Understand Bitcoin and the Future. Like what you know will be rethought forever
Hi, Habr! I present to you the translation of the article " Understanding Bitcoin and the Future. By Andrian Iliopoulos.
Bitcoin
Cryptocurrency.
Decentralized application.
Bubble.
Investments.
Specs.
The next big step after the Internet.
')
These are just some of the epithets and descriptions that people like to give to Bitcoin. The reality, however, is that none of them really describe what Bitcoin is and how this idea is likely to change the future of humanity forever.
For me, the journey to the mystical country of Bitcoin began almost 5 years ago. Then I was not engaged in investment and business. I was just starting my childhood steps in the world of entrepreneurship, and just watched major startups to learn about significant events in the community. 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 little.
At the beginning, my interest was infinitely small, since its cost was insignificant, and the technology seemed rather complicated and indescribable to invest the time needed to understand its mechanics. Over time, I continued to follow the trends, and, gradually, reluctantly, I began to realize that this seeming banal speculation became a serious part of life for some people.
The year when I decided to take Bitcoin seriously was 2015, and this coincided with my reading of the book by Israeli historians Yuval Noah Harari - Sapiens.
In this magnificent work, Harari explains how people throughout the entire existence of mankind came 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 as moral compasses that allow us to recalibrate our existence in dark times.
I saw the power of the stories around me. In religion, in politics, in social theory, in economics, in cinema. And then I realized. I realized that Bitcoin is nothing but another story. A story created by some extremely intelligent people and perfected by the adoption of more intelligent people. When smart people get together and unite around a powerful story, you cannot but understand that there is serious potential in it.
So, I decided to invest a significant amount of money in this story and today I consider this one of the most important investment decisions I have ever made.
As a serious bitcoin hodler (explained below) and a person who plunged into the world of cryptocurrency, I consider it my personal duty to educate people around the history of Bitcoin, as well as to preach its use, so that ultimately its potential can be realized.
Explanation of the word “hodling” (from English hold - hold, hold. Here is a typo - hodl. Translator’s note): Back in 2013, a member of GameKyuubi on the forum bitcointalk.org created a publication called “I AM HODLING”. It was a 200-word adage 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 domain for everyone who believes in Bitcoin and is ready to keep it no matter what.
In the following paragraphs, you will read not only my explanation of the history of Bitcoin, but also an analysis of the basic meaning of this story.
Enjoy.
October 31, 2008. In the metzdowd mailing list, which is dedicated to cryptographic technology and its political influence, a community member named Satoshi Nakamoto published an e-mail called “Bitcoin P2P”. In this letter, Nakamoto introduced Bitcoin to the members, an electronic P2P cash system.
It was an exceptional job based on a very revolutionary idea - how to send online payments directly from one participant to another without the need for a financial institution to mediate.
In a nutshell, Bitcoin creates a reliable decentralized exchange network based on a technology called blockchain. Now let's explain the incomprehensible terms:
Decentralization : this means that there is no central authority that governs transactions. In our current state of affairs, if I want to send money to someone on the Internet, I need to do it 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 a lack of anonymity, as well as a huge dependence on the system itself.
Blockchain : This is a technology proposed by Nakamoto that is trying to solve the infamous problem of double spending. 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 in digital form. It solves the problem by creating blocks of transactions on the network, called a chain of blocks that are cryptographically protected. The level of cryptography associated with this process is quite complex and provides a secure transaction and no ambiguity in the operation of the network.
One can understand the depth of Nakamoto's intellect by reading how complex the structure of his / her / their work is. This concept could not come up with an ordinary person. After all, this is a very complex algorithmic process that requires great knowledge in the field of computer science, mathematics and cryptography.
My assessment is that Nakamoto, although in the article he uses "we", is one person and, most likely, a man with a higher education, perhaps a PhD in computer science or cryptography. People assume that he is of British descent because he uses British words in different posts, such as “bloody hard” (damn hard), and that he lives somewhere in Eastern America (because of the time stamps on his emails ). His English is at a fairly advanced level, and this hints at what he has been saying since birth. The name Satoshi Nakamoto is obviously a pseudonym, and it 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 "(he 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 stay in the spotlight.
