Simple Guide to Bitcoin (Digital Gold)

What Is Bitcoin?

Bitcoin (BTC) is the very first form of cryptocurrency. A decentralised digital currency that uses cryptography to verify and record transactions. Bitcoin was created by Satoshi Nakamoto and debuted in 2009. This cryptocurrency was the very first of its kind. Satoshi Nakamoto departed the project in 2010 whilst remaining anonymous, and so far continues to remain that way. At present, bitcoin is solely controlled by a community of users and developers. Bitcoin.org describe bitcoin as ” The first decentralised peer-to-peer payment network that is powered by its users with no central authority or middlemen… From a user perspective, pretty much like cash for the internet”.

How Does Bitcoin Work?

Bitcoin uses 3 key components; Blockchain, Asymmetric Cryptographic Keys and Miners. All transactions that are conducted are listed in a shared public ledger. Transactions are referred to as ‘Blocks’ which are then linked to code (chains). As a result, all individual transactions processed using blockchain are permanently recorded. Asymmetric cryptographic keys function is to safely store users bitcoin in a digital wallet. The private key should remain private, and only be stored on the user’s device to decrypt data. In contrast, the public key is visible to all users of the network. And lastly, the bitcoin miners, that make everything possible. They’re members of the Bitcoin Network (Peer-To-Peer platform) located all around the world. Miners are responsible for confirming transactions (Blocks) using high-speed mining devices (computers, ASICs etc). The time it takes to complete a confirmation of a transaction according to The Bitcoin.org is ” between a few seconds and 90 minutes, with 10 minutes being the average”. Miners are rewarded with bitcoin for every block that they mine. However, the profit for miners can sometimes be non-existent or only cover their running costs.

Why Invest In Bitcoin?

I will only touch on a few advantages and disadvantages of owning bitcoin as an asset. Without further ado let’s have a look at the advantages:

Decentralised – Not one single entity controls the BTC network and currency. The current monetary systems in place today are centralised, controlled by the government and central bankers. Bitcoin should be seen as a speculative hedge against the failing economic system in place today.

User Anonymity – Bitcoin can provide users with unrivalled privacy when completing transactions compared to anything seen before to this day. Users are not required to provide personally identifiable information (PII). In today’s world, where governments are craving, want increasing powers and control over our freedoms. This digital asset provides users with increased privacy when completing their financial transactions.

Limited Supply – By design, there will only ever be 21 million coins created and in circulation. Bitcoin is an extremely scarce and deflationary asset. However, the current monetary systems are extremely inflationary and have an unlimited supply. In the UK, the Bank of England and government aim for a 2% inflation target each year.

Low Transactions & Quick – Bitcoins Peer-2-Peer network provides its users with the ability to complete transactions quickly and at very little cost.

Now, let's take a look at a few disadvantages:

Volatility – Bitcoin can be extremely volatile. To get an idea of its volatility, bitcoin has fallen by more than 50% on one day and nearly doubled in value on another. However, I believe this volatility will begin to reduce and stabilise as time goes on but we will have to see.

Bitcoin Scams – With the rise of cryptocurrencies, there has unfortunately also seen a rise of pesky individuals finding ways of scamming innocent people out of their hard-earned money or bitcoin. This, unfortunately, will not ever go away but there are things users can do to protect themselves so they don’t fall foul of these bad people.

Once it’s gone, you can’t get it back! – Unlike the current financial system in place, if something goes wrong you can attempt to recover your money through a refund or chargeback. Bitcoin does not offer users the same facilities as they have in the current financial systems. If you lose your bitcoin then it’s most likely it will never to be seen again. Always remember to complete your own due diligence when sending money or paying for any product or service.

Environmental impact – Bitcoin consumes a huge amount of electricity to mine and keep the network going to complete transactions for users. The BBC allegedly reports that bitcoin consumes more energy than the whole of Argentina. In this article, Cambridge researchers state it “consumes around 121.36 terawatt-hours (TWh) a year “.

How To Invest In Bitcoin?

How can you buy or earn bitcoins? Online you will see many suggestions on how to acquire this digital asset. I will only be highlighting the main 2 main methods; via cryptocurrency exchanges and mining.

