What is Bitcoin the Future or World Greatest Scam? It took bitcoin 12 years to become a trillion dollar network and there's nothing else bitcoin is worthless artificial gold I must say I bought some and it's my best investment so I’m not bullish on bitcoin and bitcoin is the best money currently available because
Bitcoin
Bitcoin is a decentralized money it cannot be stopped the main motivation is for the price to go up they don't use it they don't transact in it they just huddle it and I’m they're hoping they get rich and what's your response to that people not using bitcoin.
The Insane World of Bitcoin
A few months ago I asked for your thoughts on bitcoin the responses I received were exactly as i was expecting most didn't understand it some of you labelled it a scam and others praised it extensively saying it's going to be one of the biggest things in the future or that it's going to make us question what exactly money and currency really is you see I avoided looking into bitcoin for as long as i could.
What is Bitcoin
There's only so many social media profiles with laser eyes in them that you can bear before you start to ask what exactly is going on here? and the more i tried to answer that question the more intrigued i was by bitcoin. The ongoing saga it becomes for example the fact that it's creator an individual or a group of individuals under the pseudonym Satoshi Nakamoto remains anonymous and unidentified to this day and is said to own one million bitcoins which at the time of making this blog makes Nakamoto worth over 62 billion dollars theoretically should the price of a single bitcoin rise to 177,000. Nakamoto would be the richest person in the world were they to sell their coins but Nakamoto is only one part of what makes this ongoing saga so fascinating truth is it's a wild world out there and i think it's time that you and i finally take a step into the realm of crypto and begin to make sense of it all. Bitcoin is a story it's a story about the very thing that influences our actions today the piece of paper that we call money or the numbers you see on a screen in your bank account.
Barter Trade System
If you
rewind time far enough you'll find that our ancestors
purchased goods using a method we wouldn't recognize today
payment first began with barter a system which involved trading
goods for other goods a few fish for a loaf of bread a
dozen eggs for a bunch of lettuce and so on but this system had
a problem it relied on us wanting what the other person had
it relied on a coincidence of wants so our ancestors realized that
we needed a medium of exchange to represent the value of the items
they wanted to buy such as cattle shells and eventually coins
made of precious metals then thousands of years later
countries started using paper money that was backed by gold.
Coincidence of Wants
In other
words the dollar would be backed by a certain amount of gold and
you could theoretically exchange those dollars for physical gold
that a country held in its reserves this system was known as the
gold standard in 1971 however the us officially left the gold
standard along with many other countries this meant that the dollar
was no longer backed up by gold the dollar was simply backed up on
the basis that the government decreed that it had value.
Fiat Money
We all
agreed that it does doing this allowed governments and central banks
to have more control over our money supply making it easier to use
monetary policy to respond to times of financial crisis this
type of money. The money that we use today which is no longer backed
up by gold rather our faith in government is known as fiat money
now there exists both arguments for and against fiat money but
the important thing to realize here is that this system relies
on trust in government but what if you don't have that trust who do
you turn to then emerging in the late 1980s the cypher punks were
part of a movement that was against centralized authorities like
governments being able to spy on people or have access to their
information they
advocated for what is known as Cryptography ways in
which we're able to secure communication in the
presence of third parties typically through the use of
encryption with their libertarian views.
Trust in Government
The cypher punks saw a clear contradiction between their values and the current financial system when they looked at banks or central banks they saw centralized institutions with the power to print as much money as they wanted on their terms we the people trust our banking institutions to be a safe place to put our money that they won't mismanage it and ultimately collapse cypher punks did not Lehman brothers is going bankrupt and financial markets from Asia to Europe are doing their utmost to prevent Monday from turning from dark to black brought down by bad mortgage investments.
Lehman which has 25,000 employees will be liquidated the American people can remain confident in the soundness and the resilience of our financial system major financial institutions have teetered on the edge of collapse and some have failed we are in the midst of a serious financial crisis in 2007 and 2008 a global financial crisis was unfolding a crisis that had its roots in risky lending from banks so much so that it led to the collapse of one of the united states biggest banks at the time Lehman brothers it was perhaps no coincidence then that under the shadow of the 2008 financial crisis.
Blockchain Technology
A white paper titled bitcoin a peer-to-peer electronic cash system began to circulate on a cryptography mailing list a paper that was written by someone under the pseudonym of Satoshi Nakamoto this nine-page manifesto was a blueprint for what Nakamoto described as a purely peer-to-peer version of electronic cash which would allow payments to be sent directly from one party to another without going through a financial institution Nakamoto took the technological innovations of former cypher punks and put them together into what we now call blockchain technology to put it simply Nakamoto laid out a framework using mathematics computer science and cryptography to create a currency that could be used for transactions without needing to trust a central authority, Trust was the problem bitcoin was set out to solve now let's pause for a moment here is where things can get a little confusing whilst we've covered the motivations behind bitcoin.
