Understand Bitcoin and the future. Like what you know will be rethought forever
Hello, Habr! I present to you the translation of the article " Understanding Bitcoin and the Future. How What You Know Will Be Redefined Forever " by Andrian Iliopoulos.
Bitcoin
Cryptocurrency
Decentralized application.
Bubble.
Investments.
Speculation.
The next big step after the Internet.
These are just some of the epithets and descriptions that people love to give to Bitcoin. The reality, however, is that not one of them really describes what Bitcoin is and how this idea is likely to change the future of humanity forever.
For me, the journey to the mystical land of Bitcoin began almost 5 years ago. Then I was not involved in investments and business. I was just starting my childhood steps in the world of entrepreneurship, and I simply followed major startups to find out about significant community events. The term Bitcoin was still very vague, but most technology developers in the startup world showed interest in it, and that was enough to tease me a bit.
In the beginning, my interest was infinitesimal, since its cost was negligible, and the technology seemed rather complicated and indescribable to invest the time needed to understand its mechanics. Over time, I continued to follow trends, and gradually, albeit reluctantly, I began to realize that this seemingly banal speculation became for some people a serious part of life.
The year I decided to take Bitcoin seriously was 2015, and this coincided with my reading of Sapiens, the book by Israeli historian Yuval Noah Harari.
In this magnificent work, Harari explains how throughout the entire existence of mankind, people have come up with powerful stories to give meaning to our lives and, therefore, to ensure the stability of our social structure. Without stories, we feel lost and desperate. Stories turn our lives into adventures and act like moral compasses that allow us to recalibrate our existence in dark times.
I have seen all the power of the stories around me. In religion, in politics, in social theory, in economics, in the cinema. And then I realized. I realized that Bitcoin is nothing but a different story. A story created by some extremely intelligent people and improved by acceptance by more intelligent people. When smart people get together and come together around a powerful story, you cannot help but realize that it has great potential.
So, I decided to invest a significant amount of money in this story and today I consider this to be one of the most important investment decisions I have ever made.
As a serious Bitcoin hodler (I will explain below) and a person who plunged headlong into the world of cryptocurrencies, I consider it my personal responsibility to educate people around the history of Bitcoin, as well as to preach its use so that its potential can ultimately be realized.
Explanation of the word “hodling” (from English hold - to hold, to own. Here is a typo - hodl. Note. Translator): Back in 2013, a GameKyuubi member on the bitcointalk.org forum created a publicationtitled "I AM HODLING." It was a 200-word saying in which he told how difficult it is to be a Bitcoin trader with constant ups and downs. Obviously, he did not understand that he was mistaken in the phrase, but the Bitcoin community accepted this word and made it public for all who believe in Bitcoin and are ready to keep it, no matter what happens.
In the following paragraphs, you will read not only my explanation of the history of Bitcoin, but also an analysis of the main meaning of this story.
Enjoy it.
October 31, 2008. On the metzdowd mailing list, which focuses on cryptographic technology and its political influence, a community member named Satoshi Nakamoto posted an email called “Bitcoin P2P”. In this letter, Nakamoto introduced the members of the Bitcoin mailing list, an electronic P2P money system.
It was an exceptional work, based on a very revolutionary idea - how to send online payments directly from one participant to another without the need for mediation of a financial institution.
In a nutshell, Bitcoin is creating a reliable decentralized exchange network based on a technology called blockchain. Now let's explain the obscure terms:
Decentralization: this means that there is no central authority that regulates transactions. In our current state of affairs, if I want to send money to someone on the Internet, I need to do this through an intermediary, for example, in a bank or in an online payment system (Paypal, Stripe, etc.). Such a system creates many problems, ranging from hidden fees and ending with the lack of anonymity, as well as a huge dependence on the system itself.
Blockchain: This is a technology proposed by Nakamoto that attempts to solve the notorious double-cost problem. Double costs occur when the same digital token can be spent more than once. This is possible because a digital token consists of a digital file that can be duplicated or falsified. Imagine the equivalent of a fake digitally. It solves the problem by creating transaction blocks in the network, called a chain of blocks, which are cryptographically protected. The level of cryptography associated with this process is quite complex and provides a secure transaction and the absence of ambiguity in the network.
You can understand the depth of Nakamoto’s intelligence by reading how complex the structure of his / her / their work is. This concept could not have been invented by an ordinary person. After all, this is a very complex algorithmic process, requiring great knowledge in the field of computer science, mathematics and cryptography.