After his initial letter in 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 domain name bitcoin.org and continued to collaborate with other Bitcoin network developers until mid-2010. At about the same time, he gave control of the source code repository and alert system to Gavin Andersen (lead developer in the Bitcoin project), transferred several related domains to various prominent members of the Bitcoin community, and ceased his participation in the project. ”
His latest private message to the Bitcoin community dates back to April 2011. In it, he tells Mike Hern, one of the developers of the Bitcoin code at the time, the following: “I do other things. Bitcoin in good hands with Gavin and the rest. ”
Satoshi Nakamoto is now a legendary figure. The Bitcoin public transaction registry shows that Nakamoto’s known addresses contain approximately one million bitcoins (they were all part of the first blocks created). As of December 17, 2017, this represents more than 19 billion US dollars. Which makes him the 44th richest man on earth.
Since Nakamoto rejected the role of the new messiah (a very clever move, in my opinion), Bitcoin became open to all who wanted to influence him. The first popular Bitcoin transaction was documented in May 2010, when Laszlo Hanier, a programmer from Florida, sent 10,000 bitcoins to a volunteer from England who spent about $ 25 to order him pizza at Papa Johns.
In addition to the first Bitcoin exchanges that allowed people to buy and exchange bitcoins, many people are starting to accept this new currency as a form of payment, and it is not surprising that drug dealers have become the earliest supporters of Bitcoin. Silk Road, the illicit drug market that Bitcoin used as a confidential way to buy and sell drugs on the Internet, was created in January 2011. He opened the way to the formation of the Darknet and the creation of a whole new online ecosystem.
Slowly but steadily, Bitcoin becomes more authoritative, and as a result, new cryptocurrencies that want to compete with it appear. People believe that there is always a better version of the new system and everyone wants to be the first to come up with this “better version.” Ethereum, Litecoin, Monero, Ripple, Dash are among the earliest cryptomonet that appeared on the market, and are still considered one of the most dominant players in the cryptomire.
2013 is the most important year for Bitcoin, since it was the year when the price of Bitcoin experienced the highest spike. November 29, 2013 the price of one coin reached a record level of 1242 dollars.
It is important to note here that, as a rule, jumps and falling prices are 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, the chairman of the Federal Reserve. This is not a small thing. 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 it is supported by some kind of authority.
But there is another side to the coin. In 2014, Mt. Gox, the most famous Bitcoin exchange at that time, closed its website and exchange service, and also filed for bankruptcy in order to protect itself from creditors. This, along with the closure of Silk Road in November of the same year, marked a sharp drop in the price of Bitcoin to about $ 300.
From 2015 to the end of 2016, Bitcoin slowly conquered the charts in order to reach a value close to 960 dollars in December 2016. The number of miners, developers, and investors associated with Bitcoin during this period grew exponentially.
And this 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 that is so seductive and has so much potential in the future, as well as allowing early investors to make money out of thin air, at some point this story will explode .
Bitcoin entered the mainstream, the purchase of currency became very easy, many outstanding and respectable figures began to approve it, and as a result one of the most interesting creations in the history of mankind soared in price.
Regardless of whether you dive into the world of Bitcoin or not, you need to understand the basic idea:
Banks and governments control the monetary system from the beginning of time (in fact, not quite, but this impression is created), and this threatens all sorts of problems for the average person.
First of all, we are dependent 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 that are usually affected by the needs of individuals. Persons who are at the top of the social hierarchy will do everything to preserve 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 everything we can from the monolithic structure we have 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 intermittent solutions to our problems.
The funny thing is that the inexorable spread of such a system cannot last forever, and this will obviously lead to anomalies. In my opinion, such an anomaly, which 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 estimate 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 is used to denote 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 the fiat currency. Every country in the world has a fiat currency, which is issued by the respective government and is subject to economic fluctuations, such as inflation or deflation.