Learn more about Blockchain Bitcoin, Bitcoin Mining and Blockchain
Digital Currency
Now we must figure out what exactly is it and how is it decentralized understanding blockchain technology is the key to understanding the fanaticism around bitcoin that we see today. Bitcoin is not a physical coin it is in fact entirely virtual a digital currency think of bitcoin as simply transactions on a ledger. Let me try to explain you this with this simple and easy illustration I'll try my best to make your concepts crystal clear by this simple.
EXAMPLE:
Let's say ben pays two bitcoins to jane and jane pays two bitcoins to carl these transactions are recorded on a ledger and so on and so forth for every transaction that comes after banks work in a similar way recording.
The transactions made through a bank account each and every day using their own system verifying that the transactions made are in fact valid in other words a bank can make sure that somebody with only a hundred dollars in their account cannot spend any more than that bitcoin however is intended to be decentralized.
so how could it possibly verify that the transactions made on its ledger are legitimate. How we know that ben even has two bitcoins to send to Jain in the first place this is where we introduced the concept of a peer-to-peer or distributed ledger system that Nakamoto outlined in his white paper. Instead of a central authority owning the ledger that records all bitcoin transactions in
ledger. It is instead distributed amongst all computers or nodes in the bitcoin network a network that anyone with a computer can join by downloading.
Decentralized
This bitcoin software now each time a transaction is made on the ledger every computer on the network will attempt to verify whether this transaction is legitimate,
by
solving complex algorithms when a consensus is reached on the network
and the transaction is valid it will be permanently stored on the
ledger if a single node on the network attempts to validate an
incorrect transaction all the other nodes on the network will reject
it. After a certain amount of transactions are made on the ledger
a new ledger is created that contains a type of code otherwise
called a hash that links back to the previous ledger this is why
we call it a blockchain each of these ledgers or blocks
contain a certain amount of transactions that are then linked to the
previous block in the chain and no public identities are used
when transacting on the bitcoin blockchain. These Individuals have
both a public and a private key which appear as a string of random
numbers and letters a private key is used to create a digital
signature and a public key is used to verify the signature, without
revealing the private key this process of validating
transactions on the block is known as mining miners receive a reward
of a few bitcoins for every block
they successfully mine incentivizing them to continue adding
to the blockchain. If someone attempts to hack or
invalidate a previous block on the blockchain they would end
up invalidating every single block that comes after it which would be
easy to detect and reject by the network. the
bitcoin blockchain allows you to see every single transaction that
has ever been made since the very first block without being able to
alter or change the records. It's a decentralized form of
currency that doesn't rely on trust between parties
for transactions to occur you can still find the very first
block on the bitcoin blockchain today mined by the mysterious
Satoshi Nakamoto in 2009 showing that Nakamoto was given a
total of 50 bitcoins as a reward for mining the first block.
Genesis Block
This block is commonly referred to as the genesis block Nakamoto had also set the supply limit for bitcoins as 21 million within the software code itself as of today there are only two million bitcoins left to mine now admittedly all of this can seem very confusing at the start and it's very difficult to explain all of this inside of one blog. like I'm trying to do now.
There are many other resources that you use to learn the Bitcoin and technology
SKILLSHARE
SKILLSHARE who are helping in this blog if you haven't heard of them already SKILLSHARE is an online community with amazing classes at the moment SKILLSHARE has a demystifying cryptocurrency understanding bitcoin and beyond class by Milton Demiros who does a brilliant job of explaining some of the jargon that you'll commonly hear in the cryptocurrency space and breaking down how bitcoin technology works even better SKILLSHARE is at the price of about 10$ a month for an annual subscription which is the same price as two coffees a month and may be they will give you a free trial of SKILLSHARE premium I’ve been thankful to SKILLSHARE myself for a long while and i still use it to this day to help me with things like blog editing. Classes will help on animating kinetic typography on after effects but there are a ton of other classes on SKILLSHARE ranging from creative writing web design illustration and all sorts of other things so remember to know more about SKILLSHARE and be one of the first people to claim your free trial of the premium membership today.
Bitcoin Price
One question still remains how did bitcoin reach the price it's at today could digital currency with albeit brilliant technology truly be worth more than 60 thousand dollars price is a matter of demand so how did the demand ever reach this point in the first place in early 2009 after releasing their infamous white paper Nakamoto mined the genesis block setting into motion a series of events that would change its future forever the early adopters of bitcoin included those from the cyber punk movement. Others who mined bitcoin just as a hobby until 2010 bitcoin was worth practically nothing yet that would soon change that year.
Bitcoin First Transaction
During the month of May a man named Lazlo Honyats created a post on a bitcoin discussion forum offering to pay
More Cryptocurrencies
After this suddenly we began seeing the emergence of other cryptocurrencies using the very same blockchain technology that bitcoin uses these alternative cryptocurrencies otherwise known as altcoins aim to solve their own problems by making changes to the original bitcoin whilst bitcoin's intentions are to be a digital currency a cryptocurrency like Ethereum is attempting to do something entirely different using blockchain technology both of which require their own research and looking into there are currently thousands of altcoins out there and some of which are Ponzi or pump and dumb schemes that serve no use purpose.