My assessment is that Nakamoto, although he uses “we” in the article, is one person and most likely a man with a higher education, possibly a PhD in computer science or cryptography. People assume that he is of British descent because in different posts he uses British words like “bloody hard” (damn hard), and that he lives somewhere in the eastern part of America (due to time stamps on his emails ) His English is at a fairly advanced level, and this alludes to the fact that he speaks it from birth. The name Satoshi Nakamoto is obviously a pseudonym and could be chosen for various reasons. Satoshi is a very common Japanese name (one of its interpretations is philosophy or enlightenment), and Nakamoto means “central origin” or “(that who lives) in the middle. " It can be assumed that the use of the words Satoshi and Nakamoto refers to the idea of Bitcoin and the topic of decentralization. You can also assume that he speaks Japanese or that he admires Japanese culture.
Regardless of who the creator of Bitcoin was, one thing remains certain: this person was extremely intelligent, appreciated his anonymity and also did not want to remain in the spotlight.
After his initial letter to the cryptographic community newsletter, he released version 0.1 of Bitcoin software on Sourceforge on January 9, 2009. According to Wikipedia, “Nakamoto created a website with the bitcoin.org domain name and continued to work with other Bitcoin developers until mid-2010. Around the same time, he gave control of the source code repository and the notification system to Gavin Andersen (the lead developer in the Bitcoin project), transferred several related domains to various prominent members of the Bitcoin community, and terminated his participation in the project ”
His last personal message to the Bitcoin community dates back to April 2011. In it, he tells Mike Hern, one of the developers of Bitcoin code at the time, the following: “I do other things. Bitcoin is in good hands with Gavin and the rest. ”
Satoshi Nakamoto is now a legendary figure. The Bitcoin public transaction register shows that Nakamoto’s famous addresses contain about one million bitcoins (all of them were part of the first blocks created). As of December 17, 2017, this amounts to more than 19 billion US dollars. What makes him the 44th richest man on earth.
Since Nakamoto rejected the role of the new messiah (a very smart move, in my opinion), Bitcoin became open to anyone who wanted to influence him. The first popular Bitcoin transaction was documented in May 2010 when Laszlo Chanec, a Florida programmer, sent 10,000 bitcoins to a volunteer from England, who spent about $ 25 to order pizza for him in Papa Jones.
In addition to the first Bitcoin exchanges that allowed people to buy and exchange bitcoins, many people are beginning to accept this new currency as a form of payment, and it is not surprising that drug dealers became the earliest supporters of Bitcoin. Silk Road, the illicit drug market that used Bitcoin as a confidential way to buy and sell drugs online, was created in January 2011. He paved the way for the formation of Darknet and the creation of a whole new online ecosystem.
Slowly but steadily, Bitcoin is becoming more authoritative, and as a result, new cryptocurrencies appear that want to compete with it. People believe that there is always a better version of a new system and everyone wants to be the first to come up with this “best version”. Ethereum, Litecoin, Monero, Ripple, Dash are some of the earliest crypto coins that appeared on the market, and are still considered one of the most dominant players in the crypto world.
2013 is the most important year for Bitcoin, as it was the year the price of Bitcoin experienced the highest surge. On November 29, 2013, the price of one coin reached a record level of $ 1,242.
It is important to note here that, as a rule, jumps and drops in prices occur due to statements by influential figures or critical events in the development of the currency.
For example, in November 2013, Bitcoin received the blessing of Ben Bernanke, chairman of the Federal Reserve. This is not a trifle. Ben Bernanke is one of the most influential people in the world of finance. His opinion is taken very seriously, and many people will feel the need to invest in Bitcoin when some kind of authority supports him.
But there is another side to the coin. In 2014, Mt. Gox, the most famous Bitcoin exchange at the time, closed its website and exchange service, and filed for bankruptcy to protect itself against creditors. This, along with the closure of Silk Road in November of that year, marked a sharp drop in Bitcoin prices to about $ 300.
From 2015 until the end of 2016, Bitcoin slowly conquered the charts to reach a value close to $ 960 in December 2016. The number of miners, developers and investors associated with Bitcoin during this period has grown exponentially.
And that led us to 2017, the most successful year for Bitcoin at the moment. I’m not quite sure what happened in 2017, but I think that when you create a story so seductive and with such great potential in the future, as well as allowing early investors to make money literally from the air, at some point this story will explode .
