All You Need To Know About Bitcoin
All You Need To Know About Bitcoin – Almost 100% of the people wanted to learn about Bitcoin without the jargon.
People are hungry for this alongside forex signals and buy bitcoin signals. They don’t want to hear about “crypto” or “blockchain”. They just want to know what all this Bitcoin stuff is about.
Back in 2012, I thought Bitcoin was a scam. I was wrong and so were all the first impression readers.
In early 2012 I had my doubts. I started reading everything I’ve been a coder / programmer since 1983.
It was very hard. I had to develop the store from scratch since there were no easy tools to help me. There still isn’t (hint: business opportunity).
Once I launched it, quite a few people bought my book. I sold a PDF of my book for 0.1 Bitcoin. Bitcoin was then $60 so I sold it for about $6 per PDF. Right now, it’s as if I sold each PDF for $1600. I sold many copies.
I went on CNBC when they heard I was doing this. The anchor asked me, “Did you just do this for publicity?
TWO CRITICAL REASONS BITCOIN IS HISTORICALLY IMPORTANT AND HERE TO STAY
Just understand these two reasons. Then you will know the potential for Bitcoin. And you will be popular at cocktail parties.
A) THE HISTORY OF MONEY
Every new style of money solves the major problems of the last style of money.
If I have a bag of rice and I need shoes, what if you make shoes but you only need 1/2 bag of rice. Do I get 1/2 a pair of shoes?
Barter has a lot of problems. In the above, coming up with the rice to shoes exchange rate is difficult.
Then coming up with 1000s of exchange rates just to go out and buy groceries is almost impossible.
PLUS, what if you have to move (your kingdom is attacked). How are you going to carry all that rice? All of those shoes?
Money has two purposes:
- as a store of wealth / savings
- to make transactions
Bitcoin might be the most talked about currency in the world, but it still remains an enigma to many. We want to change that. Here’s everything you need to know about Bitcoin.
There’s a third, which Ray Dalio, the head of the largest hedge fund in the world, Brigewater, told me the other day. But we’ll get to that later.
Barter is horrible as a store of wealth. And for transactions, best case it’s very difficult.
But problems lead to opportunities.
What is Bitcoin?
Bitcoin is a currency designed to pay for goods and services, just like Euros or U.S. Dollars. But that’s where the similarities end.
Bitcoin, unlike a traditional currency, is:
Decentralized—no government or central bank controls the currency supply.
Digital—there are no physical Bitcoins or Bitcoin bills. The currency lives entirely online, tracked by blockchains, continuously growing groups of records that provide a complete history of each Bitcoin. (Imagine, for example, that you could use the serial number on a ten-dollar bill to look up every single time it changed hands.)
“Pseudo-Anonymous”—Bitcoins are tied to a wallet ID rather than your personal information, but this doesn’t make it entirely anonymous
Bitcoin is a fascinating, complicated, new-age currency that exists only online and allows the user to be somewhat anonymous.
If you’ve never heard of Bitcoin you’re probably thinking it sounds a little suspicious and a little dangerous. Even if you have heard of it, you’re probably think the same thing. We’re here to try and dispel that theory and answer some of your questions about Bitcoin.
That being said, it’s much more complicated than we’ll get into today, but these are the basics.
2. PRECIOUS METALS / COINS
Gold and silver are scarce. It’s hard to mine them.
But it’s hard to forge them because you can measure by weight.
So the scarcity combined with the lack of forgery makes them good choices for money. I can convert my rice into gold coins, you can convert your shoes into gold coins, and now we can trade and now we can buy whatever we want.
3) PAPER MONEY BACKED BY GOLD AND…PAPER MONEY
Countries made paper money that was like a contract with the government that all of that money can be converted into gold.
This was great for transactions (easy to carry paper money).
This was great for store of wealth (put the money in a bank and you can go anywhere). The first banks for paper money backed by gold helped fund every war in Europe in the 1800s. Good job!
When paper money is backed by gold it also puts a clamp on inflation. You only have as much paper money in a country as there is gold in that country.
So you can trust the government to not go crazy printing money that is not backed by gold (like German in the 1920s when trillions of Marks were printed and Germany went into an inflationary death spiral that was at least one cause for World War II).
BUT, why benefit the countries where gold is easy to mine and punish the countries where gold is hard to mine.
Also, the world is expanding in every way: more people, more technology, more innovation, more THINGS.
I’m not sure this is a good thing or a bad thing (see: Germany above) but sometimes countries need to balance debt with money printing to manage their fiscal policy.
