Everybody’s heard about Bitcoin and cryptocurrency and the blockchain but what is “bitcoin” or “crypto currency” and why is everybody suddenly so excited about it in 2021?
(later we’ll describe these more technical terms and concepts which are a part of cryptocurrency & NFTs like immutable, trustless, permissionless, decentralized, peer to peer, open source, double spending, consensus and the fact that cryptocurrency & bitcoin is about money but its much more than just about money!)
So lets start with the basics…
Cryptocurrency is all about digital money and you being your own banker and cutting out the middleman when you need money to buy or sell just about anything.
This is why the bankers worldwide are upset and very nervous for their jobs because cryptocurrency or crypto, gives everybody the power to control their own money.
But you are then responsible for your own money to a degree and you have to take special efforts with these digital things called public and private keys and a digital wallet to keep it safe.
So once you have some cryptocurrency you can buy and sell anything around the world in seconds without having to ask your banker or anybody for permission.
Now the word cryptocurrency, is a combination of the two words cryptography and currency, or money.
Cryptography is basically an old technical term for using advanced math to secure some form of communication like words, or media or money, using security features with names like private and public keys and a technique to scramble up numbers called hashing.
Hackers can’t break into the main part of crypto called the “blockchain” because computers aren’t powerful enough to crack the secret code or cryptography.
Some say that within a few years, some form of Quantum or super powerful computers may be able to crack the code but most experts say that we’ll be able to stop that before it happens.
Now Bitcoin was the first cryptocurrency to come onto the market in 2009 when a mysterious Japanese man named Satoshi Nakamoto was said to be the founder of it after he wrote his famous 9 page “white paper” which described the science and the math behind it all.
Bitcoin is not a physical coin although all cryptos are called coins or tokens although there is a big difference.
Basically Bitcoin is a digital coin and is like currency and can be spent like money and pretty well all the rest of the crypto can not.
Most of the other cryptos do not have their own blockchains so they are called tokens and usually have to be transferred into a coin like Bitcoin or Ethereum to be used like a coin or digital money and then cash in your hand.
That was a mouthful to say and hard to type out as well…but it will make more sense as you read more on this webpage and all over.
Lets carry on….
Bitcoin is also not a private profit seeking company either but is run by a foundation but pretty well all of the other coins are run by profit seeking companies.
Now you will soon find out that about 20 of the people who run the top 5 or so crypto related companies all worked in the same one or two companies!
Its like a little inbred crowd of computer nerds (I am also a bit of a nerd so I can say this)
Most people started with Bitcoin and then several moved on and created Ethereum and one Bitcoin worker left to start his own competing company called Bitcoin cash and then the Ethereum company was started and several left there to start their own crypto companies like PolkaDot and Bit
There are two Bitcoins now and we’ll explain that craziness shortly.
But behind it all is basically just math and a computer program that the mystery man or men or women….Satoshi wrote.
The program was created in a form known as open source software which means that nobody really owns it and anybody was allowed to modify it if they wanted to.
Just a few years ago one of the biggest crypto coin companies out there called Litecoin did just that.
They rewrote it.
The founder said in a recent interview that it only took him about 5 hours to rewrite some of the original Bitcoin source code and create his own company Litecoin which made him a billionaire in a matter of a year or two.
Another use of this ability to change the source code is why we have two coins called Bitcoin listed on the crypto markets today.
There was a conflict over some things with a few of the original pioneers of bitcoin and so there was a split and the original Bitcoin “BTC” remains today under the organization’s umbrella and the other one known as Bitcoin cash “BTH” is owned by a private company.
This has caused a great deal of confusion even til today but you just have to remember that the original bitcoin is just called Bitcoin or BTC. (there are also about 4 more Bitcoins listed on most markets now Wrapped Bitcoin WBTC,Bitcoin SV BSV, and Bitcoin BEP2 BTCB.)
Now lets talk about how the billions of transactions are controlled in the crypto world since there is no one central bank with big computers to do it.
This is where we talk about the idea of distributed computing and the blockchain.
Distributed computing means that instead of one big computer doing all the data processing, we have a system like the internet, where thousands of computers around the world are processing parts of this information at the same time.
Now this has to do with the word called blockchain.
The blockchain is a technology which keeps track of every single crypto transaction made by putting them in a listing or database or blockchain which is stored on every single computer in the distributed network.
The way the system is kept secure is that because the same ledger or blockchain is found on every computer doing crypto work nobody could make a change or cheat on a transaction without someone knowing about it.
Now why would anyone leave their computers on around the world to keep this so called blockchain runnin?
Well..here is where the word mining comes up and gas fees.
It takes alot of brain power or computer processing power to process these worldwide transactions and there is some extra skill involved in doing this process which they call mining so if they can solve this math problem or sorts first then that miner gets a reward.
Usually the reward is a part of a bitcoin or crypto coin.
Just like a bank must pay a company do run its database servers, these people running computer mining rigs around the world get paid either in earing a crypto coin or by earning fees like gas fees paid by the customers who are selling or buyin things with crypto.
Another question that comes up is how many bitcoins are there and is there a limit?
Yes there is a limit and this is one of the main differences between crypto and the banks and how money is made.
