Tag Archives: what-is-bitcoin

Crypto: Will the Bitcoin Dream Succeed?

  In 2021, the price of a single bitcoin, the leading cryptocurrency broke 60 000 and the market value of all cryptocurrencies reached a staggering 2.5 trillion dollars. Bitcoin’s promise to create a new decentralized financial system beyond the control of governments and banks has captured the imagination of the world. It’s become a bit of a social phenomenon. Mark Zuckerberg, the boss of facebook, has pet goats and he’s named them max and bitcoin, but so far the bitcoin dream has not been realized.

   Rather than becoming a new form of money, bitcoin, has become a highly volatile investment asset. Creating big winners. Bitcoin Trading Investors have said its price skyrocketing during the pandemic and big losers. The crypto valuation lost a third of a trillion dollars just overnight for the believers, bitcoin is still a digital stepping stone towards a utopian future for the skeptics. The crypto market is nothing more than a digital casino, too volatile to be trusted.

 So what will become of the bitcoin dream? What is Bitcoin?  It all started in 2009, somewhere in the world, a shadowy figure hiding behind the name of satoshi nakamoto created the very first bitcoin. It was the start of a digital revolution. Bitcoin and the thousands of cryptocurrencies market that have followed are nothing like actual coins.

 They are code recorded on a digital ledger that gets longer and longer as more people use them and embedded in nakamoto’s code for the first batch or block of bitcoins was a newspaper headline. Bitcoin’s creator put that headline in the first block because he wanted to send a signal. He wanted to show that people were looking for alternatives after the financial crash and the question that people were asking is: can we trust financial institutions with our money and bitcoin? Was the response? Trust is at the heart of the current financial system, banks and other financial institutions control how money flows around the economy.

 Faith that their ledgers are accurate is vital. This is because money is simply a social convention. It exists and has value, because we agree that it does. This agreement only works because we put trust in financial institutions such as banks. Bitcoin does not require trusted.

 Institutions nakamoto wanted to create a secure system that did not rely on any trust at all. To achieve this, the coins are registered on a revolutionary technology called a blockchain, which is a ledger of transactions that is not held by a centralized institution. Instead, transactions are verified and logged by a network of computers all over the world. In a process known as mining. We’re combining this for two purposes: one is to put new bitcoin in circulation and the second one, which is also essential, is to verify transactions on the network [ Music ].

 But it’s a complex process. If someone wants to make a transaction, everyone on the network is alerted, the transactions are verified by so-called miners. First, they check the transactions are legitimate. Once a miner has checked a few thousand transactions, they group them together in a block. That’S the easy part.

 The bitcoin miners then race for the right to add this block to a string of those previously made known as the blockchain. To do this, they compete to solve a complex numerical problem. The miner that solves it first sees their block added to the chain and they are rewarded in bitcoin. This whole process is incredibly energy intensive and is contributing to the climate crisis. As of may 2021, bitcoin mining used more electricity annually than the whole of the Netherlands.

 To keep bitcoin scarce and to help maintain its value, the number of bitcoins that can be mined is capped at 21 million. To date, almost 19 million bitcoins have been mined, but it cannot yet be classified as money for something to be considered money. It has to work in three ways as a medium of exchange as a store of value and as a unit of account for all the main functions of money that you can think of. Actually so far, bitcoin is not superior to the solutions that we already have, which are shared money and other ways of paying, and that’s you know the main reason why it you can’t really call it the currency now, here’s why fundamentally, bitcoin is a string of code With limited use like a gold bar, it doesn’t produce any revenue, but compared with the price of gold, the value of a single bitcoin is hugely volatile, and a single tweet can change people’s faith in it as a future currency. As a result, its price moves wildly up and down as people buy and sell it, and, unlike the dollar, there’s no central bank or government to defend its value.

 This volatility also makes bitcoin very hard to use as a medium of exchange. So a seller on amazon is unlikely to accept bitcoin for their goods as the following day. The price could vary dramatically, as happened on may 19. 2021. The price dropped almost 8 000 in less than an hour, but that’s not stopping el salvador.