Bitcoin entered the mainstream, buying currency became very easy, many prominent and respectable figures began to approve of it, and as a result, one of the most interesting creations in the history of mankind soared in value.
Regardless of whether you are immersed in the world of Bitcoin with your head or not, you need to understand the basic idea:
Banks and governments have been in control of the monetary system since the beginning of time (in fact, not quite like that, but this impression is created), and this threatens all kinds of problems for the average person.
First of all, we depend on two organizations that can decide how money is distributed in society. Their decisions are not based on an impeccable system that ensures the stability of a social building, but rather on economic assumptions, which are usually influenced by the needs of individuals. Persons who are at the top of the social hierarchy will do everything in order to maintain their power and wealth.
This is due to erroneous interpretations of the current system and the fact that we do not understand its limits. Whenever we encounter a problem, we try to squeeze out everything that we can from the monolithic structure we created, thereby accumulating debts and bubbles. These bubbles, in turn, lead to a moment of crisis, when we seek the intervention of an “invisible hand” that offers temporary and unstable solutions to our problems.
The funny thing is that the inexorable spread of such a system cannot last forever, and this, obviously, will lead to anomalies. In my opinion, such an anomaly that we are facing at the moment, just led to the dawn of Bitcoin and other cryptocurrencies.
Bitcoin offers something very simple, but something very revolutionary:
For the first time in history, we can begin to discuss alternatives to the current Fiat standard . Back in the 1800s, people used to rely on gold to value the value of currencies in circulation. Each dollar was associated with a certain amount of gold, and this helped maintain the dollar. This system was quite effective, but not so flawless.
What is Fiat?Fiat is a Latin word that means “let it be done”, and it is used to indicate an order or decree. That is, fiat money is money issued by the government and regulated by the government. They have value only because the government uses its authority to ensure the value of fiat currency. Every country in the world has a fiat currency, which is issued by the relevant government and is subject to economic fluctuations, such as inflation or deflation.
During the Great Depression in the 1920s, the gold standard hindered economic growth because it did not allow the Federal Reserve to expand the money supply to stimulate the economy, support bankrupt banks and finance government deficits, which could give an impetus to the economy.
In addition, gold, in itself, is not so convenient to use. Yes, it can be involved in jewelry, electronics and some other industries, but this is not enough to make it an important asset. The idea of the gold standard was that gold was a very expensive metal with a limited edition.
The latter is true for Bitcoin. When Satoshi Nakamoto invented Bitcoin, he did this with the intention of creating a certain amount of bitcoins that could be mined. In total, there may be 21 million bitcoins, the last of which will be mined around 2140.
Bitcoin mining :Bitcoin mining is not an easy process. When Satoshi introduced us to the concept of Bitcoin, he also created a mathematical algorithm that allowed programmers to use it on powerful computers. The need for a powerful computer is important, because the way this algorithm works is that it forces computers to compete with each other to decode certain cryptographic elements involved in the process of creating bitcoins. This video explains the process in detail. In principle, each block that is added to the blockchain contains a certain amount of bitcoins that can be obtained by solving a cryptographic puzzle. The number of bitcoins issued in the block decreases geometrically, with a reduction of 50% every 4 years. Satoshi did this to make the mining process interesting and probably
If we take into account the limited edition and add to the incredible possibilities of using bitcoins, which include decentralization, security, anonymity and ease of use, Bitcoin becomes one of the most important alternatives to fiat currencies that the world has ever seen.
At first glance, Bitcoin is just a digital currency. Because people are primarily interested in him as a form of investment and alternative payment method. However, when someone begins to delve deeper into the idea of what Bitcoin is, you can see something completely innovative. You can see the future of mankind.
If you look at the history of mankind as a species, you will realize that our progress depends on the progress of our management systems. What we are constantly trying to achieve is the optimization of our societies in order to organize a state of universal equality and defeat injustice. We tried the monarchy, oligarchy, democracy, communism and other forms of government, and none of them met our expectations. None of this is our ideal political system.
Ideally, we would have a model of anarchy that favors individuals to benefit society. We do not need governments that will take care of us. We know that we can do it ourselves, but the primitive structure of our social models does not allow us to do this.
Especially when the money system is organized in such a crazy way.
And here comes the idea of Bitcoin. Bitcoin is a decentralized system, which means that it is not controlled from the outside. This seemingly simple idea can lead to a monumental shift in the way we interact with each other, and ultimately restructure our entire thinking.
