Bitcoin and Beyond
    Category: Financial Revolution By : Shintya Felicitas Read : 513 Date : Friday, March 02, 2018 - 00:08:43




    In mid-December last year, Bitcoin reached a record price of nearly $20,000, a huge runup from the price of zero when it was first launched in 2009. Those kind of returns generated plenty of excitement from investors but also created concern from regulators and governments worldwide (it is trading around $8,000 now). Bank of Indonesia (BI) immediately banned Bitcoin as a payment instrument in Indonesia, even stating it has the potential to disturb the country’s financial stability, as the price is very volatile.

    Responding to BI’s statement, founder and chief executive of Bitcoin Indonesia Oscar Darmawan, 32, agrees that Bitcoin is not supposed to be a legal payment instrument in Indonesia. He emphasizes that Bitcoin is not even a currency. “All transactions in Indonesia have to be conducted in rupiah, so you cannot even do a transaction in other currencies such as U.S. dollars. I have never seen Bitcoin as currency, I see it as a commodity,” Oscar says.

    Instead of comparing it with currencies, Oscar suggests people should see Bitcoin like digital gold, and the price is determined by supply and demand. However, unlike the supply of gold, in which new supply is being mined and new reserves being discovered, the supply of Bitcoin is fixed at 21 million Bitcoins. After those 21 million are issued (or “mined”) then no new

    Bitcoins can be created—at the moment only about 4 million Bitcoins are still left to be mined.

    Bitcoin was created by a mysterious figure under the Japanese-sounding name Satoshi Nakamoto (it’s still unclear whether that’s a pseudonym or a real person or a group of persons). He released online a nine-page paper in 2008 entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” By 2010, the first transaction using Bitcoins happened, when developer Laszlo Hanyecz bought two pizzas for 10,000 Bitcoins—which, if Laszlo had kept the Bitcoins instead, would be worth $80 million today (it’s unclear who owns those Bitcoins now). Internet wags have dubbed this transaction “the world’s most expensive pizzas.” In the wake of the success of Bitcoin, some 1,300 of other cryptocurrencies have been created since then, including Ethereum, Ripple and Litecoin.

    One of the early Bitcoin miners was Indonesian Lawrence Samantha, founder and chief executive of software firm PT Indo Sistem Global, who started mining Bitcoins in 2011. His interest in Bitcoin came while he was getting a computer science degree from Ohio State University. “I wanted to know how to mine Bitcoin, so I decided to try it by myself for fun. Back then, the mining process was way simpler, you only need to turn on a computer, run the Bitcoin Core program that was downloadable and configured it, and just like that, my computer become a node, part of the Bitcoin network. I just let my computer and Internet run 24 hours,” he remembers. He started when he was still living in U.S. and worked for decentralized file transfer company BitTorrent. Miners get paid Bitcoins in return for verifying transactions.

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