Cryptocurrency Exchanges
Crypto exchanges are an online marketplace where traders can buy & sell a variety of digital currencies (BTC, ETH etc) in just a few clicks. Some well-known exchanges are; Coinbase, eToro, CoinJar, Kraken etc. Make sure you complete your own due diligence (reputation, security, fee structure, validation checks) on any exchange you decide to use. Once you’ve purchased bitcoin, a crypto wallet will be required to safely store your new crypto. Most exchanges provide a wallet facility but some at a cost, and not at all.

Mining
As discussed earlier in the post, miners are responsible for confirming transactions (Blocks) using high-speed mining devices (ASICs etc). Every miner earns a certain amount of bitcoin for every block (Confirming transactions) they mine. The block reward as of writing sits at 6.25 BTC per BTC block mined. Mining is not cheap and does cost a lot to get started and also to maintain. You will require an extremely powerful high-specification mining device (ASICs etc). These devices have other associated costs such as storage, security, maintenance, electricity & internet costs. The BTC block rewards less than mining costs can conclude that this method may be unprofitable. For the vast majority, the mining of bitcoin will likely be unprofitable and unsustainable.

How To Store Your Bitcoin?

Ok so you have bitcoin, now where do you store it? Let’s take a look at the 2 types of wallets :

Hot Wallets

Any wallets that are held online are referred to as hot wallets. These wallets can be extremely convenient and allow you to complete transactions quickly. However, here are some things to consider:

Lack Of Security – Like with anything connected to the internet there is always a risk of it being hacked. This also applies to bitcoin and holding it online increases your risk of your precious bitcoin being stolen.

No Ownership/Control – You are simply NOT the owner of the private key of that wallet. The wallet facilities provided by exchanges are custodial accounts. In an event where the exchange was compromised then your wallet is at risk of being stolen or lost. Increased government influence could see crypto exchanges forced to freeze assets. In that scenario, your bitcoin would be under the total control of the government.

In my humble opinion, I believe a hot wallet should only be seen as a temporary wallet to complete transactions. These wallets should not be used to hold large amounts of bitcoins.

Cold Wallets

A wallet that has no connection to the internet (offline). These wallets reduce the risk significantly as they are not internet-connected. The wallet address and the private key are stored on the offline device that the user owns and controls.

Paper Wallets
You generate this wallet on a specific website that then provides you with a public and private key. You simply print and store these keys. Access to any bitcoin stored in these wallets can only be accessed if you have the printed paper.

Hardware Wallets
These devices are USB drives that are used to securely store your private keys. These wallets are not as susceptible to threats or vulnerabilities as internet-connected devices. These devices are extremely easy to set up and use. They are a clever way to discreetly and securely transport your bitcoin around with you.

My Thoughts

I personally see this new form of digital gold as a speculative hedge against the current financial system. As my readers are aware, I have zero faith in this current system. I believe a collapse will happen eventually, and each day it becomes ever more likely. Bitcoin in the last month has hit a high of $58,367 and at the time of writing sits at $46,615. The prices of assets like bitcoin, gold and silver are a result of the decrease in the value of the dollar (or other fiat currencies). I am proudly invested in bitcoin and a few other crypto assets but I follow the same strategy as I do with silver, buy and hold. I think the bitcoin highs have not yet been reached and I don’t trust governments, central banks and the manipulated financial system.

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Why I've changed my opinion on Bitcoin.

I've recently changed my opinion on Bitcoin from being super bullish to thinking that it's an incredibly risky asset that is completely unpredictable. First, a quick backstory. I first bought into Bitcoin in December 2017 at literally the absolute top. I bought in at around $19,000. I shortly sold after for a small loss and I never touched Bitcoin for over a year. Starting in 2019, I started to get kind of interested in Bitcoin again. I was interested in the actual technology though and not simply the price. I bought in in July 2019 at around $11,000. I had in making purchases here and there and I even bought in at around $5,000 at around March 2020. I was buying more aggressively towards the end of the year and I think my average cost was in the low $20,000's. I've recently sold almost all of my bitcoin for around $46,000. I only have a very small amount now as pure speculation. I want to list all the points made by those in favor of Bitcoin that even I used to make myself. I then want to list my new perspective on them and why I don't think they are valid. Here goes.

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Medium of Exchange

This was supposed to be the original purpose of Bitcoin. It was supposed to be a peer to peer payment system that didn't need a central authority to function. Maybe Bitcoin was a decent payment system back in the days when it was used on places like the silk road, places where it is not reliable to use a centralized payment system, but it fails as a payment system in the real world for multiple reasons.