Bitcoin Scandals
Bitcoin did however struggle in its early years from a poor reputation and multiple SCANDALS its use of a private and a public key system allowed for a level of anonymity which made it perfect for criminals and illegal use purposes silk road was a notorious website on the dark web which engaged in the buying and selling of illegal substances with which bitcoins were used for transactions the website itself was a sophisticated Endeavor that proved tough to crack it used the online currency bitcoins and operated in the so-called deep web because of this the association of bitcoin with black markets like silk road put a stain on its reputation that can
still be felt today another significant scandal during these years was the collapse of M.GX bitcoin's first and biggest exchange which at one point handled up to 70 percent of all bitcoin transactions heard of an online currency exchange known as M.GX his website had been one of the largest online exchanges for the digital cryptocurrency known as bitcoins the site went offline Tuesday amid allegations of major theft and carpals acknowledged today he can't account for 850 000 bitcoins M.GX unexpectedly shut down today owing hundreds of millions of pounds
what was once one of the world's biggest bitcoin exchanges M.GX has filed for bankruptcy protection in japan.
Even during bitcoin's worst days the demand still remained with the launch of companies like Bitpay which provided mobile transactions for businesses wanting to accept bitcoin the speculation around the cryptocurrency reached new heights in 2013 bitcoin reached 1000 at its peak before dropping into the hundreds it was in 2017 however when bitcoin faced its most unbelievable year yet in japan that very year a law was passed that accepted bitcoin as the legal payment method the hype and speculation continue to mount as headline after headline reported bitcoin reaching all-time highs it's during these moments of a bubble where suddenly everyone you ever knew is talking about bitcoin the market was getting greedy and irrational there were companies simply adding blockchain to their name and seeing their share prices surged 394 at the peak of it all in December of 2017 a single bitcoin was worth almost 20000 but just as fast as the hype and speculation had come it had also burst if you think the Dow had a bad day bitcoins was worse the price is now having around seven thousand dollars a jaw-dropping loss of nearly 15 percent just check the members yeah 15 over the course within days after hitting its peak bitcoin began to tumble back down in price spurred on partly,
because
of government crackdowns as cryptocurrency exchanges were banned in china the
fear of missing out swiftly became the fear of losing money and the price of
cryptocurrencies collapsed 80 since its peak making the "2018
cryptocurrency crash worse than the dot-com crash i mean i bought bitcoin when
it was twenty thousand dollars and i literally put three hundred thousand
dollars in there that 300.
Yet
despite the crash bitcoin's worth remained in the thousands and now only three
years after the 2018 crash bitcoin is worth over 60000 at the time of blogging.
why what separates a retail investor from an institutional investor for one
it's money a lot of money it's for that reason then that the recent
institutional interest in bitcoin. what is fueling the current insanity that we
see today this morning from paypal the company's Venmo app will now allow its
70 million customers to buy hold and sell cryptocurrency now the rollout begins
today and it's going to be available to all customers in the next few weeks
Elon Musk does it again a shock announcement and an immediate market response
tesla has put one and a half billion dollars into bitcoin and musk will accept
bitcoin as payment and as the us federal reserve continues printing money in
order to boost the economy under the current circumstances the fear of rising
inflation grows stronger and stronger you see the narrative around bitcoin has
changed whereas in its initial white paper bitcoin was intended to be a
currency more and more investors are looking at bitcoin as a store of value
instead we'll dive deeper into this pivot during the next part of this series
but it's important to acknowledge that institutional interest in bitcoin was
something it was previously lacking bitcoin ultimately has to rely on people's
belief in its ability to be a currency or as we now see it being used as a store
of value and yet there are those who say that bitcoin is not worth its current
price or those that think its price is being manipulated to a great extent the
price of bitcoin is totally manipulated by bunch of people by a bunch of ways i
think the whole damn development is disgusting former paypal CEO Bill Harris
called the cryptocurrency quote the greatest scam in history noting that it is
a pump and dump scheme i could care less with bitcoin trades for how it trades
Wiretrace who trades it if you're stupid enough to buy you'll pay the price for
it one day the next part of this series will be coming shortly as we take a
dive into the heated debate and speculation around bitcoin today the link for
that will be in the description when it's out but i would absolutely recommend
you learn about bitcoin and blockchain technology yourself especially if you're
going to be investing in it again.
Thanks to SKILLSHARE
SKILLSHARE is a great resource that you can use to begin learning as well as having access to tons of other classes so be sure to search in google and be one of the first 1000 people to claim your free trial of the premium membership but if you did enjoy this blog do hit the like button do follow to know more of those things are free but they really help out with the blog my friends i wish you the best rest of the day i look forward to seeing you in the next part of the series things are going to be getting really interesting but as always hand to head too salute days is yet to come too many times has come to pass too many moments put aside.
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