The average person does not understand this. However, sincere adherents of Bitcoin understand this. And if they don’t even understand, then they feel. This is what makes us crazy about Bitcoin. This is what really makes us invest in it.
Throughout my life I have been a part of many social associations. I was a fan of football teams, I was a member of university and political groups. During my interaction with various representatives within the groups to which I joined, I noticed a similar picture. Usually dominated by those groups whose supporters showed two important attributes: loyalty and intelligence.
Devotion is required for the group to work. Without loyalty, the members of the group will not be able to remain involved and, in the end, the group will break up. However, devotion alone is not enough. You can be faithful, but if you are not smart enough to understand what is happening behind a veil of reality, you will not be able to sustain the growth of the group, and also surpass other associations.
The Bitcoin community is made up of the most dedicated and smartest people I have ever encountered in my entire life. Watch this presentation by Andreas Antonopoulos, the Bitcoin Popularizer:
His intellectual and passionate speech charges. And he is just one of many intellectuals who hopped onto the Bitcoin train and are calling us all to join.
Despite this, it is important to note that the main followers of the Bitcoin philosophy are not primitive inhabitants. These are people who are immersed in technology and have knowledge in areas such as programming and engineering. All this makes the Bitcoin movement safer and more advanced, and also distinguishes it from other revolutionary movements that have existed throughout human history.
Most people will fight Bitcoin, and that is a fact. And not only because they do not understand the concepts that I described, but also because of the inherent mechanism of self-preservation, many of which are victims, and, in addition, because of the desire to stay in the comfort zone.
What will determine the stability of Bitcoin is the desire of the main community players - miners, programmers, investors, popularizers and entrepreneurs - to continue to participate in the Bitcoin game and be prepared to risk everything to do their job.
History is full of such revolutionary movements, and we all know that the changes that this revolution will bring are not colossal, but it is definitely a step towards a better path, unlike the one we are moving now.
When many Bitcoin opponents use the word bubble, they are mistaken because most of the bubbles in history were created by scammers who wanted to exploit the greed of people. Bitcoin is far from what these people attribute to it.
Yes, some ICOs have a bubble element at their core, but you need to be able to distinguish between ICOs and Bitcoin.
Briefly about ICO: ICO is the initial offer of a coin, and its meaning is to circumvent traditional financing systems. When a startup or small business collects money, they can do it using their own funds or by asking a bank for a loan, or by trying to convince an investor or venture capitalist to acquire capital. An ICO is essentially a primary IPO. The company publishes its concept in a white paper and issues coins that correspond to the share capital in the company, and each person interested in investing can purchase these coins. This is an interesting system, but it also raises the question of how many of them are legal. Many people are furiously investing in ICOs and companies, without even understanding the basic principles of investment. Obviously, this creates a bubble; bubble,
A bitcoin game is a marathon, not a sprint. This is a game in which high stakes, risk, drama, influence, persuasion, money, politics, psychology, philosophy, economics and history participate.
For some reason, this is a game that many people find excruciating.
And, sometimes, that’s all it takes to participate in the game and, ultimately, rethink our world forever.
What should I do as a novice Bitcoin investor :many people ask me is it too late to buy bitcoins? Well, my personal opinion is that now is still a great time to buy Bitcoin. Of course, it would be great to buy it 2-5 years ago, but I believe that we have not reached the peak of its price. All because he is still a young technology that has not yet entered the mainstream and has not revealed its full potential. I really don’t think that Bitcoin will ever go beyond $ 100,000 because it’s crazy, but at some point it can rise to $ 60,000 - $ 100,000. I view Bitcoin the way I see stocks. Its value is based on how effective it is as a “business" and how many people see its value. For example, if you bought Amazon stocks worth $ 10,000 in 2000, when the price per share was $ 20, today you are likely to own half a million dollars. As a rule, I advise people not to invest more than they are willing to lose. Also look at other cryptocurrencies and follow the same tactics. All you have to do is educate yourself. Knowledge is power. In addition, in case you decide to invest, make sure that your cryptocurrency risks are diversified. I suggest using a popular platform like Coinbase and wallets like Ledger Nano S or Trezor. that your cryptocurrency risks are diversified. I suggest using a popular platform like Coinbase and wallets like Ledger Nano S or Trezor. that your cryptocurrency risks are diversified. I suggest using a popular platform like Coinbase and wallets like Ledger Nano S or Trezor.
Bitcoin
Cryptocurrency
Decentralized application.