1. Bitcoin has exorbitantly high fees. If you want your transaction to occur within the next block, you're gonna be paying over $10 in fees minimum. If you pay a fee of $1, you're still gonna be waiting at least a few hours for it to confirm. This is completely impractical for being used in the real economy.
2. Bitcoin cannot scale. Bitcoin can only do about 4 transactions per second whereas Visa can do over 65,000. There is no way for Bitcoin to settle transactions on a global scale with how slow it is. And if more people did start to use Bitcoin, the fees would become even more expensive which relates to my first point.
3. Bitcoin offers no benefit as a medium of exchange to the average person than something like credit cards or apps like PayPal, Cash App, or Venmo. In fact Bitcoin is worse than these apps for the average person. These apps allow you to send money instantly and for free while with Bitcoin you'll be waiting possibly hours to send money and you'll pay at least a few dollars. Nobody wants to pay a few dollars to send $20 to a friend to pay them for something.
4. Bitcoin is way too volatile to be used as a medium of exchange. In order for something to successfully work as money in the economy, it needs to be stable. If money does not have a stable price, it will result in all kinds of misallocations of capital in the economy. Borrowing and lending both get screwed up and companies cannot reliably make long term plans if the value of the currency drops by 50% in a year. I actually favor the privatization of money and I want people to be able to use whatever money that they want. I just don't think Bitcoin works. Personally, I think David Friedman's idea is best. That is that money should be backed by a basket of commodities in the economy to ensure stable prices. Backing money by a single commodity like gold runs into issues because if that commodity becomes high in demand, it will increase the value of the money without any sort of productivity increase. Backing it by a bunch of commodities is basically the same as diversifying your stock portfolio. It would make it more stable. Anyways that's a whole different discussion so I don't wanna get deep into it.

​

Store of Value

Because Bitcoin obviously fails as a medium of exchange, its proponents have changed to calling it a store of value. I don't see Bitcoin as being an effective store of value for a few reasons.

1. Bitcoin has had 3 drawdowns of over 80% in its lifetime. Something that drops 80% because of no real catalyst is not an effective store of value.
2. Proponents will say "But in all its 12 years it has always gone higher so that proves it's a good store of value." That doesn't make it a store of value though as it has clearly lost a lot of its value 3 times. Store of values are places where people put their money when they know it'll be there if some event happens. If someone bought Bitcoin and it drops 50%, you can't just tell them to hold till it goes back up because that's not what a store of value asset is supposed to be.
3. Bitcoiners themselves don't even believe that it is an effective store of value. Why would they say "don't invest more than you can afford to lose" if it was an effective store of value?
4. If Bitcoin was an actual store of value asset, nobody would want it. If Bitcoin simply went up 2-3% to account for inflation, nobody would want to buy it. Everyone is in Bitcoin because they wanna become rich. Nobody actually cares about any of technology or use.
5. Bitcoin has no value.

• Bitcoin is backed by nothing. People will say that the dollar is backed by nothing but that's simply not true. The dollar is backed by the power of the US government and it's also backed by the productivity of the US economy.
• Gold and other commodities have value because they are used in the real world for real uses. We can actually create a demand curve for gold. It's impossible to create a demand curve for Bitcoin because most Bitcoin believers are willing to buy at any price. The demand curve for Bitcoin is vertical.
• Bitcoin is worth what 2 people believe it's worth. Now you can say that about anything but because its only utility is being able to transact, it's relevant in how you value it. The value of Bitcoin is the same whether it's worth $1 or $1,000,000 because it doesn't produce anything. So why should it ever be worth $1,000,000?
• The fact that Bitcoin is scarce doesn't actually mean anything because since there is no way to effectively measure the demand of Bitcoin, its supply doesn't matter either. Nobody is looking to buy a certain number of Bitcoin. People are buying a certain dollar amount. So the actual units that exist of Bitcoin is irrelevant because nobody is trying to accumulate a certain number of Bitcoin.
• What is the difference between 1 Bitcoin and 0.1 Bitcoin? In absence of the price, 1 Bitcoin is no more valuable than 0.1 Bitcoin. 0.1 Bitcoin is more valuable than 1 Bitcoin was back in March. 100 oz of gold is 10 times more stuff than 10 oz of gold. 100 oz of gold took more effort to create than 10 oz of gold. There is no actual utility in Bitcoin besides the ability to send it to someone. How much should that be worth? It should probably be worth at least something but it's impossible to know. Is Bitcoin undervalued at $50,000? Is it undervalued at $100,000? $1,000,000? It's impossible to know because it has no fundamental value.

