perform transactions in bitcoins (purchase, bitcoins transmission or receipt), you must have an e-wallet (wallet). It is a software that you must download and it generates another one in form of a unique algorithm. The digital portfolio consists of two parts: a public key to receive bitcoins and a private key that will be used as a digital signature to debit the account during your transactions (payment of goods and services, purchase of bitcoins, transfer of bitcoins).
Source: Les Echos
How is the bitcoin value specified?
The Bitcoin is traded in different market places, with different prices, which enables to reach an equilibrium price through arbitrage transactions. So the price of the Bitcoin is specified by supply and demand in the market places where it is traded.
How are the bitcoins created ?
The issuance of bitcoins does not fall within the scope of any organization because it is generated by a computer program. The program specifies notably the issued quantity of the currency based on a predefined pace (21 million bitcoins generated in total by 2140). Today, the number of bitcoins reached 13 million bitcoins and this pace is divided in two every four years. The bitcoins are the result of a competitive process that is called mining.
The bitcoins are designed to self-regulate; the smooth functioning of trade is guaranteed by a fully decentralized network that everyone can examine because it is public: basic protocols, cryptographic algorithms used. All the accounts and their balances are stored in a file; the blockchain that can be accessed by everyone.
How do you explain the volatility of the bitcoin?
The bitcoin has a relatively low capitalization compared to currencies. And there is a growing number of participants who invest, speculate, and mediate, for this reason the price of bitcoin remains very volatile.
What are the factors that lead to the increase of the bitcoin?
- Investment: 420 million USD by venture capital in bitcoin companies.
- Businesses that accept the currency (100,000)
- Influence of forums and social networks
What are the factors that lead to the decrease of the bitcoin?
- Instant sales of bitcoins against euros in order to get rid of them
- Influence of forums and social networks
Can we predict in a few years forward and option markets related to the bitcoin?
They are already available (binary options and warrants). Like any new asset, the currency enters into a financialization stage by creating instruments and derivatives.
What can you tell us about the bankruptcy of the exchange platform Japanese MtGox which went bankrupt in February 2014?
They must have been victim of a hack. Bitcoins were stolen and 46 million euros disappeared.
- What about the French regulation in front of the Bitcoin rise?
The currency is not subject to any public authority and is not regulated by a central bank. Hence the state authorities are a little concerned by this matter and they are trying to regulate and monitor this virtual currency. Following the Tracfin report of July 2014 on virtual currencies, the Finance Minister Michel Sapin wants to regulate this type of currency and promote the emergence of a framework to prevent and deter its use for fraudulent purposes or money laundering.
Summary table of the three pillars of the strategy suggested by Tracfin:
What is the mission of Bitcoin House?
The objective is to create an incubator around the bitcoin and raise public awareness. We market a bitcoin storage wallet called the Ledger Wallet. It is a smart card that can be read on a USB port which protects the private key.
To summarize, the bitcoin identifier file
- Format: Numerical
- Account unit: Bitcoins (BTC)
- Clients’ identification:
- Required upon purchase at the exchange office
- Anonymous on the Internet, it works from private keys
- Transactions: Irreversible
- Transfer fees: Almost non-existent (less than 1 %)
- Production means: Mined / generated mathematically
- Issuer: Community of individuals/miners
- Convertibility: Free in currencies that have a legal rate
- Bitcoin rate in EUR: 270 EUR, March 18, 2015 at 9:30 am
- Taxes: No VAT on the transactions in bitcoin
- Maximum amount of currency created by the system: 21 millions
- Date on which the maximum amount of currency is expected to be reached: 2140
- Division: The bitcoin can be divided into bitcoin fractions up to 1/100 000 000e