 The central american country has become the first to adopt bitcoin as legal tender. It’s a major gamble. Bitcoin doesn’t really work as a means of payment because it’s very inefficient it can process only 10 transactions per. Second. When you know visa, the credit card company can do as much as 24 000 per second, so if bitcoin doesn’t work as a way of paying for things, what gives it value like shares and bonds, it’s also traded as an investment.

 This has led to a speculative mania where teenagers have become millionaires. It’s not just a maybe a get-rich-quick scheme as a lot of people put it, but i see it as the future of currency and others have lost it all. Literally in 2013, one unlucky man in wales even scoured a rubbish dump for a hard drive containing 7500 accidentally discarded bitcoins. Without that file, there is no way of getting the money back, because there is no central um central server that records a log of it today that hard drive would be worth 218 million dollars, if only he could find it, but investing in cryptocurrency is no longer For early adopters and armchair investors, it’s attracting attention from some of the world’s biggest banks, including morgan stanley, which now offers investors access to bitcoin funds, but even cautious buy-in from some financiers brings greater scrutiny. Banks are taking tentative steps to get into bitcoin.

 Regulators are watching this closely and so far they’ve only allowed a limited set of things that banks can do. They can provide access to the market to clients, but they can’t bet on the market themselves, for example using their own capital, and regulators are also wary, because bitcoin has a dark side: so bitcoin has been used to fund criminality or to launder money. Uh, if you venture on the dark web for example, which i did for an article recently you’ll find that everything from stolen credit card details to to drugs is priced in bitcoin. There’s has also been a lot of theft from crypto exchanges and a lot of fraud, and it’s not just criminality that is ringing alarm bells. Leading economists have warned that bitcoin is a dangerous bubble destined to burst and join the graveyard of historically hyped-up investments like the tulip mania of the 1630s, where the price of tulip bulbs rose sharply before spectacularly crashing or the dot-com boom in the late 1990s in 2018.

 There was reason to believe the skeptics might be right: the sharp surge and later drop in the price of bitcoin mimicked, these historic bubbles, a pattern which continued into the first half of 2021. The price soared to over 60 thousand dollars only to fall again. The bitcoin market is very fragile in 2020 and 2021 we’ve seen these students, you know sharp drops in in price on the basis of very little and then they partially recover, for you know other bits of news that that are completely unpredictable supporters, see cryptocurrency as a Burgeoning asset class with real value more like gold than tulips, but the jury is still out on whether the comparison is accurate, bitcoin or another cryptocurrency might become. You know relatively stable or trusted asset class like gold, but it’s too early to tell because you can see today as soon as people think it’s no longer a good investment, then dumb and plummets and value with it. Perhaps the biggest winner from its climb is bitcoin’s.

 Mysterious inventor satoshi nakamoto, assuming of course that nakamoto is a real person who is still alive, they’re thought to own more than 1 million bitcoin, currently worth around 37 billion dollars. Bitcoin may yet become a stable asset like gold or prove to be a bubble that bursts spectacularly. But one thing is for certain: the utopian dream of bitcoin becoming a new form of money beyond the control of governments and central banks is still as elusive as the technologies creator. Visit Crypto Swami for Bitcoin and Crypto News.

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What is Bitcoin? How to Buy Bitcoin? Can I Buy Bitcoin with a Debit Card?

