Bitcoin for Boomers

I am working on creating content to raise awareness about our Cryptocurrencies.

I would encourage you to helpfully check and add revisions to this as necessary. Especially the topic on being hacked and a check on how nodes work. Our website will be opening up, and it's important to get some of these things out there.

I will cover 10 topics today. This work is not mine but rather a collection of things I have learned, I take zero credit for discovering this information. PLAN B is who you should look to for guidance on the STF models.

What is Bitcoin?

•In short, Bitcoin (BTC) is treated and was approved as a commodity by the Futures Trading Commission.

•Bitcoin is a digital currency. The world’s largest digital currency.

•Current market cap for BTC as of writing is $356.58 Billion. Priced at $19,237.34 per BTC.

•There are no physical coins, the balances and transactions are kept on a ledger that is verified by all computers on the Bitcoin network.

•Computers mine bitcoin by going to work verifying transactions for the network. They are rewarded with Bitcoin.

Who controls it?

•Absolutely no one! Bitcoin was designed to be decentralized. This means it is free of government, corporation, entity, and political control.

•The creator or creator(s) went by the pseudonym of Satoshi Nakamoto. It was created in 2009 and published in the famous Whitepaper. Satoshi contributed to the source code of Bitcoin until 2010 when he disappeared.

•By being free of control you do not need a financial institution or government to conduct your transactions. No-one can create more bitcoins and there will only ever be 21 million coins.

•The last coin will be mined in 2040.

Why should I care?

•In the early 1990s very few people saw the use of computers to the extent we use them today. Bitcoin was created over a decade ago and is now being noticed by world leaders, billionaires, countries, individual people, and everyone in every country across the globe.

•Bitcoin solves many problems Govt. controlled money creates. By its nature, it is deflationary and gains value over time.

•Bitcoin has increased around 8.9 million percent from Jan 2010 to current. 4,788.35% increase in the last five years.

•It may replace gold as the next store of value, and from there can compete to become a global reserve currency.

•Bitcoin can be used to pay anyone without using a financial institution.

How is it valuable?

•A common thing to hear. “There’s nothing behind that value holding it up. Stocks have companies, bonds have certificates Bitcoin doesn’t have any value.”

•What makes a currency valuable in general?

•Portable, durable, sustainable, scarce, ease of use, and store of value.

•Dollars / Fiat currency can be printed. This year the USA has printed upwards of 2 trillion dollars. Weakening USD to a two and a half year low.

•Interest rates on the 10-year bond are less than 1%. Inflation is rising at 2% on average. This means right now; your USD savings are literally losing money sitting in the bank. Eroding your savings.

•Bitcoin cannot be printed, it’s deflationary due to Halving. No government controls it, and there will only ever be 21 million in existence.

Can’t anyone make it?

•Bitcoin is the only decentralized currency. Alternative (Alt) coins such as Etherium, Dogecoin, and others are all able to be controlled by their creators or company.

•Satoshi Nakamoto created bitcoin and then disappeared after 2010. Bitcoin then began to take its own form and grow autonomously. Even if we wanted to, we could not “print” more Bitcoins. It was designed to be without control of any one person or entity. Money for the people, without political or sovereign control.

•There can be cryptocurrencies made, but Bitcoin will be the one competing to overtake gold in market cap and become a global reserve currency.

•Anyone can Mine bitcoin. The computers and software are expensive, the profitability is low in many areas. The more computers “mining” the harder the difficulty of mining becomes. This keeps the Bitcoin flowing into the system at an average of 328k coins per year and this cut in two every four years. The last coin being mined in 2040.

The price just goes up because people want it.

•Why does the price of gold rise?

•It’s hard to mine gold, takes a lot of work. Gold does not rust. It is divisible (to an extent) you cannot pay for a coffee in gold. Gold produced 3.3 tonnes in 2019. Estimates say there are 197 tonnes of gold in the world. This gives us a stock to flow 59.9. The flow is how much we are putting in, the stock is how much we have. This measures the scarcity and production of gold and helps affect the price. If we produce 10 tonnes next year, gold would become more abundant and then have a stock to flow of 19.7. Making the price go down.