Bubble.
Investments.
Speculation.
The next big step after the Internet.
These are just some of the epithets and descriptions that people love to give to Bitcoin. The reality, however, is that not one of them really describes what Bitcoin is and how this idea is likely to change the future of humanity forever.
For me, the journey to the mystical land of Bitcoin began almost 5 years ago. Then I was not involved in investments and business. I was just starting my childhood steps in the world of entrepreneurship, and I simply followed major startups to find out about significant community events. The term Bitcoin was still very vague, but most technology developers in the startup world showed interest in it, and that was enough to tease me a bit.
In the beginning, my interest was infinitesimal, since its cost was negligible, and the technology seemed rather complicated and indescribable to invest the time needed to understand its mechanics. Over time, I continued to follow trends, and gradually, albeit reluctantly, I began to realize that this seemingly banal speculation became for some people a serious part of life.
The year I decided to take Bitcoin seriously was 2015, and this coincided with my reading of Sapiens, the book by Israeli historian Yuval Noah Harari.
In this magnificent work, Harari explains how throughout the entire existence of mankind, people have come up with powerful stories to give meaning to our lives and, therefore, to ensure the stability of our social structure. Without stories, we feel lost and desperate. Stories turn our lives into adventures and act like moral compasses that allow us to recalibrate our existence in dark times.
I have seen all the power of the stories around me. In religion, in politics, in social theory, in economics, in the cinema. And then I realized. I realized that Bitcoin is nothing but a different story. A story created by some extremely intelligent people and improved by acceptance by more intelligent people. When smart people get together and come together around a powerful story, you cannot help but realize that it has great potential.
So, I decided to invest a significant amount of money in this story and today I consider this to be one of the most important investment decisions I have ever made.
As a serious Bitcoin hodler (I will explain below) and a person who plunged headlong into the world of cryptocurrencies, I consider it my personal responsibility to educate people around the history of Bitcoin, as well as to preach its use so that its potential can ultimately be realized.
Explanation of the word “hodling” (from English hold - to hold, to own. Here is a typo - hodl. Note. Translator): Back in 2013, a GameKyuubi member on the bitcointalk.org forum created a publicationtitled "I AM HODLING." It was a 200-word saying in which he told how difficult it is to be a Bitcoin trader with constant ups and downs. Obviously, he did not understand that he was mistaken in the phrase, but the Bitcoin community accepted this word and made it public for all who believe in Bitcoin and are ready to keep it, no matter what happens.
In the following paragraphs, you will read not only my explanation of the history of Bitcoin, but also an analysis of the main meaning of this story.
Enjoy it.
How it all began - the story of Satoshi Nakamoto
October 31, 2008. On the metzdowd mailing list, which focuses on cryptographic technology and its political influence, a community member named Satoshi Nakamoto posted an email called “Bitcoin P2P”. In this letter, Nakamoto introduced the members of the Bitcoin mailing list, an electronic P2P money system.
It was an exceptional work, based on a very revolutionary idea - how to send online payments directly from one participant to another without the need for mediation of a financial institution.
In a nutshell, Bitcoin is creating a reliable decentralized exchange network based on a technology called blockchain. Now let's explain the obscure terms:
Decentralization: this means that there is no central authority that regulates transactions. In our current state of affairs, if I want to send money to someone on the Internet, I need to do this through an intermediary, for example, in a bank or in an online payment system (Paypal, Stripe, etc.). Such a system creates many problems, ranging from hidden fees and ending with the lack of anonymity, as well as a huge dependence on the system itself.
Blockchain: This is a technology proposed by Nakamoto that attempts to solve the notorious double-cost problem. Double costs occur when the same digital token can be spent more than once. This is possible because a digital token consists of a digital file that can be duplicated or falsified. Imagine the equivalent of a fake digitally. It solves the problem by creating transaction blocks in the network, called a chain of blocks, which are cryptographically protected. The level of cryptography associated with this process is quite complex and provides a secure transaction and the absence of ambiguity in the network.
You can understand the depth of Nakamoto’s intelligence by reading how complex the structure of his / her / their work is. This concept could not have been invented by an ordinary person. After all, this is a very complex algorithmic process, requiring great knowledge in the field of computer science, mathematics and cryptography.