During the Great Depression in the 1920s, the gold standard hampered economic growth because it did not allow the Federal Reserve to expand the money supply to stimulate the economy, support insolvent banks, and finance government deficits, which could give a boost to the economy.
In addition, gold, in itself, is not so convenient to use. Yes, it can be used 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 circulation.
The latter is true for Bitcoin. When Satoshi Nakamoto invented Bitcoin, he did this with the intention of creating a certain number of bitcoins that could be mined. In total, there may be 21 million bitcoins, the last of which will be mined in about 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 in order 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 a block chain contains a certain amount of bitcoins that can be obtained by solving a cryptographic riddle. The number of bitcoins issued in the block is reduced geometrically, with a reduction of 50% every 4 years. Satoshi did this to make the mining process interesting and probably longer.
If we take into account the limited circulation and add to the incredible use of bitcoins, which include decentralization, security, anonymity, and ease of use, Bitcoin is becoming one of the most important alternatives for fiat currency the world has ever seen.
At first glance, Bitcoin is just a digital currency. Because people, first of all, are interested in them as a form of investment and an alternative payment method. However, when someone begins to dive deeper into the idea of ​​what constitutes Bitcoin, you can see something completely innovative. You can see the future of humanity.
If you look at human history as a species, you will understand 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 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 an anarchy model 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 monetary 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 how we interact with each other, and ultimately rebuild all of our thinking.
An ordinary person does not understand this. However, sincere supporters of Bitcoin understand this. And even if they do not understand, they feel. This is what makes us go 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 I joined, I noticed a similar picture. Usually dominated by those groups whose supporters demonstrated two important attributes: loyalty and intellectuality.
Devotion is required for the group to work. Without devotion, group members will not be able to remain involved, and in the end, the group will fall apart. However, loyalty alone is not enough. You may be faithful, but if you are not smart enough to understand what is happening behind the veil of reality, you will not be able to withstand the growth of the group, as well as surpass other associations.
The bitcoin community consists of the most dedicated and intelligent people I have ever encountered throughout my life. Watch this performance by Andreas Antonopoulos, a Bitcoin popularizer:
His intellectual and passionate speech charges. And he is just one of many intellectuals who jumped on the Bitcoin train and urged us all to join.
Despite this, it is important to note that the main adherents of the Bitcoin philosophy are not primitive philistines. These are people with a head immersed in technology, and having knowledge in areas such as programming and engineering. All this makes the Bitcoin movement more secure and advanced, and also distinguishes it from other revolutionary movements that existed throughout human history.
Most people will fight Bitcoin, and that’s a fact. And not only because they do not understand the concepts that I have described, but also because of the innate mechanism of self-preservation, many of which are the victims, and, moreover, because of the desire to stay in the comfort zone.
What will determine the stability of Bitcoin is the desire of the main players of the community - miners, programmers, investors, popularizers and entrepreneurs - to continue to participate in the Bitcoin game and be ready to risk everything to do their work.
History is full of such revolutionary movements, and we all know that the changes that this revolution will bring are not colossal, but this is definitely a step towards a better way, unlike the one we are following now.
When many opponents of Bitcoin use the word "bubble", they are mistaken, because most of the bubbles in history were created by fraudsters who wanted to take advantage of 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 differentiate between ICO and Bitcoin.
ICO in briefA: ICO is the original 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 the bank for a loan, or by trying to convince an investor or venture capitalist to acquire capital. 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 every 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 legitimate. Many people are wildly investing in ICO and in companies, without even understanding the basic principles of investment. Obviously, this creates a bubble; bubble,which will surely burst at some point.
A bitcoin game is a marathon, not a sprint. This is a game involving high stakes, risk, drama, influence, persuasion, money, politics, psychology, philosophy, economics, and history.
For some reason this is a game that many people find painful.
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 : , ? , , - . , 2-5 , , . , , . , - 100 000 , , - $ 60 000 — $ 100 000. , . , «» . , Amazon 10 000 2000 , 20 , , , . , , . . , , . — . , , , , . , ​​ Coinbase , Ledger Nano S Trezor.