The US went off of gold in the early 70s in order to fund the financial needs of both the Vietnam War and the social improvement programs of Lyndon Johnson.
This created inflation.
Paper money will often lead to this situation. Someone will say: why do we need the gold part?
Again, might be good or bad. There’s a lot of debate. Did money printing save the US in 2008 and 2009? Maybe. Or will their be future problems caused by this? Maybe.
Nevertheless, there are other problems with paper money that need to be solved:
a. No privacy.
If I’m making a sizable (greater than $1000) transaction I’m usually not using cash but either a credit card or a money wire.
So that means your bank knows. Other banks know (the bank you are sending money to, the Federal Reserve, the local Reserve bank, etc).
Government agencies know (the IRS, the NSA, etc etc).
Potentially sites like Google and Amazon know depending on what payment services you use and what you are buying.
So you have no privacy on your transactions with paper money.
If I send a friend in Korea money, I go through my bank (fee), local reserve bank (fee), Federal Reserve (fee), International wiring system (fee), their central bank (fee), their local reserve bank (fee), their local bank (fee).
That’s a lot of fees. Those fees help create inflation because every transaction needs to have a profit on top of those fees.
c. Forgery. Something like $200 billion in forged money is circulating right now.
d. Human error. This is a CRITICAL problem. There are so many opportunities for human error. When you transfer money, they can send to the wrong account. Or a bank’s software can be hacked and you lose all of your money.
Or, most importantly, the Federal Reserve in the US can decide to print another trillion (Like 2009) and, without your permission, the value of your dollar has gone down.
Is Bitcoin really anonymous?
No, Bitcoin isn’t actually completely anonymous. Talented hackers and government agencies have the means to track pretty much anything, including Bitcoin. Although Bitcoin transactions are randomly transmitted over the peer-to-peer network (making it seemingly anonymous), this system doesn’t always hold up.
In the US we’ve been lucky. But all of South America hasn’t been so lucky (all of their currencies crashed in the 80s. Most of Asia wasn’t so lucky in the 90s (their currencies wiped them out). Russia in 1997 was wiped out.
Many countries have relied on humans to print (or not print) money and the slightest human error can wipe out an entire country’s economy.
The United States has been lucky. For now. But this is a HUGE error we risk every day.
These are the basic problems. There are more (theft, for instance).
e. What is backing paper money?
Only our trust. I don’t want to be a conspiracy theorist. But the reality is: a dollar is a piece of paper. Just like gold is just a rock.
How do they make us trust that the money has value?
And, for the weirdos, they even put a pyramid with an eye on it.
And that’s supposed to be why we trust it. I don’t trust it.
4) BITCOIN (and, btw, Bitcoin is not the end. There will be a “5”).
Bitcoin solves the problems above.
a. Human error: there is no printing of money. There is a fixed supply of 21,000,000 coins.
How do you get Bitcoin?
You can buy Bitcoin with cash
You can buy bitcoins with hard cash, credit or debit cards, and wire transfers. But first, you’ll want to establish a bitcoin “wallet,” which will be where your wallet ID is derived from. This is just a place to store your bitcoins, just like your wallet holds your cash and credit cards.
How do I know this? I’m a skeptic. So I read the software behind Bitcoin. I read it over and over until I could figure it out. In one part of the code they clearly define how many coins can be “mined” / printed (printed is the wrong word but I’m using it here to make the connection with paper money). And there’s another part of the code which “enforces” the first part.
No Central Command
Bitcoin isn’t owned by anyone. Think of it like email. Anyone can use it, but there isn’t a single company that is in charge of it. Bitcoin transactions are irreversible. This means that no one, including banks, or governments can block you from sending or receiving bitcoins with anyone else, anywhere in the world. All You Need To Know About Bitcoin With this freedom comes the great responsibility of not having any central authority to complain to if something goes wrong. Just like physical cash, don’t let strangers hold your bitcoins for you, and don’t send them to untrustworthy people on the internet.
There are several different types of Bitcoin wallets, but the most important distinction is in relation to who is in control of the private keys required to spend the bitcoins. Some Bitcoin “wallets” actually act more like banks because they are holding the user’s private keys on behalf. If you choose to use one of these services, be aware that you are completely at their mercy regarding the security of your bitcoins. Most wallets, however, allow the user to be in charge of their own private keys. This means that no one in the entire world can access your account without your permission. It also means that no one can help you if you forget your password or otherwise lose access to your private keys. If you decide you want to own a lot of Bitcoin it would be a good idea to divide them among several different wallets. As the saying goes, don’t put all your eggs in one basket.