Unlike the way banks and governments operate with money where they just print more when they need it all cryptocurrency companies agree before they start that there will be a certain limit to how many coins they will produce and no more.
So with Bitcoin it was agreed at the beginning that there would eventually be a total of 21 million bit coins and no more.
There are about 3 million left to be mined.
So that makes Bitcoin rare and helps it to keep its value going up instead of being affected by inflation.
Its all about economics with the supply and the demand of products in this case Bitcoin.
When bitcoin started we had thousands of individual computer operators with a few computers in their basements mining bitcoin as it is called.
Then large comanies set up huge warehouses full of computers to do the same thing and we all realized that incredible amounts of heat and wasted electricity was caused by mining with a lot of computers.
So there have been changes made to the way crypto is mined and the fees charged called gas fees.
Here is some mining trivia.
Satoshi was the first crypto miner and he mined the first whats called “bit coin genesis block” which was the first block on the block chain.
Although few can say what Satoshi looks like or if he was even a person, he apparently stayed with the foundation (I assume by working remotely) for about 10 years and if he is a person would have about $200 billion worth of bitcoin with him/her/it/they.
There are now over 6,000 cryptoocurrencies in late 2021.
Now lets say a few things about the reasons we have cryptocurrencies.
The reasons at first were mostly philosophical and the crypto movement was very laudable or well intentioned.
There was a realization that most of the 3rd world did not have easy access to money and the means to use money.
This was also the case in the Western world where the central banks and large corporations controlled how and when we could use our money.
The technology that Bitcoin used had been around in the 1970’s and 1980’s but it wasn’t until 2008 that all the pieces of the puzzle had been added together in a new way which suddenly made this whole new industry of cryptocurrency possible.
There had been previous attempts to make something like Bitcoin in the late 80s/90s in Silicon Valley with companies like Digicash, B-Money, Hash Cash and an electronic exchange operated on a Bulletin board system (this was like a simple mainly text form of the Internet).
Some names of the players in the digital cash movement back then were May and Morningstar and others.
So lets advance forward to today.
At the beginning of 2009 there was just one crypto currency named Bitcoin but today there are over 6,000 crypto coins.
Now the reason that everybody is excited about all this, is because in the last few years there have been countless stories of people buying crypto and becoming millionaires or even billionaires overnite.
Basically, crypto works like the stock market or the gold rush in a way, where every little stock tip or buy from a celebrity has the ability to send the price of stock or a crypto coin up like crazy.
So lets mention two of the greatest examples of the craziness now as they relate to Elon Musk the owner of Tesla and Vitalek Buterin, the cofounder of probably the second most well known crypto company called Ethereum.
Elon’s involvement was buying some dog related coin called Dogecoin. (pronounced Doe-juh-coin and not DOG coin)
Basically the Dogecoin was created as a joke in reference to a little known Russian hunting dog called a Shiba Innu.
Elon bought a lot of these digital coins so when people saw that he believed in it, thousands of people rushed out to buy them thinking that he knew something big could happen.
It did and many became millionaires overnite and thus began the Goldrush frenzy with crypto.
Then an even bigger event happened with the Ethereum founder.
Several coin makers started their own version of the dog coins and at least one coin producer found a way to secretly deposit about 30,000 of their Shiba Innu coins into the cofounder of Ethereums public wallet without him knowing or asking for it.
When word got out to the public that Vitalek had so much of that dog coin in his wallet, the people all assumed that it was a great coin to have so they all bought it like crazy just like they did when Elon bought a dog coin!
It then shot up in value and made Vitalek’s 30,000 coins worth about $17 billion. That is 17 BILLION!!!
Vitalek says that he destroyed or burned almost all of these coins and donated about 10% to an Indian Covid charity. (burning is a term used in crypto to say that you were ethical and moral and got rid of them because you didn’t believe it was right to own them)
You can hear the young and frail looking 27 year old Vitalek with his own explanation on the Youtube video by interviewer Lex Fridman in 2001.
Vitalek stated that the crypto movement was “never about making fast money but it was “about empowering billions of people to participate in the global economy in a way that resists the centralization of power.”.
There is a slightly different version of this on this website you can read if you like. https://www.theblockcrypto.com/post/104676/vitalik-buterin-donates-more-than-60m-to-charity-after-selling-meme-tokens-including-shiba-inu
Vitalek said that he didn’t want to have that much money and be the “locus” of power and money as a result.
But soon after these incidents, other crypto companies tried to send Vitalek money to get their prices to sky rocket but Vitalek was aware of what was happening and blocked all urther attempts to do this.
This is the price of being a famous crypto billionaire. (young crypto millionaires should take note of this and maybe lay low with your new found money)
Now like I said, the crypto movement was started with all the best intentions but human beings are only human and with that comes our greed and more.
If you go on Youtube and type in “how to make a fake crypto coin” you’ll see in great detail how you can illegally or immorally make a goofy fake coin and have it listed on some markets in about half hour for a cost of about $10!
So we must ask ourselves something as users of crypto.
If its that easy to pull off a scam then maybe its just as easy for the average non-expert computer user to lose his or her life savings.
The whole movement can and probably will straighten itself out for the betterment of mankind but just go with the slogan…”don’t put all of your eggs in one basket”. and “have your eyes wide open”.