Bitcoin
Cryptocurrency.
Decentralized application.
Bubble.
Investments.
Specs.
The next big step after the Internet.
')
These are just some of the epithets and descriptions that people like to give to Bitcoin. The reality, however, is that none of them really describe what Bitcoin is and how this idea is likely to change the future of humanity forever.
For me, the journey to the mystical country of Bitcoin began almost 5 years ago. Then I was not engaged in investment and business. I was just starting my childhood steps in the world of entrepreneurship, and just watched major startups to learn about significant events in the community. 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 little.
At the beginning, my interest was infinitely small, since its cost was insignificant, and the technology seemed rather complicated and indescribable to invest the time needed to understand its mechanics. Over time, I continued to follow the trends, and, gradually, reluctantly, I began to realize that this seeming banal speculation became a serious part of life for some people.
The year when I decided to take Bitcoin seriously was 2015, and this coincided with my reading of the book by Israeli historians Yuval Noah Harari - Sapiens.
In this magnificent work, Harari explains how people throughout the entire existence of mankind came 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 as moral compasses that allow us to recalibrate our existence in dark times.
I saw the power of the stories around me. In religion, in politics, in social theory, in economics, in cinema. And then I realized. I realized that Bitcoin is nothing but another story. A story created by some extremely intelligent people and perfected by the adoption of more intelligent people. When smart people get together and unite around a powerful story, you cannot but understand that there is serious potential in it.
So, I decided to invest a significant amount of money in this story and today I consider this one of the most important investment decisions I have ever made.
As a serious bitcoin hodler (explained below) and a person who plunged into the world of cryptocurrency, I consider it my personal duty to educate people around the history of Bitcoin, as well as to preach its use, so that ultimately its potential can be realized.
Explanation of the word “hodling” (from English hold - hold, hold. Here is a typo - hodl. Translator’s note): Back in 2013, a member of GameKyuubi on the forum bitcointalk.org created a publication called “I AM HODLING”. It was a 200-word adage 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 domain for everyone who believes in Bitcoin and is ready to keep it no matter what.
In the following paragraphs, you will read not only my explanation of the history of Bitcoin, but also an analysis of the basic meaning of this story.
Enjoy.
How it all began - the story of Satoshi Nakamoto
October 31, 2008. In the metzdowd mailing list, which is dedicated to cryptographic technology and its political influence, a community member named Satoshi Nakamoto published an e-mail called “Bitcoin P2P”. In this letter, Nakamoto introduced Bitcoin to the members, an electronic P2P cash system.
It was an exceptional job based on a very revolutionary idea - how to send online payments directly from one participant to another without the need for a financial institution to mediate.
In a nutshell, Bitcoin creates a reliable decentralized exchange network based on a technology called blockchain. Now let's explain the incomprehensible terms:
Decentralization : this means that there is no central authority that governs transactions. In our current state of affairs, if I want to send money to someone on the Internet, I need to do it 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 a lack of anonymity, as well as a huge dependence on the system itself.
Blockchain : This is a technology proposed by Nakamoto that is trying to solve the infamous problem of double spending. 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 in digital form. It solves the problem by creating blocks of transactions on the network, called a chain of blocks that are cryptographically protected. The level of cryptography associated with this process is quite complex and provides a secure transaction and no ambiguity in the operation of the network.
One can understand the depth of Nakamoto's intellect by reading how complex the structure of his / her / their work is. This concept could not come up with an ordinary person. After all, this is a very complex algorithmic process that requires great knowledge in the field of computer science, mathematics and cryptography.
My assessment is that Nakamoto, although in the article he uses "we", is one person and, most likely, a man with a higher education, perhaps a PhD in computer science or cryptography. People assume that he is of British descent because he uses British words in different posts, such as “bloody hard” (damn hard), and that he lives somewhere in Eastern America (because of the time stamps on his emails ). His English is at a fairly advanced level, and this hints at what he has been saying since birth. The name Satoshi Nakamoto is obviously a pseudonym, and it 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 "(he 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 stay in the spotlight.