•Bitcoin takes a lot of computer power and electricity to produce. It does not erode with time. It is divisible. It is a bank in your pocket. You can pay for coffee, you can carry millions of dollars with you anywhere. Try taking $16 Million dollars to an airport.

• Remember, the higher the stock to flow the more scarce a material. There are currently 18,564,587.5 Bitcoins and since the halving event in June, the system will be producing about 328,500 BTC per year. This gives BTC a stock to flow of 56.5.

•The market cap for gold is 9 trillion dollars, The market cap for BTC is currently 356 Billion. Yet has roughly the same stock to flow. No other asset in the world has come this close to gold.

Stock to flow continued.

•So what other assets have as high of stock to flow?

•None. Silver comes in at 20, crude oil, copper, corn, and wheat all come in less than 5.

•Platinum market cap 1.9 billion. Silver 44 billion. Exxon Mobil 173 BN.

•Bitcoin has already surpassed many precious commodities in market cap. It is undervalued for its stock to flow (STF) being nearly as high as gold. We will see the market cap for BTC begin to catch up now that Halving has occurred.

•What is market cap? In sense of shares of stock, it is the stock price multiplied by the number of shares outstanding. We are witnessing Bitcoin on the path to overtaking gold.

•Current price of BTC at $19,000 for a market cap of $356 billion with 18.5 Million coins right now. Reaching gold in market cap of $9 Trillion within four years time from now would have 19.8 Million coins valued around $454,545.00 each.

Halving

•As with gold, we can predict how much will be added to the system YOY.

•The timeline of four years from now becomes significant because of Halving. Every four years the reward for the computers mining is cut in half. This has a price effect of raising BTC. In June of this year, we experienced a halving event and now the reward for BTC is 6.5 bitcoins.

•When we halved in June, the stock to flow was increased because the flow was reduced making the scarcity increase. The deflationary principle of Bitcoin allows it to increase in value and scarcity over time. There will only ever be 21 Million Bitcoins with the last one being mined in 2040. Four years from now we will experience another halving event. Taking our bitcoins per year produced from 328,500 down to 164,250 per year.

•This would put us at an STF of 120.5 (19.8 Million coins total with 164,250 coming in.) 120.5 stock to flow in four years from now. Therefore, BTC is currently competing for gold and will soon blow it out of the water. During the next four years we will simply see it catch up to, and then surpass gold especially when the next halving occurs.

Can it be hacked?

•Bitcoin would be incredibly hard to hack. This is because of the blockchain technology used. Transactions are constantly being reviewed by the system and only verifiable blocks are added to the chain.

•To hack Bitcoin you would need to control at least 51% or more of the computing power in the entire world that is connected to the Bitcoin network.

•Miners verify transactions, they earn the “new” bitcoins and this is how they are added to the system. Adding to the chain when a miner creates or sells one, all transactions are recorded and verified in the ledger.

•“Hacking” Bitcoins on to your balance is impossible, you must show miners there is a previous transaction to your address. If you tried, the miners will reject your transaction as they cannot accept something generating an unsolvable hash. You would have no proof of work/proof of owning one, to begin with. There is no way to hack yourself this proof of work, all bitcoins come from mining and the ledger has verifiable transaction history to show you “Don’t” have that “Bullshit coin”. Thus rejecting the attempt.

•This language and the understanding of how it can or cannot be hacked is hard to simplify. Everything is based on proof of work and you cannot add new bitcoins to the system without having mined them.

Can I be hacked?

•Yes absolutely.

•If you do nefarious things on your computer or phone and get a virus or keylogger implanted on you, you may be hacked. This is unrelated to BTC in general. Just as you may have compromised passwords, you may use the same password for your BTC wallet and the Hackerman kidnaps those bitcoins along with your bank account.

•Be safe when online, use a hard wallet to prevent this. Certain wallets for bitcoin only allow withdraws to verifiable or approved addresses, meaning someone wouldn’t be able to up and steal your coins without you noticing.