My assessment is that Nakamoto, although he uses “we” in the article, is one person and most likely a man with a higher education, possibly a PhD in computer science or cryptography. People assume that he is of British descent because in different posts he uses British words like “bloody hard” (damn hard), and that he lives somewhere in the eastern part of America (due to time stamps on his emails ) His English is at a fairly advanced level, and this alludes to the fact that he speaks it from birth. The name Satoshi Nakamoto is obviously a pseudonym and could be chosen for various reasons. Satoshi is a very common Japanese name (one of its interpretations is philosophy or enlightenment), and Nakamoto means “central origin” or “(that who lives) in the middle. " It can be assumed that the use of the words Satoshi and Nakamoto refers to the idea of Bitcoin and the topic of decentralization. You can also assume that he speaks Japanese or that he admires Japanese culture.
Regardless of who the creator of Bitcoin was, one thing remains certain: this person was extremely intelligent, appreciated his anonymity and also did not want to remain in the spotlight.
After his initial letter to the cryptographic community newsletter, he released version 0.1 of Bitcoin software on Sourceforge on January 9, 2009. According to Wikipedia, “Nakamoto created a website with the bitcoin.org domain name and continued to work with other Bitcoin developers until mid-2010. Around the same time, he gave control of the source code repository and the notification system to Gavin Andersen (the lead developer in the Bitcoin project), transferred several related domains to various prominent members of the Bitcoin community, and terminated his participation in the project ”
His last personal message to the Bitcoin community dates back to April 2011. In it, he tells Mike Hern, one of the developers of Bitcoin code at the time, the following: “I do other things. Bitcoin is in good hands with Gavin and the rest. ”
Satoshi Nakamoto is now a legendary figure. The Bitcoin public transaction register shows that Nakamoto’s famous addresses contain about one million bitcoins (all of them were part of the first blocks created). As of December 17, 2017, this amounts to more than 19 billion US dollars. What makes him the 44th richest man on earth.
Era after nakamoto
Since Nakamoto rejected the role of the new messiah (a very smart move, in my opinion), Bitcoin became open to anyone who wanted to influence him. The first popular Bitcoin transaction was documented in May 2010 when Laszlo Chanec, a Florida programmer, sent 10,000 bitcoins to a volunteer from England, who spent about $ 25 to order pizza for him in Papa Jones.
In addition to the first Bitcoin exchanges that allowed people to buy and exchange bitcoins, many people are beginning to accept this new currency as a form of payment, and it is not surprising that drug dealers became the earliest supporters of Bitcoin. Silk Road, the illicit drug market that used Bitcoin as a confidential way to buy and sell drugs online, was created in January 2011. He paved the way for the formation of Darknet and the creation of a whole new online ecosystem.
Slowly but steadily, Bitcoin is becoming more authoritative, and as a result, new cryptocurrencies appear that want to compete with it. People believe that there is always a better version of a new system and everyone wants to be the first to come up with this “best version”. Ethereum, Litecoin, Monero, Ripple, Dash are some of the earliest crypto coins that appeared on the market, and are still considered one of the most dominant players in the crypto world.
2013 is the most important year for Bitcoin, as it was the year the price of Bitcoin experienced the highest surge. On November 29, 2013, the price of one coin reached a record level of $ 1,242.
It is important to note here that, as a rule, jumps and drops in prices occur due to statements by influential figures or critical events in the development of the currency.
For example, in November 2013, Bitcoin received the blessing of Ben Bernanke, chairman of the Federal Reserve. This is not a trifle. Ben Bernanke is one of the most influential people in the world of finance. His opinion is taken very seriously, and many people will feel the need to invest in Bitcoin when some kind of authority supports him.
But there is another side to the coin. In 2014, Mt. Gox, the most famous Bitcoin exchange at the time, closed its website and exchange service, and filed for bankruptcy to protect itself against creditors. This, along with the closure of Silk Road in November of that year, marked a sharp drop in Bitcoin prices to about $ 300.
From 2015 until the end of 2016, Bitcoin slowly conquered the charts to reach a value close to $ 960 in December 2016. The number of miners, developers and investors associated with Bitcoin during this period has grown exponentially.
And that led us to 2017, the most successful year for Bitcoin at the moment. I’m not quite sure what happened in 2017, but I think that when you create a story so seductive and with such great potential in the future, as well as allowing early investors to make money literally from the air, at some point this story will explode .
Bitcoin entered the mainstream, buying currency became very easy, many prominent and respectable figures began to approve of it, and as a result, one of the most interesting creations in the history of mankind soared in value.
