Harry Potter author and the Bitcoin explanation - Jim Duffy comment

I have to admit that I really do like the Harry Potter movies.

Duffy has decided to 'educate' hugely successful author JK Rowling and others on Bitcoin. Picture: Ben Pruchnie.

I’ve watched the first three and although my daughters tell me to get a move on, I will watch the rest on a rainy weekend. One cannot beat a bit of wizardry and suspense coupled with sub-plots and lots of ups and downs. A bit like Bitcoin, really! Which is why I was fascinated by a Twitter exchange that started this week with JK Rowling, the creator of Harry Potter.

Rowling said on Twitter that, in short, she didn’t really understand Bitcoin and was looking for some inspiration to assist her. Of course, when someone as popular and well-followed asks a question like this, the responses will come from far and wide. And we were not disappointed. Even Mr Elon Musk joined in.

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But alas, the Harry Potter creator, even with all her wisdom and imagination, still did not seem to get what Bitcoin is or could be – so I thought that we might have a go here to “educate” and “elucidate” JK and many of you on what Bitcoin is and could be. Like all fairy stories, the beginnings are a little hazy and the endings can be as imaginative, outrageous and fanciful as one wishes. And here is how Bitcoin has come to pass, JK. So, let us begin.

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First up, the author. Bitcoin was created, or so the story goes, by one Satoshi Nakamoto. Mr, Mrs or they Nakamoto has never been seen or popped their heads up at all. Almost fantasy or allegory-like, Bitcoin was born without parents. But, don’t worry, it has been well adopted. Millions of people across the globe are looking after their Bitcoin as we speak.

The next thing to note is that while it has the moniker Bitcoin, which would suggest it has a reality, do not be fooled. The marketing and creative producers have categorised our prodigy as a coin. But if you head to a high-street retail bank this week and ask to buy some as you are going on holiday in 2021, then the teller will look a little bamboozled. You see, Bitcoin cannot be seen by the likes of you and me. No, only computers can see it and work with it.

Changes afoot

But, never say never, as big changes are around the corner for the next movie. And here is where Mr Musk has been frustrated in the past. Essentially, then, Bitcoin is just a pile of computer code that is logged securely on a blockchain. This closed and mathematically created blockchain stores Bitcoin pieces on it as named and known blocks that should not be able to be tampered with.

And only 21 million Bitcoin will ever be made. It has been created for scarcity with fixed supply and demand parameters. So, no-one can ever print more, if they feel like propping up already hugely indebted economies.

And this is the key plot. The authors of Bitcoin, which was borne out of the 2008 financial crisis, wanted to build something outside normal money. This way the bad guys, like governments, banks and financial institutions could never own it, control it nor manipulate it.

As of today, Bitcoin is trading on digital exchanges at a price of $9,600 (£7,835). Imagine that! A piece of code created by an innovative author within a decade being more valuable than an ounce of gold. However, like anything in a fairytale, anything can happen.

It is volatile and appears to possess spooky qualities where it can rise and fall in minutes by $1,000. So, it is not for the faint-hearted. But, the next chapters of Bitcoin will be even more exciting and thrilling for many than the great Harry Potter movies.

Of course, I’m not the creator or author, so to advise where Bitcoin is going would be folly and speculation. But to put Bitcoin into perspective for JK and hopefully prompt her into finding out more, here is an interesting exercise. A Google search of Harry Potter throws up 536,000,000 hits in 0.55 seconds.

But the same search on Bitcoin reveals 556,000,000 in 0.79 seconds. Statistically, these are very close. Perhaps, the magic of both has captured lots of imaginations. Harry Potter will be around in ten years. It is simply that good. Bitcoin on the other hand? Only a wise wizard can predict that one…

Jim Duffy MBE, Create Special

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