​

Bitcoin is only worth $50,000 a coin because someone bought it thinking they could sell it to someone else for more. It is the Greater Fool Theory. Nobody actually wants Bitcoin. People want dollars to buy stuff and they think Bitcoin will allow them to get more dollars. Other people believe the same thing so they are willing to buy it for higher because they think they can sell it for higher. I'm not even saying that Bitcoin will go down. I think in 10 years it is likely that Bitcoin could 10x from here. That doesn't mean that Bitcoin will actually be anymore valuable than it is today. It will be worth $500,000 because someone believed that they could sell it to someone else for more than $500,000. If Apple increases net income by 5% in a quarter, it would be justified for their stock to be valued higher because they have created more value. What value has Bitcoin ever created or will ever create that can ever justify its price? I'd be curious to hear a rebuttal to my arguments besides just "you don't understand it" because I've held Bitcoin for almost 2 years through the ups and the downs. I've only now changed my opinion on it. Hopefully we can have a civil discussion about it.

Payment from your account.

Greetings!

I have to share bad news with you. Approximately few months ago I have gained access to your devices, which you use for internet browsing. After that, I have started tracking your internet activities.

Here is the sequence of events: Some time ago I have purchased access to email accounts from hackers (nowadays, it is quite simple to purchase such thing online). Obviously, I have easily managed to log in to your email account .

One week later, I have already installed Trojan virus to Operating Systems of all the devices that you use to access your email. In fact, it was not really hard at all (since you were following the links from your inbox emails). All ingenious is simple. =)

This software provides me with access to all the controllers of your devices (e.g., your microphone, video camera and keyboard). I have downloaded all your information, data, photos, web browsing history to my servers. I have access to all your messengers, social networks, emails, chat history and contacts list. My virus continuously refreshes the signatures (it is driver-based), and hence remains invisible for antivirus software.

Likewise, I guess by now you understand why I have stayed undetected until this letter...

While gathering information about you, I have discovered that you are a big fan of adult websites. You really love visiting porn websites and watching exciting videos, while enduring an enormous amount of pleasure. Well, I have managed to record a number of your dirty scenes and montaged a few videos, which show the way you masturbate and reach orgasms.

If you have doubts, I can make a few clicks of my mouse and all your videos will be shared to your friends, colleagues and relatives. I have also no issue at all to make them available for public access. I guess, you really don't want that to happen, considering the specificity of the videos you like to watch, (you perfectly know what I mean) it will cause a true catastrophe for you.

Let's settle it this way: You transfer $950 USD to me (in bitcoin equivalent according to the exchange rate at the moment of funds transfer), and once the transfer is received, I will delete all this dirty stuff right away. After that we will forget about each other. I also promise to deactivate and delete all the harmful software from your devices. Trust me, I keep my word.

This is a fair deal and the price is quite low, considering that I have been checking out your profile and traffic for some time by now. In case, if you don't know how to purchase and transfer the bitcoins - you can use any modern search engine.

Here is my bitcoin wallet: 1xPr18gM8YKsaiUkGz9MgpjtwcBQcME2i

You have less than 48 hours from the moment you opened this email (precisely 2 days).

Things you need to avoid from doing: *Do not reply me (I have created this email inside your inbox and generated the return address). *Do not try to contact police and other security services. In addition, forget about telling this to you friends. If I discover that (as you can see, it is really not so hard, considering that I control all your systems) - your video will be shared to public right away. *Don't try to find me - it is absolutely pointless. All the cryptocurrency transactions are anonymous. *Don't try to reinstall the OS on your devices or throw them away. It is pointless as well, since all the videos have already been saved at remote servers.

Things you don't need to worry about: *That I won't be able to receive your funds transfer. - Don't worry, I will see it right away, once you complete the transfer, since I continuously track all your activities (my trojan virus has got a remote-control feature, something like TeamViewer). *That I will share your videos anyway after you complete the funds transfer. - Trust me, I have no point to continue creating troubles in your life. If I really wanted that, I would do it long time ago!

Everything will be done in a fair manner!

