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== Appendix == === How does Bitcoin work? === Bitcoin operates using a technology called blockchain, which is a decentralised ledger system. Here's a simplified explanation of how it works: # '''Transactions:''' Every Bitcoin transaction is a data unit that includes a few different items: the amount of Bitcoin being sent, the sender's address (public key), and the receiver's address. # '''Blockchain:''' A blockchain is a chain of blocks, where each block contains a number of transactions. Once a transaction is initiated, it is broadcast to a network of peer-to-peer computers scattered across the world. # '''Mining:''' To add a transaction to the blockchain, a process called mining must take place. This involves computers solving a complex mathematical problem that ultimately verifies the authenticity of the transaction. The first miner to solve the problem gets to add the block of transactions to the blockchain. # '''Proof of Work:''' This mathematical problem is part of a system called proof of work, which is what prevents fraudulent transactions. It ensures that altering any single record (or block) in the chain would require re-mining not just the block with the transaction, but all the subsequent blocks. # '''Decentralisation:''' Unlike traditional currencies, there is no central authority like a bank or government backing Bitcoin. Instead, it relies on this decentralized network of computers (miners) to process transactions. # '''Bitcoin Wallets:''' To use Bitcoin, you need a digital wallet. This wallet doesn't actually store your Bitcoin; instead, it holds the private keys that allow you to access your Bitcoin address (public key). # '''Public and Private Keys:''' A Bitcoin wallet contains a public key and a private key, which work together to allow the owner to initiate and digitally sign transactions, providing proof of authorization. # '''Supply Limit:''' Bitcoin also has a stipulated supply limit of 21 million coins, which is expected to be reached around the year 2140. This limited supply is one of the factors that contributes to Bitcoin's value. # '''Market-Driven Value:''' The value of Bitcoin is determined by what people are willing to pay for it, making it highly volatile. It's influenced by factors like supply and demand, investor sentiment, market news, and government regulation. # '''Anonymity and Transparency:''' While Bitcoin transactions offer some level of anonymity, all transactions are publicly recorded in the blockchain, making it transparent. Bitcoin's complex nature combines elements of mathematics, computer science, and economics. It represents a shift in how we think about money in the digital age. === Cryptocurrencies comparisons === Below is a table covering some of the most well-known cryptocurrencies and their unique characteristics. {| class="wikitable" |+This table provides a snapshot of the unique qualities of each cryptocurrency. !Cryptocurrency !Unique Feature |- |Bitcoin (BTC) |The first cryptocurrency, it introduced blockchain technology and operates on a proof-of-work model. |- |Ethereum (ETH) |Introduced smart contracts, allowing decentralised applications (dApps) to run on its blockchain. |- |Ripple (XRP) |Focused on international money transfers, it offers fast transaction speeds and low fees. |- |Litecoin (LTC) |Similar to Bitcoin but with faster block generation rate and a different hashing algorithm (Scrypt). |- |Cardano (ADA) |Uses a proof-of-stake model and focuses on security through a layered architecture. |- |Polkadot (DOT) |Enables different blockchains to transfer messages and value in a trust-free fashion; betting on blockchain interoperability. |- |Chainlink (LINK) |A decentralised oracle network designed to connect smart contracts with data from the real world. |- |Binance Coin (BNB) |Originally created as a utility token for the Binance cryptocurrency exchange, it now fuels its blockchain ecosystem. |- |Solana (SOL) |Known for its high throughput and low transaction costs, it uses a unique proof-of-history mechanism. |- |Dogecoin (DOGE) |Began as a meme but gained popularity and use, particularly for tipping and charitable donations. |- |Uniswap (UNI) |Pioneered the