Crypto and bitcoin 101
1.
What is a Cryptocurrency
A cryptocurrency is a completely digital currency designed to be used as a medium of exchange. Throughout human history there have been many things used by various different cultures as a medium of exchange. For instance native Americans used to use wampum which were strings of beads made from seashells, Europe in the middle ages used copper, iron, gold, and silver most of which were melted down in order to make coins. Human beings have been using different forms of currency to facilitate trade since the beginning of time and cryptocurrency is the next step in this evolution for the modern world.
The thing that makes cryptocurrencies so unique amongst other currencies is that cryptocurrencies are secured through cryptography, hence the name, which is the practice of using various mathematical techniques to secure information against third parties. Most cryptocurrencies work by operating on a blockchain, which we will go into more detail on later in this book, but for now the simple explanation of a blockchain is a network of separate and independent computers around the world that pool together computing power to validate network operations and transactions.
New cryptocurrencies are not minted by a central authority like with traditional fiat currencies (fiat just means “by government decree”) ex. Euro, Yen, Dollar; but by a process called mining. Cryptocurrency mining involves using a powerful and highly specialized computer (either a GPU or an application specific integrated circuit) to perform and solve extremely complex computational math problems. Miners are in competition with all the other miners around the world to see who can be the first to solve a complex math problem called a hash function. Miners are then rewarded for completing this hash function by receiving a small amount of the crypto they are mining called a block reward. This is by no means an in-depth analysis of cryptocurrency mining as this topic is incredibly complex and could be elaborated upon in a whole book itself.
2.
A brief history of Bitcoin
The Bitcoin whitepaper was published in 2008 by an anonymous programmer by the name of Satoshi Nakamoto. Only a year later the bitcoin network went live to the world and ever since then a whole industry has grown up with numerous different blockchains all trying to accomplish different goals. Bitcoin originated as a form of digital cash for easy payments however the asset has now grown into a role more akin to gold as it is used as a store of value to hedge against inflation.
Cryptocurrencies as we have them today are not the first attempt at an online monetary solution. The ideas, principles, and technologies that make cryptocurrencies possible today were developed through trial and error by many different companies all trying to achieve the same or similar goals. Many of these companies had great ideas and solid technologies behind them but they failed to be able to bring all these various factors together into one successful product that could withstand the test of time.
Bitcoin was the first online monetary solution to be able to successfully repurpose what worked from other projects while avoiding the same mistakes they made that eventually led to their failures. The most notable of these failures before bitcoin was the issue of users being able to spend the same asset twice, often called double spending. Think about it like this: the way our monetary system works today if I want to send money to my friend I have to go through a trusted third party called a bank (or a payment processor like PayPal or square) which will make sure that when I send money to my friend it is successfully taken out of my account and transferred into his. Now if there was no third party to verify and carry out transactions on or behalf who’s to say I couldn’t send money to my friend and then go spend that same money at the coffee shop. Since there is no third party to enforce and keep track of the transactions there is no accountability or guarantee my money was even sent in the first place.
Bitcoin was the first online monetary solution to successfully solve this problem by using blockchain technology to remove the need for a trusted third party. Bitcoin was built using blockchain technology so that numerous computers all around the world can share the computational load of verifying and processing transactions without the need for a trusted third party. This one single advancement has been what has allowed bitcoin to grow into the largest cryptocurrency in the world by market capitalization and it is this single feature of true decentralization that I believe will allow us to enter a new age of personal sovereignty.
3.
So what makes bitcoin so special (why should I care?)
In order to understand the true power and value of bitcoin and cryptocurrencies in general you must first understand the problems that these technologies were designed to solve. Bitcoin being a medium of exchange it is inextricably linked to commerce. Commerce revolves around a ledger which is a simple record of transactions made between various parties such that they can maintain a state of trade. The method of double entry bookkeeping is the standard for banks and payment providers because it provides the infrastructure for counterparts to transact with one another and a central authority also prevents double spending because they have the power to roll back payments and settle disputes.
In the early 2000’s financial cryptographer Ian Grigg proposed the concept of triple entry bookkeeping as a solution for digital commerce and a way to get around the double spending problem. There would exist a neutral mechanism shared by both parties that would digitally sign and record their transactions producing a chain of verifiable transaction history data. This would create a cryptographic receipt that accumulates the digital signatures of all previous transactions. This idea was elegant and was a step in the right direction but it was missing one key feature that would prevent it from ever being successful. It relied on a central authority to administer the system so no matter how secure you made the system there would always be a single point of failure and there would always be a third party involved. Bitcoin uses this same concept of triple entry bookkeeping but the thing that sets it apart from every other previous digital currency is that the trusted third party that is used to verify transactions in the case of bitcoin is the blockchain and the proof of work consensus algorithm which is permanent and immutable. This one single feature is the source of bitcoin’s transformative power. Now for the first time in human history we have a truly decentralized medium of exchange and store of value that is independent from any one nation, corporation, organization, or individual.
