Hello Subscriber and welcome to Bitcoin Basics Lesson 1:
Cryptocurrencies and Bitcoin.
In Lesson 1 you will learn:
Cryptocurrencies are decentralized digital currencies secured with
cryptography
Bitcoin is the top cryptocurrency due to its rst-mover advantage
Bitcoin was created by Satoshi Nakamoto
Bitcoin is only in its infancy period with huge growth potential
Why cryptocurrencies?
Cryptocurrency is a new type of digital money used to exchanged agreed-
upon values. It is just like regular currency, except it uses cryptography to
secure transactions and control the creation of its native currency.
In centralized nancial systems—such as the U.S. Federal Reserve system—
government and banks control the supply of currency. They essentially
"print" units of this currency, which is called at. When centralized entities
operate in this fashion often times the " at" system can be in ationary. By
contrast, a lot of cryptocurrencies like bitcoin have a capped supply,
although some digital assets do not. This means currencies like bitcoin are
produced by a cryptocurrency protocol at a predetermined, set rate. The
supply is capped at a speci c amount. Bitcoin's cryptographic nancial
system is built on a peer-to-peer, open source, and decentralized network.
The currency is not controlled by one person or organization, and their
speci cations are not easily altered without consensus on the network.
The great thing about cryptocurrencies is that you can send and receive
money anywhere in the world at any given time. You don’t have to worry
about bank hours, formal permission or any other limitations. You can
make and complete payments in bitcoin without anyone’s personal
information being tied to the transactions, therefore it also protects against
identity theft. The fees involved are usually also low, compared to legacy
systems like Western Union. Bitcoin payments are irreversible and secure,
meaning that merchants don’t have to worry about the cost of fraud.
Introducing Bitcoin
Bitcoin pioneered the eld as the rst decentralized cryptocurrency back in
2009 and the decentralized control is by use of Bitcoin's distributed ledger,
called the blockchain. Bitcoin is by far the most popular digital currency and
it has tens of thousands of programmers and entrepreneurs around the
world developing new services and apps. Like most other cryptocurrencies,
Bitcoin is not controlled by any single government or central bank, and no
one can decide who is allowed to send or receive money. Bitcoin
transactions are censorship resistant. This means that no one, including
banks, or governments, can block you from sending or receiving bitcoins.
Bitcoin was the rst decentralized digital currency and has had time to gain
acceptance among both merchants and consumers. It is considered very
safe compared to other digital currencies, it has no third parties, and the
protocol is open source (i.e. its code is peer-reviewed by a large community
of developers). It is also the rst digital currency to implement the
blockchain as a core component. All these factors have helped attract the
open source developer community to the currency. The no-VAT ruling in
Europe has also helped to enhance the popularity and value of the
currency, and today most countries around the world allow bitcoin as a
payment method. Many companies now also accept bitcoin as a method of
payment. From restaurants and co ee shops, to real estate companies and
online shops, Bitcoin is now accepted by a wide variety of establishments. It
also has a strong advantage over its competitors because of important
network e ects like adoption-rate and developer mindshare.
The Past, Present, and Future
Bitcoin was created by an anonymous person or group who called
themselves Satoshi Nakamoto. Nakamoto published the invention on
October 31, 2008, to the Cryptography Mailing list called metzdowd.com.
The research paper was called "Bitcoin: A Peer-to-Peer Electronic Cash
System". It was implemented in its rst client and released to the open
source community in January 2009. The Bitcoin network came into
existence on January 3, 2009, with the release of the rst Bitcoin
software and the issuance of the rst bitcoins. Satoshi Nakamoto continued
to collaborate with other developers on the bitcoin software until mid-2010.
Around this time, he handed over control of the source code repository to
the bitcoin developer Gavin Andresen. Nakamoto also transferred several
related domains to various prominent members of the bitcoin community,
and then stopped his involvement in the project. Prior to his absence and
handover, Satoshi Nakamoto made all modi cations to the source code.
At rst, the initial exchange rates for Bitcoin were set by individuals on
online forums. The rst “famous” transaction was the infamous 10,000
bitcoin pizza purchase, worth around 20 million USD eight years later.
Today, however, most bitcoin exchanges are made through online trading
platforms. In 2013, several mainstream websites began accepting bitcoin.
Wordpress started in November 2012, followed by OKCupid in 2013. In
2014 several major vendors started to accept bitcoin, including TigerDirect,
Overstock.com, Expedia, Dell, and Microsoft.
With bitcoin’s transactional volume increasing every day, a cap on supply,
and an ongoing reduction in bitcoins produced, bitcoin values should
continue on an upward trend. Compare this to most all at (paper)
currencies which lose value every year due to in ation.
The digital currency has not gone viral yet, and many of the apps, upgrades,
and protocols that will make it truly ready for common use are still being
developed, so the potential is still huge. We’ve probably only scratched the
surface of what Bitcoin can do.
This ends today’s lecture and hopefully you now have a rst grasp on what
Bitcoin is and why you should start learning about it and using it.
Tomorrow we’ll dig a little deeper into the world of Bitcoin and how it
works in practice.
Roger Ver
P.S.: Can’t wait to learn more? Jump ahead to the next lesson.
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