Welcome to Crypto Swami and I’ll be your guide through this video series What is Bitcoin? We’re going to cover a lot of topics such as Bitcoin mining, Bitcoin wallets, how to trade Bitcoin and a lot more. Today we’re going to start from scratch and answer the third most searched term on Google today, what is Bitcoin?
If you’re worried that we’re going to get too technical and use a lot of complicated words, don’t. Here at Crypto Swami we translate Bitcoin news and videos into plain English so even if you have no technical background you’ll be able to understand everything. By the end of this course, you’ll know more about Bitcoin and how it works than 99% of the population.
So let’s get started… Before we talk about Bitcoin I want to take a moment and talk about money. What is money exactly?
At its core, money represents value. If I do some work for you, you give me money in exchange for the value I gave you. I can then use that money to get something of value from someone else in the future. Throughout history, value has taken many forms and people used a lot of different materials to represent money. Salt, wheat, shells and of course gold have all been used as a medium of exchange.
However, in order for something to represent value people have to trust that it is indeed valuable and will stay valuable long enough for them to redeem that value in the future. Up until a hundred years ago or so we always trusted in someTHING represent money. However something happened along the way and we’ve changed our trust model from trusting someTHING to trusting in someONE.
Let me explain. Over time, people found it too cumbersome to walk around the world carrying bars of gold or other forms of money, so paper money was invented.
Here’s how it worked: a bank or government would offer to take possession of your bar of gold; let’s say worth $1000, and in return, that bank would give you receipt certificates, which we call bills, amounting to $1000. Not only were these pieces of paper much easier to carry, but you could spend a dollar on a cup of coffee and not have to cut your gold bar into a thousand pieces.
And if you wanted your gold back, you simply took $1000 in bills back to the bank to redeem them for the actual form of money, in this case that gold bar, whenever you needed… And so, paper began its use as money as an instrument of practicality and convenience. However as time progressed, and due to macroeconomic changes, this bond between the paper receipt and the gold it stands for was broken. Now, to explain the path that led us away from the gold standard is extremely complex, but suffice to say that governments told their people that the government itself would be liable for the value of that paper money.
Basically we all said “let’s just forget about gold and trade paper instead”. So people continued to trade with receipts that are backed by nothing but the government’s promise. And why did that continue to work? Well, because of trust. Even though there is no actual commodity backing paper money, people trusted the government and that’s how fiat money was created.
Fiat is a Latin word that means “by decree”. Meaning the dollars, or euros or any other currency for that matter have value because the government orders it to.
It’s what is known as “legal tender” – coins or banknotes that must be accepted if offered as payment. So the value of today’s money actually comes from a legal status given to it by a central authority, in this case, the government. And so the trust model has changed, from trusting someTHING to trusting someONE, in this case, the government.
Fiat money has two main drawbacks: 1. It is centralized: You have a central authority that controls and issues it. In this case the government or central bank. And two, it is not limited by quantity: The government or central bank can print as much as they want whenever needed and inflate the money supply on the market. The problem with printing money is that because you’re flooding the market with more money the value of each dollar drops, so your own money is worth less.
When you see prices rising throughout the years it’s not necessarily that prices are rising as much as that the purchasing power of your money is dropping.
You need more dollars to buy something that used to “cost less”. Once fiat money was in place, the move to digital money was pretty simple. We already have a central authority that issues money, so why not make money mostly digital and let that authority keep track of who owns what. Today we mainly use credit cards, wire transfers, Paypal and others forms of digital money.
The amount of physical money in the world is almost negligible and is getting smaller with each year that passes. So if money today is digital, how does that even work? I mean, if I have a file that represents a dollar, what’s to stop me from copying it a million times and having a million dollars? This is called the “double spend problem”. The solution that banks use today is a “centralized” solution; they keep a ledger on their computer which keeps track of who owns what.
Everyone has an account and this ledger keeps a tally for each account. We all trust the bank and the bank trusts their computer, and so the solution is centralized on this ledger in this computer.
You may not know this, but there were many attempts to create alternative forms of digital currencies, however none were successful in solving the double spend problem without a central authority. Whenever you give a anyone control over the money supply you’re giving them enormous power and this creates three major issues: The first issue is corruption; power corrupts, and absolute power corrupts absolutely.
When banks have a mandate to create money, or value, they basically control the flow of value in the world, which gives them almost unlimited power.
A small example of how power corrupts can be seen in the Wells Fargo’s scandal where employees secretly created millions of unauthorized bank and credit card accounts in order to inflate the bank’s revenue stream, without their customers knowing about it for years.
