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Explain bitcoin like im 5
Despite its need to handle currencies and transactions in a global environment, aviation as an industry has been hesitant to accept borderless cryptocurrencies, such as the well-known Bitcoin. We will not touch on the technical details of how Bitcoins are created mined , stored and traded, since you can easily find this all over the Internet.
Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies. Essentially you can state this class of computer-based currency is not backed by any government.
The chart below shows the top 10 by market capitalization courtesy of CoinMarketCap. The key attraction of why Bitcoin and other such offerings are interesting is that no government entity has control over them to a degree and offer distributed control to its customer base.
The entire system depends upon trusted databases which archive, document and complete transactions, and create trust by requiring each to check and verify that the Bitcoin being traded is valid, or else the transaction is voided these are stored in distributed ledgers, aka, databases.
All of this is made possible by the underlying technology called blockchain I have written several articles recently in DOM Director of Maintenance magazine regarding the use blockchain in tracking assets and establishing pedigree , which are managed by various service providers. Since this system is peer-to-peer, transactions are handled are directly between users, without an intermediary which is why many financial institutions are concerned about this, and they are launching their own blockchain-based solutions to forestall eventual revenue losses.
Each transaction is verified by the Bitcoin network nodes and recorded in the Bitcoin blockchain. And you can do this anonymously, which is why many criminal organizations gravitated to this initially, as well as the online gambling industry. There is quite a bit more to Bitcoin and blockchain than this too-brief introduction here, but for the sake of brevity, I will mercifully cut short the overview. While the market is rather limited on where you can spend or easily acquire bitcoins, it is growing and spreading into new market niches.
In fact, as of mid there are unsubstantiated reports of over , merchants around the world which accept Bitcoin as payment. Many of these simply have their payment processor convert a bitcoin-based payment into the currency where they are based, but nevertheless, more transactions are occurring.
Due to the costs of moving money across borders, remittances and international payroll services, cryptocurrencies may solve some of these problems and reduce transaction costs. There are now smartphone apps which are dedicated to helping you transact in bitcoin, with one of the most widely accepted being from CoinBase. This is a short list, but growing. One notable recent company is Star Jets International, which now accepts bitcoin payments for private jet flights.
They are expecting that by providing customers with an option of using bitcoin that they will appeal to a new customer base, and leapfrog their competition.
The first private jet booking service was PrivateFly. They had a paying customer use this option shortly afterwards for a same-day-booking flight. A low-cost Japanese carrier, Peach Aviation, will begin to accept bitcoin as payment in late expectedly. The country of Japan in general is very open to Bitcoin, conferring legal status to it, and is among a handful of cryptocurrency-friendly nations.
Peach Aviation expects that by accepting bitcoin that new customers from outside of Japan will increase, since many Asian businesses and individuals are active in this movement in regards to remittances and trading. Asia has been one of the hotspots of cryptocurrencies, and blockchain applications.
We offer a full range of services including the acquisition of aircraft, parts, consulting, re-marketing, and repairs. Charging and service stations, technology platforms, assembly factories, content providers, interior designers, spare parts manufacturers and the flying car makers themselves.
The solution reduces trading risks, processing time and costs, while guarantying better performance and improving cash flow.
This is surely not an exhaustive list, and our research probably missed a few companies. But the obvious point is that bitcoin and other such currencies are not widely adopted in aviation, even as the underlying technology of blockchain is gathering steam in asset tracking, cargo and documentation.
The main concerns are untracked criminal activities and tax dodging, either of which could sink this movement. A number of countries, such as Japan, have announced their acceptance of Bitcoin and certain other such offerings, but, this is not universal. The bigger question is what will follow Bitcoin? Will the US or EU or China look at either working with it and its customer base, or, launch a competitor s? One of the possible outcomes is China creating a consortium of countries to create a new cryptocurrency to knock of the US dollar as world's most dominant reserve currency where China, Russia and others have long wanted to displace the dollar for various reasons, and now may be the time.
This would impact US companies trading overseas negatively and not to mention the US in general , but this is out of scope for an aviation industry article. We can conclude that cryptocurrencies in general are a very niche offering at this time. We can also conclude that they are not going away, even if Bitcoin and other such existing products do not survive over time in their present form. Aviation and other industries which operate globally will undoubtedly embrace any type of financial mechanism which will reduce transaction costs, especially those focused on currency handling or making transactions more frictionless, once this niche matures.
Today is not that day, but it is coming. It is highly recommended that everyone learn something about this topic area, since it is not going away. Welcome to the ever-increasing digitization of the world around us.