Bitcoin miners use a special software to solve math problems (your computer must correctly come up with the right combination of 64 digits) and are issued a certain number of Bitcoins in exchange for solving them correctly.
Like everything, Bitcoin’s price is determined by the laws of supply and demand. Because the supply is limited to 21 million bitcoins, as more people use Bitcoin the increased demand, combined with the fixed supply, will force the price to go up. Because the number of people using Bitcoin in the world is still relatively small, the price of Bitcoin in terms of traditional currency can fluctuate significantly on a daily basis, but will continue to increase as more people start to use it. All You Need To Know About Bitcoin – For example, in early 2011 one Bitcoin was worth less than one USD, but in 2015 one Bitcoin is worth hundreds of USD. In the future, if Bitcoin becomes truly popular, each single Bitcoin will have to be worth at least hundreds of thousands of dollars in order to accommodate this additional demand.
Bitcoin has become increasingly popular due to its relative anonymity—which allows for legally-questionable purchases. But it can be used for every day, legal purchases as well. Via gift cards and “wallet” exchanges, you can buy items for Walmart or Amazon, and even buy discount plane tickets. The cyrptocurrency is also quickly becoming a mainstream investment option—one that the average investor has to take note of.
There are several ways to buy Bitcoin, but trusted exchanges are a great way to acquire Bitcoin. Because there are inefficiencies in the traditional banking system, exchanges will sometimes have slightly different prices. If the difference is too great, traders will buy low on one an exchange and sell high on another and close the gap. If an exchange constantly has substantially different prices than others, it is a sign of trouble and that exchange should be avoided. As with everything else, do your research and find an exchange you can trust. It’s also a good idea not to use an exchange as a wallet. Move your Bitcoin to your personal wallet so that you have control over your funds at all times. You can view our list of Bitcoin exchanges here.
Bitcoin Isn’t Completely Anonymous
Because all Bitcoin transactions are stored on a public ledger known as the blockchain, people might be able to link your identity to a transaction over time. Some companies offer various tools such as Bitcoin mixers to help achieve greater privacy, but it takes a huge amount of effort to use Bitcoin anonymously. You may want to follow your country’s tax regulations regarding Bitcoin in order to avoid trouble with the law, but you have the power not to should you choose to take that risk. All You Need To Know About Bitcoin- To improve privacy, most newer Bitcoin wallets will use a new Bitcoin address each time someone sends bitcoins to you.
Even the most tech savvy among us have a hard time wrapping their heads around Bitcoin. It’s a hot topic and a frequent point of discussion among investors, entrepreneurs and stock traders, so you should want to know all about it.
Although the most well-known, Bitcoin isn’t the only cryptocurrency. Let’s take a look at some of the other major players.
Unlike Bitcoin, Ether can only operate through its own network—Ethereum. There is a limited amount of Ether, that was generated during their 2014 “presale.” 60 million were created during this time.
Ether is not necessarily intended for day-to-day use like Bitcoin. It can be used by application developers as a currency on the Ethereum network. It’s used for things like ride-sharing, betting and investments.
For starters, here’s an overly simplified explanation of Bitcoin: It’s a digital currency (there are more than 800 now) that isn’t controlled by a central authority such as a government or bank. It’s created by “miners,” who use computers and specialized hardware to process transactions, secure the currency’s network and collect bitcoins in exchange. Supporters say it allows for more secure transactions over the internet. That’s in part due to blockchain, a technology that records cryptocurrency transactions chronologically in a public digital ledger.
Bitcoin is only eight and a half years old, but it’s the oldest and most highly valued cryptocurrency out there. In such a short time, it’s had a rocky and controversial history, but it’s also attracted a fair share of high-profile supporters. All You Need To Know About Bitcoin Click through to read 11 bits about Bitcoin that will make you at least sound like you know what you’re talking about next time it inevitably comes up.
Bitcoin transactions are seen by the entire network within a few seconds and are usually recorded into Bitcoin’s world wide ledger called the blockchain, in the next block. It is more and more unlikely that a major bug will emerge in the system as time goes by, and people can trust the technology more with the passing of time. Each month people transact hundreds of millions of dollars worth of Bitcoin.
Is Bitcoin safe to use?
Just like thieves steal your wallet, hackers will be after your Bitcoins, so it’s important to make sure your store it in a safe place.
We mentioned Bitcoin wallets above, and getting one is among the more secure ways to store and use Bitcoin.
So you’re thinking about investing in bitcoin? by FxPremiere Group Live FX Signals and Crypto Alerts SMS and Daily Email. signalsOur CryptoCurrency Learning Guides
Download our BitCoin and Forex APP