The real value of bitcoin
Regardless of whether you are immersed in the world of Bitcoin with your head or not, you need to understand the basic idea:
Bitcoin is not something that originated in the sick or crazy mind of a random programmer. Bitcoin was what we all desperately needed.
Banks and governments have been in control of the monetary system since the beginning of time (in fact, not quite like that, but this impression is created), and this threatens all kinds of problems for the average person.
First of all, we depend on two organizations that can decide how money is distributed in society. Their decisions are not based on an impeccable system that ensures the stability of a social building, but rather on economic assumptions, which are usually influenced by the needs of individuals. Persons who are at the top of the social hierarchy will do everything in order to maintain their power and wealth.
This is due to erroneous interpretations of the current system and the fact that we do not understand its limits. Whenever we encounter a problem, we try to squeeze out everything that we can from the monolithic structure we created, thereby accumulating debts and bubbles. These bubbles, in turn, lead to a moment of crisis, when we seek the intervention of an “invisible hand” that offers temporary and unstable solutions to our problems.
The funny thing is that the inexorable spread of such a system cannot last forever, and this, obviously, will lead to anomalies. In my opinion, such an anomaly that we are facing at the moment, just led to the dawn of Bitcoin and other cryptocurrencies.
Bitcoin offers something very simple, but something very revolutionary:
For the first time in history, we can begin to discuss alternatives to the current Fiat standard . Back in the 1800s, people used to rely on gold to value the value of currencies in circulation. Each dollar was associated with a certain amount of gold, and this helped maintain the dollar. This system was quite effective, but not so flawless.
What is Fiat?Fiat is a Latin word that means “let it be done”, and it is used to indicate an order or decree. That is, fiat money is money issued by the government and regulated by the government. They have value only because the government uses its authority to ensure the value of fiat currency. Every country in the world has a fiat currency, which is issued by the relevant government and is subject to economic fluctuations, such as inflation or deflation.
During the Great Depression in the 1920s, the gold standard hindered economic growth because it did not allow the Federal Reserve to expand the money supply to stimulate the economy, support bankrupt banks and finance government deficits, which could give an impetus to the economy.
In addition, gold, in itself, is not so convenient to use. Yes, it can be involved in jewelry, electronics and some other industries, but this is not enough to make it an important asset. The idea of the gold standard was that gold was a very expensive metal with a limited edition.
The latter is true for Bitcoin. When Satoshi Nakamoto invented Bitcoin, he did this with the intention of creating a certain amount of bitcoins that could be mined. In total, there may be 21 million bitcoins, the last of which will be mined around 2140.
Bitcoin mining :Bitcoin mining is not an easy process. When Satoshi introduced us to the concept of Bitcoin, he also created a mathematical algorithm that allowed programmers to use it on powerful computers. The need for a powerful computer is important, because the way this algorithm works is that it forces computers to compete with each other to decode certain cryptographic elements involved in the process of creating bitcoins. This video explains the process in detail. In principle, each block that is added to the blockchain contains a certain amount of bitcoins that can be obtained by solving a cryptographic puzzle. The number of bitcoins issued in the block decreases geometrically, with a reduction of 50% every 4 years. Satoshi did this to make the mining process interesting and probably
If we take into account the limited edition and add to the incredible possibilities of using bitcoins, which include decentralization, security, anonymity and ease of use, Bitcoin becomes one of the most important alternatives to fiat currencies that the world has ever seen.
What does an ordinary person not understand in Bitcoin?
At first glance, Bitcoin is just a digital currency. Because people are primarily interested in him as a form of investment and alternative payment method. However, when someone begins to delve deeper into the idea of what Bitcoin is, you can see something completely innovative. You can see the future of mankind.
If you look at the history of mankind as a species, you will realize that our progress depends on the progress of our management systems. What we are constantly trying to achieve is the optimization of our societies in order to organize a state of universal equality and defeat injustice. We tried the monarchy, oligarchy, democracy, communism and other forms of government, and none of them met our expectations. None of this is our ideal political system.
Ideally, we would have a model of anarchy that favors individuals to benefit society. We do not need governments that will take care of us. We know that we can do it ourselves, but the primitive structure of our social models does not allow us to do this.
Especially when the money system is organized in such a crazy way.
And here comes the idea of Bitcoin. Bitcoin is a decentralized system, which means that it is not controlled from the outside. This seemingly simple idea can lead to a monumental shift in the way we interact with each other, and ultimately restructure our entire thinking.