One more thing... Don't get caught in similar kind of situations anymore in future! My advice - keep changing all your passwords on a frequent basis

Beeple Trump NFT token resold for $ 6.6 million

Digital artwork "Crossroad" by artist Mike Winckelmann, known by the pseudonym Beeple, resold on the second market for a record $ 6.6 million.

​

The non-fungible token (NFT) contains an image of former US President Donald Trump, who lost the election.

According to the team of the Niftu Gateway trading platform, this is an historic event.

​

What are your spontaneous purchases?

#ETF #bitcoin #cryptocurrency #yllo #trade #fintech

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https://preview.redd.it/93js45gdh4k61.jpg?width=640&format=pjpg&auto=webp&s=a0bbf5522081f81b0a3a8dccdc3860785d2504fb

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How would the bitcoin standard look like?

Hi,

I am reading Lords of finance -

"The Bankers Who Broke the World is a nonfiction book by Liaquat Ahamed about events leading up to and culminating in the Great Depression as told through the personal histories of the heads of the Central Banks of the world's four major economies at the time."

In the book its is clear that the gold standard coupled with central banking and politics is a recipe for disaster. This eventually lead to Great Depression and WW2. Yes, Germany really got their schnitzel muddied by the Versailles treaty war debt (270 billion today or so). Excluding that it's still evident that the central bankers - trying to further their own agenda/countries was able to impact markets, salaries, employment, prices, etc.

Today we talk about hyperbitcoinization and "the bitcoin standard". I am really curious how it could look when central banks once again peg their currency to a hard asset - promising stability. Would the same scenario play out or did we leave such things in the history books? Please help me think about it! Write your thoughts, I look forward to hear them =)

Every Due Diligence forgets ONE crucial addition factor, one you SHOULD know!

Dear Monkeys, Apes and Su Wukong(s),

I read new brilliant posts and contributions every day. Some that strengthen one post after the other, while other posts contributing and providing alternative insights of what is discussed. All in the best interests to help Monkey brain evolve into Ape brains and in a Su Wukong brain in the financial markets.

But we are forgetting one MASSIVE component in all equations! Mainstream media has continuously told "Humans" this is a bubble, its a meme stonk, its a Reddit rally, do not invest in this, institutional investors and advisors strongly oppose to not buy this stock and blablablaaaaaaabla and blabla.

What they forget... Is that our Monkey brains did our homework, we know what's going on.. But unlike Monkey brains "Human" brains do not have a retarded Monkey brains that like RedPorn or drink our own Yellow stuff like its a complete normal thing to do, they have a "Human" brain that has been poisoned.. Poisoned to believe that everything is fine and do not worry about what is going on with GameStop.

All this strong resistance by mainstream narrative becomes irrelevant for "Human" brain when they see the following event unfold:

Monday "xx"/03/2021 or sometime soon: GameStop has risen 30% today, yet again a strong rally by the bulls. Redditors have for sure caught our attention again today. But remember folks this is still a "meme" stock people, do not invest in it. It is dangerous!

Tuesday "xx"/03/2021 or sometime soon: GameStop that rallied yesterday with 30%, But GameStop now seems to be on yet another rally to break its All Time High(ATH) closing with 50% End Of Day(EOD).

Wednesday "xx"/03/2021 or sometime soon: Folks, its unbelievable, but yesterday GameStop increased its price towards "xxx" USD and we are closing today with another 20% gain.

Thursday "xx"/03/2021 or sometime soon: People watching this right now, your not going to believe me when I say this, but look at this chart. The growth of GameStop is unbelievable! It seems to be the same like Bitcoin going in a massive rally upwards.

By the time 3-4 days have spend, every news outlet has probably mentioned this rally for the 2nd time in 2 months period. But now its caught mainstream and also higher circles in 1000x fold. On Twitter, Facebook, Newspapers, Youtube, Instagram, TikTok, LinkedIn and you name it...

What do you think this does to Human brain? Everyone that can afford a piece of this stock at this price is going to wonder if they should liquidate their holdings in Apple, Microsoft etc. just to get a higher return of lets say 20-50-200% in a day or 2.

You can ask me what that might mean for the stock right? Options "In The Money" will be easily achieved and executed....

TLDR:

Once GME moon, people will rush in to throw their tendies at it as well, Hedge Funds and any other shorts might be roped, but Kerosene just put that rope on fire from below.

\The above is no financial advice, do not trade what you cannot afford to lose**

\This is your "money" and your OWN decision!*

**Still holding Diamond hands till Alpha Centuri*\*