The future of currency: Understanding Bitcoin from a Birmingham perspective

Birmingham Bitcoin
Graph from Bloomberg

Birmingham and the financial world is abuzz about Bitcoin the digital currency that spiked through the $10,000 barrier earlier this week.

Bitcoin surges through $11,000 less than 24 hours after topping $10,000

Derek Waltchack with Shannon Waltchack Real Estate has been giving local presentations in the Birmingham area on Bitcoin. Bham Now recently asked him to help our readers understand this emerging currency that is rising in value.

Bham Now Q &A with Derek Waltchak
Birmingham
Derek Waltchack

Bham Now: Tell us about the rise of Bitcoin?

Waltchack: Bitcoin began as a white paper written by a mysterious character who went by the pseudonym of Satoshi Nakamoto. He, she or they released this paper 9 years ago. They claimed that they solved a problem that had bedeviled computer scientists since the early 70’s- the ‘double spend problem’.

The double spend problem asks, how can a digital asset have a singular digital identity? For instance, let’s say that an artist creates an digital work of art- a painting with pixels. And then claims that there will only be one produced and sells that work of art to you as the only one in the world. What stops the artist from making one hundred copies before it’s sent to the buyer? It’s a tough problem, especially if you don’t want to use an intermediary to authenticate the digital art.

Satoshi solved the problem by setting up the Bitcoin network. His idea was to create a digital ledger keeping track of an asset- bitcoins- and then store the ledger on everyone’s computer that is part of the system. The more people who maintain a copy of the ledger, the safer the network is. New bitcoins are created every 10 minutes and paid to the people who are keeping a copy of the ledger on their computer.

This makes the act of sending digital money as easy as sending an email. It’s the digital equivalent of handing a person a dollar bill. You don’t have to go to your bank and send it to another person’s bank. There is no intermediary and no permission needed. In a very real sense, you are the bank.

Anyway, in 2016 I gave a speech on the future of technology and how Alabama needs to embrace change in a quicker way. I actually gave this speech 6 times times and each time I mentioned the price of bitcoin. It went like this: $250, $370, $700, $553 and then $967. I’m embarrassed to say it never occurred to me to buy any until the last speech. So I’ve been buying small amounts since the end of last year.

Empire Hotel Birmingham Alabama
Birmingham’s Financial Center

Bham Now: How large of a constituency does Bitcoin have in Birmingham?

Waltchack: Birmingham doesn’t seem to have a large Bitcoin following. And that’s something that I’ve been trying to remedy. I have a 25 minute speech I give about Bitcoin, blockchains and and how these technologies will change pretty much everything. I’m looking for more opportunities to give this speech to any audience that asks.

Bham Now: Tell us a little bit about yourself and business background?

Waltchack: I live in Vestavia, am married to Rushton Waltchack and we have 5 kids. I am a partner at Shannon Waltchack, a commercial real estate company based in Birmingham. We’ve been very active in the rebirth of downtown and are always on the lookout to buy good real estate. I can get bored pretty easily, so I keep an eye on the future and look for emerging trends.

Bham Now: Finals thoughts about investing in Bitcoin?

Waltchack: I think everyone should own a little bitcoin. But I said a little. It’s a highly volatile asset. My kids own a tiny bit, but those amounts have been growing!

When investing in new technologies, never forget Amara’s law: “We tend to overestimate the effects of technology in the short run but underestimate the effect in the long run.”

I’m convinced that Bitcoin or something like it will become the future of money.

6 billion people in the world are unbanked don’t enjoy the same privileges that we take for granted. With bitcoin and an internet connection, those same people can now join global economy. That’s powerful.

Graphic from the Economist
Follow on Twitter @dwaltchack

If you want to learn more locally about Bitcoin, Cryptocurrencies, real estate, and Birmingham, follow Derek on twitter at  @dwaltchack

 

 

Author: Pat Byington

Longtime conservationist. Former Executive Director at the Alabama Environmental Council and Wild South. Publisher of the Bama Environmental News for more than 18 years. Career highlights include playing an active role in the creation of Alabama's Forever Wild program, Little River Canyon National Preserve, Dugger Mountain Wilderness, preservation of special places throughout the East through the Wilderness Society and the strengthening (making more stringent) the state of Alabama's cancer risk and mercury standards.