4.
Why we need bitcoin now more than ever
As I’m sure you all know the past year and a half has been one of the most divisive and turbulent times we’ve had to face in recent memory. If you are close to my age (23) then this is the first time in our lifetime we are seeing a complete and utter attack on Individual rights and liberties. With politicians and bureaucrats spreading fear porn and misinformation to try and have the citizens give away more and more rights so that they can have more and more power and control over our lives. One of, if not the biggest vector they use to control and subjugate the people is through the use, or better said the misuse of money and monetary policy. Ever since the federal reserve was started in the early 1900’s and the U.S. dollar was unpegged from the gold standard corrupt bankers and politicians have colluded together to gradually devalue the currency and thus steal money from the average citizen through inflation by issuing more and more fiat currency and increasing the national debt recklessly. Today our economy is run off of false prosperity and spending money today that we will pay for ten fold down the line, this is an unsustainable system that needs to be stopped.
The result of this corrupt central bank run system is a gross misalignment of the incentives of the government and the incentives of the people. Ideally in a perfect society the incentives of the government and the people should be aligned, in other words what is good for the people is good for the government and vice versa. The governments job is to take tax dollars collected from the people and invest those dollars into protecting our borders from foreign invaders, protecting the weak and innocent from others who would do them harm here on our own soil, and maintaining proper and adequate infrastructure such as roads, buildings, schools, etc… This is good for the people because it allows for them to safely study at good schools with high quality teachers to learn a trade that can contribute value to society and thus earn them money in the free market economy. The more people we have who are educated and free to go pursue whatever dreams they desire creates more businesses who can employ more people and add more value to the economy thus earning greater rewards in the form of money which can then be taxed by the government to be used to reinvest back into the people. This is the ideal scenario when it comes to the incentives of the people and the government being aligned, when the government invest tax dollars back into improving the education and quality of life of its citizens you have more citizens who will go on to create more value in the free market economy thus generating more money to be used to reinvest and gradually this improves the quality of life for the whole nation and everyone can reap the rewards.
Unfortunately when you have a system like we are existing in today where the government no longer relies on getting its money from the taxation of its citizens, it can just use a central bank to artificially and arbitrarily create new fiat money out of thin air. This then changes the whole power dynamic between the government and the governed. Suddenly the government doesn’t have to be accountable for its actions, it doesn’t need to do what the people want because it is no longer reliant on the people. The government no longer cares about the well being of the people and the actions taken by the government reflect this by operating in a way that benefits the ones who are involved in government by funneling tax payer money out of being reinvested back into the people and instead into politicians and bankers pockets. If you look at the actions taken by the United States over the past year and a half it is painfully obvious to see that our government no longer has its citizens best interest in mind. No longer is the government incentivized to create an environment of equality and prosperity for all as the founding fathers envisioned when they created this great nation. Instead our government is incentivized to keep us all divided, uneducated, lazy, and dependent on the state.
I believe that buying and holding Bitcoin, educating others around us on the importance of getting away from our current fiat system, and trying to move to a bitcoin standard Is the way we can fight back against the politicians and bureaucrats who are robbing us and the future generations just to stuff their pockets full today. Buying and holding Bitcoin is a moral imperative. Its not just about making a lot of money on an investment (although that is a pleasant side effect) it is a protest against the current corrupt system that has been unknowingly forced upon us by those who are supposed to have our best interest in mind.
I hope that by laying out these facts for you in this short book I have opened your eyes to the reality of what is going on in our world today. As I stated in the beginning this is by no means a comprehensive view of bitcoin or cryptocurrencies but it is a good base of knowledge to allow you to make informed decisions on your own. If you want to join the fight against tyranny and the oppression of the American people and all human beings on this planet then you can start by buying and holding bitcoin. Don’t just take my word for it do the research on your own, invest the time to really understand this stuff in and out, share this book with your friends and family, take a stand against the people who wish to control you and everyone else you know, and don’t forget the most important step :HODL your bitcoin (hold on for dear life) and don’t ever let go.