After his initial letter in 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 domain name bitcoin.org and continued to collaborate with other Bitcoin network developers until mid-2010. At about the same time, he gave control of the source code repository and alert system to Gavin Andersen (lead developer in the Bitcoin project), transferred several related domains to various prominent members of the Bitcoin community, and ceased his participation in the project. ”
His latest private message to the Bitcoin community dates back to April 2011. In it, he tells Mike Hern, one of the developers of the Bitcoin code at the time, the following: “I do other things. Bitcoin in good hands with Gavin and the rest. ”
Satoshi Nakamoto is now a legendary figure. The Bitcoin public transaction registry shows that Nakamoto’s known addresses contain approximately one million bitcoins (they were all part of the first blocks created). As of December 17, 2017, this represents more than 19 billion US dollars. Which makes him the 44th richest man on earth.
Era after Nakamoto
Since Nakamoto rejected the role of the new messiah (a very clever move, in my opinion), Bitcoin became open to all who wanted to influence him. The first popular Bitcoin transaction was documented in May 2010, when Laszlo Hanier, a programmer from Florida, sent 10,000 bitcoins to a volunteer from England who spent about $ 25 to order him pizza at Papa Johns.
In addition to the first Bitcoin exchanges that allowed people to buy and exchange bitcoins, many people are starting to accept this new currency as a form of payment, and it is not surprising that drug dealers have become the earliest supporters of Bitcoin. Silk Road, the illicit drug market that Bitcoin used as a confidential way to buy and sell drugs on the Internet, was created in January 2011. He opened the way to the formation of the Darknet and the creation of a whole new online ecosystem.
Slowly but steadily, Bitcoin becomes more authoritative, and as a result, new cryptocurrencies that want to compete with it appear. People believe that there is always a better version of the new system and everyone wants to be the first to come up with this “better version.” Ethereum, Litecoin, Monero, Ripple, Dash are among the earliest cryptomonet that appeared on the market, and are still considered one of the most dominant players in the cryptomire.
2013 is the most important year for Bitcoin, since it was the year when the price of Bitcoin experienced the highest spike. November 29, 2013 the price of one coin reached a record level of 1242 dollars.
It is important to note here that, as a rule, jumps and falling prices are 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, the chairman of the Federal Reserve. This is not a small thing. 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 it is supported by some kind of authority.
But there is another side to the coin. In 2014, Mt. Gox, the most famous Bitcoin exchange at that time, closed its website and exchange service, and also filed for bankruptcy in order to protect itself from creditors. This, along with the closure of Silk Road in November of the same year, marked a sharp drop in the price of Bitcoin to about $ 300.
From 2015 to the end of 2016, Bitcoin slowly conquered the charts in order to reach a value close to 960 dollars in December 2016. The number of miners, developers, and investors associated with Bitcoin during this period grew exponentially.
And this 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 that is so seductive and has so much potential in the future, as well as allowing early investors to make money out of thin air, at some point this story will explode .
Bitcoin entered the mainstream, the purchase of currency became very easy, many outstanding and respectable figures began to approve it, and as a result one of the most interesting creations in the history of mankind soared in price.
The real value of Bitcoin
Regardless of whether you dive into the world of Bitcoin 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 control the monetary system from the beginning of time (in fact, not quite, but this impression is created), and this threatens all sorts of problems for the average person.
First of all, we are dependent 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 that are usually affected by the needs of individuals. Persons who are at the top of the social hierarchy will do everything to preserve 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 everything we can from the monolithic structure we have 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 intermittent solutions to our problems.
The funny thing is that the inexorable spread of such a system cannot last forever, and this will obviously lead to anomalies. In my opinion, such an anomaly, which 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 estimate 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 is used to denote 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 the fiat currency. Every country in the world has a fiat currency, which is issued by the respective government and is subject to economic fluctuations, such as inflation or deflation.