The second issue of a centralised system is mismanagement. If the central authority’s interest isn’t aligned with the people it controls there may be a case of mismanagement of the money. For example, printing a lot of money in order to save a certain bank or institution from collapsing, as what happened in 2008. The problem with printing too much money is that it causes inflation and basically erodes the value of the citizen’s money.
One extreme example for this is Venezuela, where the government has printed so much money, and the value of it has dropped so much, that people are no longer counting money but are weighing it instead. The last issue is control. You are basically giving away all control of your money to the government or bank.
At any point in time the government can decide to freeze your account and deny you access to your funds. Even if you use only cold hard cash the government can cancel the legal status of your currency as was done in India a few years back.
This was the state of things until 2009. Creating an alternative to the current monetary system seemed like a lost cause. But then everything changed…. In October 2008 a document was published online by a guy calling himself Satoshi Nakamoto. The document, also called a whitepaper, suggested a way of creating a system for a decentralised currency called Bitcoin.
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This system claimed to create digital money that solves the double spend problem without the need for a central authority.
At its core Bitcoin is a transparent ledger without a central authority, but what does this confusing phrase even really mean? Well, let’s compare Bitcoin to the bank. Since most money today is already digital, the bank basically manages its own ledger of balances and transactions. However the bank’s ledger is not transparent and it is stored on the bank’s main computer.
You can’t sneak a peek into the bank’s ledger, and only the bank has complete control over it.
Bitcoin on the other hand is a transparent ledger. At any point in time I can sneak a peek into the ledger and see all of the transactions and balances that are taking place. The only thing you can’t figure out is who owns these balances and who is behind each transaction. This means Bitcoin is pseudo-anonymous; everything is open, transparent and trackable but you still can’t tell who is sending what to whom.
Let’s explain this with an example. You can see on your screen certain rows from Bitcoin’s ledger.
We can see that a certain Bitcoin address sent 10,000 Bitcoins to another Bitcoin address in May of 2010. This specific transaction is the first purchase that was ever made with Bitcoin and it was used to buy 2 pizzas by a guy named Laszlo. Laszlo published a post back in 2010 asking for someone to sell him 2 pizzas in exchange for 10,000 Bitcoins.
Well, someone did, and now the price of these two Pizzas is worth well over 100 million dollars today.
Bitcoin is also decentralized; there’s no one computer that holds the ledger. With Bitcoin, every computer that participates in the system is also keeping a copy of the ledger, also known as the Blockchain. So if you want to take down the system or hack the ledger you’ll have to take down thousands of computers which are keeping a copy and constantly updating it. Like most money today, Bitcoin is also digital.
This means there’s nothing physical that you can touch in Bitcoin. There are no actual coins, there are only rows of transactions and balances.
When you “own” Bitcoin it means that you own the right to access a specific Bitcoin address record in the ledger and send funds from it to a different address. So what does all of this mean? Why is Bitcoin such big news?
Well for the first time since digital money came into existence we now have an alternative to the current system. Bitcoin is a form of money that no government or bank can control. Think about the time before the Internet, how centralized the flow of information was.
Basically if you wanted information you could get it from a few major players like the New York Times, The Washington Post and others like them. Today, thanks to the Internet, information is decentralized and you can communicate and consume knowledge from around the world with the click of a button.
Bitcoin is the Internet of money and it’s offering a decentralized solution to money. Bitcoin has several advantages over the current system.
First, it gives you complete control over your money. With Bitcoin, you and you alone can access your funds. How you actually do this will be explained in a later video.
No government or bank can decide to freeze your account or confiscate your holdings. Bitcoin also cuts a lot of the middlemen from the process of transferring money. This means that in many cases Bitcoin is cheaper to use than traditional wire transfers or money orders.
Also, unlike fiat currencies, Bitcoin was designed to be digital by nature, this means you can add additional layers of programming on top of it and turn it into “smart money”, but more on that in later videos. Finally, Bitcoin opens up digital commerce to 2.
5 billion people around the world who don’t have access to the current banking system. These people are unbanked or underbanked because of where they leave and the reality that they have been born into. However, today, with a mobile phone and a click of a button they can start trading using Bitcoin, no permission needed.
Today there are several merchants online and offline that accept Bitcoin. You can order a flight or book a hotel with Bitcoin if you like.
There are even Bitcoin debit cards that allow you to pay at almost any store with your Bitcoin balance. However the road toward acceptance by the majority of the public is still a long one. As we continue in this video series, we will break down exactly how Bitcoin works and how to use it. We will learn about Bitcoin mining, Bitcoin wallets, how to buy bitcoins and much more. The revolution of money began in 2009 and these days we are seeing it change money as we know it.
You may still have some questions. If so, just leave them in the comment section below. And if you’re watching this video on YouTube and enjoy what you’ve seen, don’t forget to hit the like button. Then, make sure to subscribe for notifications about new episodes. Thanks for joining me here at the Whiteboard.
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