decentralised finance (DeFi) movement with an automated liquidity protocol on Ethereum. |- |Monero (XMR) |Focuses on privacy and anonymity, using ring signatures and stealth addresses to obscure transaction details. |} {| class="wikitable" |+ !Currency/Asset !First Cryptocurrency !Smart Contract Capabilities !Focused on International Transfers !Faster Transaction Speeds !Proof-of-Stake Pioneer !Blockchain Interoperability !Decentralized Oracle Network !Exchange's Native Token !Proof-of-History Consensus !Meme-Based Origins !Automated Liquidity Protocol !Focus on Privacy !Fiat Currency !Physical Asset |- |Bitcoin (BTC) |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Ethereum (ETH) |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Ripple (XRP) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Litecoin (LTC) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Cardano (ADA) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Polkadot (DOT) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Chainlink (LINK) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Binance Coin (BNB) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Solana (SOL) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Dogecoin (DOGE) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Uniswap (UNI) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |Monero (XMR) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |- |USD (United States Dollar) |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |style="background: red; color: white;" |β |- |Gold |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: red; color: white;" |β |style="background: green; color: white;" |β |} === Beta risk profile === {| class="wikitable" |+ !Beta value !Risk rating |- |style="background: green; color: white;" |0 to 0.50 |style="background: green; color: white;" | Low |- |style="background: orange; color: white;" | 0.50 to 1.50 |style="background: orange; color: white;" | Medium |- |style="background: red; color: white;" | 1.50 to 3.00 |style="background: red; color: white;" | High |- |style="background: purple; color: white;" | 3.00 and above |style="background: purple; color: white;" | Extremely high |} === Bitcoin adjusted beta calculation === {| class="wikitable" |+ !Date !iShares MSCI World ETF unit price (USD) !Bitcoin share price (GBP) !iShares MSCI World ETF unit price change (%) !Bitcoin share price change (%) |- |01/11/2018 |86.21 |4,017.27 | | |- |01/12/2018 |78.87 |3742.70 | -8.51% | -6.83% |- |01/01/2019 |84.96 |3457.79 |7.72% | -7.61% |- |01/02/2019 |87.49 |3854.79 |2.98% |11.48% |- |01/03/2019 |88.79 |4105.40 | 1.49% |6.50% |- |01/04/2019 |92.09 |5350.73 |3.72% |30.33% |- |01/05/2019 |86.76 |8574.50 | -5.79% |60.25% |- |01/06/2019 |91.02 |10817.16 |4.91% |26.15% |- |01/07/2019 |91.86 |10085.63 |0.92% | -6.76% |- |01/08/2019 |89.84 |9630.66 | -2.20% | -4.51% |- |01/09/2019 |91.78 |8293.87 |2.16% | -13.88% |- |01/10/2019 |94.12 |9199.58 |2.55% |10.92% |- |01/11/2019 |96.76 |7569.63 |2.80% | -17.72% |- |01/12/2019 |98.78 |7193.60 |2.09% | -4.97% |- |01/01/2020 |97.73 |9350.53 | -1.06% |29.98% |- |01/02/2020 |89.67 |8599.51 | -8.25% | -8.03% |- |01/03/2020 |77.93 |6438.64 | -13.09% | -25.13% |- |01/04/2020 |86.36 |8658.55 |10.82% |34.48% |- |01/05/2020 |90.7 |9461.06 |5.03% |9.27% |- |01/06/2020 |92.14 |9137.99 |1.59% | -3.41% |- |01/07/2020 |96.65 |11323.47 |4.89% |23.92% |- |01/08/2020 |102.96 |11680.82 |6.53% |3.16% |- |01/09/2020 |99.52 |10784.49 | -3.34% | -7.67% |- |01/10/2020 |96.53 |13781.00 | -3.00% |27.79% |- |01/11/2020 |108.94 |19625.84 |12.86% |42.41% |- |01/12/2020 |112.41 |29001.72 |3.19% |47.77% |- |01/01/2021 |111.49 |33114.36 | -0.82% |14.18% |- |01/02/2021 |114.27 |45137.77 |2.49% |36.31% |- |01/03/2021 |118.49 |58918.83 |3.69% |30.53% |- |01/04/2021 |123.61 |57750.18 |4.32% | -1.98% |- |01/05/2021 |125.6 |37332.86 |1.61% | -35.35% |- |01/06/2021 |126.57 |35040.84 |0.77% | -6.14% |- |01/07/2021 |128.83 |41626.20 |1.79% |18.79% |- |01/08/2021 |132.02 |47166.69 |2.48% |13.31% |- |01/09/2021 |126.46 |43790.89 | -4.21% | -7.16% |- |01/10/2021 |133.84 |61318.96 |5.84% |40.03% |- |01/11/2021 |131.1 |57005.43 | -2.05% | -7.03% |- |01/12/2021 |135.32 |46306.45 |3.22% | -18.77% |- |01/01/2022 |128.32 |38483.13 | -5.17% | -16.89% |- |01/02/2022 |124.58 |43193.23 | -2.91% |12.24% |- |01/03/2022 |128.16 |45538.68 |2.87% |5.43% |- |01/04/2022 |117.42 |37714.88 | -8.38% | -17.18% |- |01/05/2022 |117.94 |31792.31 |0.44% | -15.70% |- |01/06/2022 |106.88 |19784.73 | -9.38% | -37.77% |- |01/07/2022 |115.57 |23336.90 |8.13% |17.95% |- |01/08/2022 |110.28 |20049.76 | -4.58% | -14.09% |- |01/09/2022 |99.95 |19431.79 | -9.37% | -3.08% |- |01/10/2022 |107.42 |20495.77 |7.47% |5.48% |- |01/11/2022 |115.44 |17168.57 |7.47% | -16.23% |- |01/12/2022 |109.25 |16547.50 | -5.36% | -3.62% |- |01/01/2023 |117.01 |23139.28 |7.10% |39.84% |- |01/02/2023 |113.98 |23147.35 | -2.59% |0.03% |- |01/03/2023 |117.67 |28478.48 |3.24% |23.03% |- |01/04/2023 |119.79 |29268.81 |1.80% |2.78% |- |01/05/2023 |118.6 |27219.66 | -0.99% | -7.00% |- |01/06/2023 |124.52 |30477.25 |4.99% |11.97% |- |01/07/2023 |128.54 |29230.11 |3.23% | -4.09% |- |01/08/2023 |125.7 |25931.47 | -2.21% | -11.29% |- |01/09/2023 |120.17 |26967.92 | -4.40% |4.00% |- |01/10/2023 |117.11 |34667.78 | -2.55% |28.55% |- |01/11/2023 |122.84 |37313.97 |4.89% |7.63% |} {| class="wikitable" |+Bitcoin beta and adjusted beta value ! !Beta !Adjusted beta !Comment(s) |- |Consistent (monthly) intervals between data points |1.64 |1.42 | |} === Glossary === Here's a glossary of key terms commonly used in the cryptocurrency and blockchain space: # '''Blockchain:''' A digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. # '''Bitcoin (BTC):''' The first and most well-known cryptocurrency, which introduced blockchain technology. # '''Ethereum (ETH):''' A blockchain platform known for its smart contract functionality, allowing developers to build decentralised applications. # '''Smart Contract:''' A self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. # '''Ripple (XRP):''' A digital payment protocol and cryptocurrency known for its digital payment protocol more than its cryptocurrency. # '''Litecoin (LTC):''' A peer-to-peer cryptocurrency often considered the silver to Bitcoin's gold. # '''Cardano (ADA):''' A blockchain platform that aims to be a more secure and scalable infrastructure for developing decentralised applications and smart contracts. # '''Polkadot (DOT):''' A multi-chain interchange and translation architecture which allows customised side-chains to connect with public blockchains. # '''Chainlink (LINK):''' A decentralised oracle network designed to connect blockchain-based smart contracts to external data sources. # '''Binance Coin (BNB):''' Originally a utility token for the Binance cryptocurrency exchange, now used to power its ecosystem. # '''Solana (SOL):''' A high-performance blockchain supporting builders around the world creating crypto apps that scale today. # '''Dogecoin (DOGE):''' A cryptocurrency that started as a meme but grew to have a large online community and real-world usage. # '''Uniswap (UNI):''' A popular decentralised trading protocol, known for facilitating automated trading of decentralised finance (DeFi) tokens. # '''Monero (XMR):''' A privacy-focused cryptocurrency that obfuscates sender, recipient, and amount in transactions. # '''Proof of Work (PoW):''' A consensus mechanism that requires participants to perform computationally intensive tasks to validate transactions and create new blocks. # '''Proof of Stake (PoS):''' A consensus mechanism where validators are chosen to create new blocks based on the number of coins they hold and are willing to "stake" as collateral. # '''Decentralised Finance (DeFi):''' Financial services, including lending, borrowing, and trading, provided on a decentralised network typically built on blockchain technology. # '''Non-Fungible Token (NFT):''' A type of cryptographic token on a blockchain that represents a unique asset, such as digital art, collectibles, or real estate. # '''Cryptocurrency Wallet:''' A digital wallet used to store, send, and receive cryptocurrencies like Bitcoin and Ethereum. # '''Decentralised Applications (dApps):''' Digital applications or programs that exist and run on a blockchain or peer-to-peer network of computers instead of a single computer, and are outside the purview and control of a single authority.
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