ScaredyCatGuide to Bitcoin and Other Cryptocurrencies – Part 1 - Bitcoin Introduction

in cryptocurrency •  11 months ago

Both understanding and being able to explain bitcoin and the blockchain in a simple clear way is important.


This post is the first in a series that will discuss the basics of bitcoin (and other cryptos) so that we can clearly explain it to the average joe who is skeptical of it all.


In this post we will…

  • Learn what bitcoin is and how it came to be

Bitcoin Beginnings

Bitcoin is a new form of currency - a digital currency. It was created in 2009 by a developer(s) Satoshi Nakamato. The goal of this new currency and technology is to decentralize the power of money.

Currently the world’s money is controlled by the central banks of the issuing Country. This became ever present during the financial collapse in 2008. Central banks implemented quantitative easing and created bail outs for the large financial institutions integral to the financial crisis.

The same big banks that we use to hold our money and process our financial transactions. It is this centralized system that bitcoin and more so the blockchain are designed to make obsolete.

Decentralization

Decentralization is done by using a peer-to-peer network. Rather than relying on a central bank, middleman or government, bitcoin is empowered by everyone that makes up the peer-to-peer network.

Each individual that owns or uses bitcoin is part of the network that enables bitcoin to function. There is no central hub or center of control.

The strength and convenience of bitcoin grows as more and more people make use of it. Anyone in the world can send or accept bitcoin payments from others anywhere in the world, nearly instantaneous without paying large transactions fees.

This is what makes it revolutionary. You do not need a middle man to transact with people. Granted, there are exchanges you can buy, sell and hold bitcoin, but they are an optional as opposed to being mandatory.

Free Market at Work

Unlike fiat currency which has its value manipulated by central banks, bitcoin as a currency has its value dictated by the free market principle of supply and demand.

As for the supply side, that amount is limited to 21 million bitcoins. Nobody knows exactly why it’s 21 million, though there are many theories. Once all the coins are mined, that's it.

The thing it does do is create a finite supply. This means more won’t be printed per se , which we know manipulates value as seen by the practices of banks with fiat currency.

Bitcoin as a Currency

Now that we have discussed the currency aspect of bitcoin and that it can be used to buy and sell things with any other person or business that accepts it we can move to the next step.

In the next post we will discuss the technology behind bitcoin – the blockchain

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Some things I use:


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Best Regards,
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Disclaimer: All content in this post is my opinion and for informational purposes.

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Very informative post most of us don't know.

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Thanks, I will continue to delve further into it with each post.

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As Andreas Antonopoulos says, "your keys, your coins, not your keys, not your coins". So it's important not to hold your coins long term on an exchange like Coinbase (or you will be goxxed). I use a hardware wallet.

Exchanges violate the decentralization principles of Satoshi Nakamoto by creating giant honeypots that can be attacked.

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Exactly, generally I only leave my active trading cyrpto on the exchange, all long term holdings are in wallets.

I will get into wallets vs exchanges and keys in future posts.

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Thank you for explaining bitcoin and the blockchain in a simple clear way is important so I can understand it.

Great post as always man

I think I will bookmark this comprehensive guide and send it to people. When it comes to explaining such things, I'm not very good at finding my words.

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You and me both, that's why I'm writing - a task in finding the words :-)

I just tell people it is money from the clouds.

Thank you, thank you, thank you, very helpful for a complete newbie. I'll be following and hopefully learning along the way.

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Upvoting this comment will help support @minnowsupport.