The average person does not understand this. However, sincere adherents of Bitcoin understand this. And if they don’t even understand, then they feel. This is what makes us crazy about Bitcoin. This is what really makes us invest in it.
Throughout my life I have been a part of many social associations. I was a fan of football teams, I was a member of university and political groups. During my interaction with various representatives within the groups to which I joined, I noticed a similar picture. Usually dominated by those groups whose supporters showed two important attributes: loyalty and intelligence.
Devotion is required for the group to work. Without loyalty, the members of the group will not be able to remain involved and, in the end, the group will break up. However, devotion alone is not enough. You can be faithful, but if you are not smart enough to understand what is happening behind a veil of reality, you will not be able to sustain the growth of the group, and also surpass other associations.
The Bitcoin community is made up of the most dedicated and smartest people I have ever encountered in my entire life. Watch this presentation by Andreas Antonopoulos, the Bitcoin Popularizer:
His intellectual and passionate speech charges. And he is just one of many intellectuals who hopped onto the Bitcoin train and are calling us all to join.
Despite this, it is important to note that the main followers of the Bitcoin philosophy are not primitive inhabitants. These are people who are immersed in technology and have knowledge in areas such as programming and engineering. All this makes the Bitcoin movement safer and more advanced, and also distinguishes it from other revolutionary movements that have existed throughout human history.
In conclusion: is it a bubble? What will determine his future?
Most people will fight Bitcoin, and that is a fact. And not only because they do not understand the concepts that I described, but also because of the inherent mechanism of self-preservation, many of which are victims, and, in addition, because of the desire to stay in the comfort zone.
What will determine the stability of Bitcoin is the desire of the main community players - miners, programmers, investors, popularizers and entrepreneurs - to continue to participate in the Bitcoin game and be prepared to risk everything to do their job.
History is full of such revolutionary movements, and we all know that the changes that this revolution will bring are not colossal, but it is definitely a step towards a better path, unlike the one we are moving now.
When many Bitcoin opponents use the word bubble, they are mistaken because most of the bubbles in history were created by scammers who wanted to exploit the greed of people. Bitcoin is far from what these people attribute to it.
Yes, some ICOs have a bubble element at their core, but you need to be able to distinguish between ICOs and Bitcoin.
Briefly about ICO: ICO is the initial offer of a coin, and its meaning is to circumvent traditional financing systems. When a startup or small business collects money, they can do it using their own funds or by asking a bank for a loan, or by trying to convince an investor or venture capitalist to acquire capital. An ICO is essentially a primary IPO. The company publishes its concept in a white paper and issues coins that correspond to the share capital in the company, and each person interested in investing can purchase these coins. This is an interesting system, but it also raises the question of how many of them are legal. Many people are furiously investing in ICOs and companies, without even understanding the basic principles of investment. Obviously, this creates a bubble; bubble,
A bitcoin game is a marathon, not a sprint. This is a game in which high stakes, risk, drama, influence, persuasion, money, politics, psychology, philosophy, economics and history participate.
For some reason, this is a game that many people find excruciating.
And, sometimes, that’s all it takes to participate in the game and, ultimately, rethink our world forever.
What should I do as a novice Bitcoin investor :many people ask me is it too late to buy bitcoins? Well, my personal opinion is that now is still a great time to buy Bitcoin. Of course, it would be great to buy it 2-5 years ago, but I believe that we have not reached the peak of its price. All because he is still a young technology that has not yet entered the mainstream and has not revealed its full potential. I really don’t think that Bitcoin will ever go beyond $ 100,000 because it’s crazy, but at some point it can rise to $ 60,000 - $ 100,000. I view Bitcoin the way I see stocks. Its value is based on how effective it is as a “business" and how many people see its value. For example, if you bought Amazon stocks worth $ 10,000 in 2000, when the price per share was $ 20, today you are likely to own half a million dollars. As a rule, I advise people not to invest more than they are willing to lose. Also look at other cryptocurrencies and follow the same tactics. All you have to do is educate yourself. Knowledge is power. In addition, in case you decide to invest, make sure that your cryptocurrency risks are diversified. I suggest using a popular platform like Coinbase and wallets like Ledger Nano S or Trezor. that your cryptocurrency risks are diversified. I suggest using a popular platform like Coinbase and wallets like Ledger Nano S or Trezor. that your cryptocurrency risks are diversified. I suggest using a popular platform like Coinbase and wallets like Ledger Nano S or Trezor.