During the Great Depression in the 1920s, the gold standard hampered economic growth because it did not allow the Federal Reserve to expand the money supply to stimulate the economy, support insolvent banks, and finance government deficits, which could give a boost to the economy.
In addition, gold, in itself, is not so convenient to use. Yes, it can be used 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 circulation.
The latter is true for Bitcoin. When Satoshi Nakamoto invented Bitcoin, he did this with the intention of creating a certain number of bitcoins that could be mined. In total, there may be 21 million bitcoins, the last of which will be mined in about 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 in order 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 a block chain contains a certain amount of bitcoins that can be obtained by solving a cryptographic riddle. The number of bitcoins issued in the block is reduced geometrically, with a reduction of 50% every 4 years. Satoshi did this to make the mining process interesting and probably longer.
If we take into account the limited circulation and add to the incredible use of bitcoins, which include decentralization, security, anonymity, and ease of use, Bitcoin is becoming one of the most important alternatives for fiat currency 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, first of all, are interested in them as a form of investment and an alternative payment method. However, when someone begins to dive deeper into the idea of ​​what constitutes Bitcoin, you can see something completely innovative. You can see the future of humanity.
If you look at human history as a species, you will understand 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 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 an anarchy model 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 monetary 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 how we interact with each other, and ultimately rebuild all of our thinking.
An ordinary person does not understand this. However, sincere supporters of Bitcoin understand this. And even if they do not understand, they feel. This is what makes us go 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 I joined, I noticed a similar picture. Usually dominated by those groups whose supporters demonstrated two important attributes: loyalty and intellectuality.
Devotion is required for the group to work. Without devotion, group members will not be able to remain involved, and in the end, the group will fall apart. However, loyalty alone is not enough. You may be faithful, but if you are not smart enough to understand what is happening behind the veil of reality, you will not be able to withstand the growth of the group, as well as surpass other associations.
The bitcoin community consists of the most dedicated and intelligent people I have ever encountered throughout my life. Watch this performance by Andreas Antonopoulos, a Bitcoin popularizer:
His intellectual and passionate speech charges. And he is just one of many intellectuals who jumped on the Bitcoin train and urged us all to join.
Despite this, it is important to note that the main adherents of the Bitcoin philosophy are not primitive philistines. These are people with a head immersed in technology, and having knowledge in areas such as programming and engineering. All this makes the Bitcoin movement more secure and advanced, and also distinguishes it from other revolutionary movements that existed throughout human history.
In conclusion: is it a bubble? What will determine his future?
Most people will fight Bitcoin, and that’s a fact. And not only because they do not understand the concepts that I have described, but also because of the innate mechanism of self-preservation, many of which are the victims, and, moreover, because of the desire to stay in the comfort zone.
What will determine the stability of Bitcoin is the desire of the main players of the community - miners, programmers, investors, popularizers and entrepreneurs - to continue to participate in the Bitcoin game and be ready to risk everything to do their work.
History is full of such revolutionary movements, and we all know that the changes that this revolution will bring are not colossal, but this is definitely a step towards a better way, unlike the one we are following now.
When many opponents of Bitcoin use the word "bubble", they are mistaken, because most of the bubbles in history were created by fraudsters who wanted to take advantage of 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 differentiate between ICO and Bitcoin.
ICO in briefA: ICO is the original 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 the bank for a loan, or by trying to convince an investor or venture capitalist to acquire capital. 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 every 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 legitimate. Many people are wildly investing in ICO and in companies, without even understanding the basic principles of investment. Obviously, this creates a bubble; bubble,which will surely burst at some point.
A bitcoin game is a marathon, not a sprint. This is a game involving high stakes, risk, drama, influence, persuasion, money, politics, psychology, philosophy, economics, and history.
For some reason this is a game that many people find painful.
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 : , ? , , - . , 2-5 , , . , , . , - 100 000 , , - $ 60 000 — $ 100 000. , . , «» . , Amazon 10 000 2000 , 20 , , , . , , . . , , . — . , , , , . , ​​ Coinbase , Ledger Nano S Trezor.
Source: https://habr.com/ru/post/348418/
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