Bitcoin - Simplified

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Bitcoin is to banks, what email is to post offices. Just as email allows you to send mail to anybody, anywhere and anytime from your computer anonymously, securely, fast and with minimal cost, Bitcoin allows you to send Bitcoin tokens to anybody, anywhere and anytime from your computer anonymously, securely, fast and with minimal cost. Bitcoin enables anyone with internet access to anonymously open an account without permission or registration. With this account, you have a public address that anyone can send you Bitcoin tokens but only you can access them to sell them for money.

Unlike money which is under the control of governments and banks and which can be confiscated, the Bitcoin network is totally decentralized and does not have any central point to attack.

Transferring money requires trusting a centralized authority, like a bank, that issues money and manages your private data and your account and allows money in it to be safely transferred. They work with proprietary systems. Instead of having one bookkeeper in a bank keeping one centralized ledger of all transactions, Bitcoin has many bookkeepers called "miners" who keep a check on each other for any mistakes or inconsistencies. One miner is selected every 10 minutes and if 51% of the miners agree that his ledger is correct, then he is rewarded with a new issuance of Bitcoins and his ledger is adopted by all the other miners. To keep the selection of the lucky miner fair and honest, a lottery method is used where a heuristic method of brute trial and error is used to win the lottery. While solving the lottery is very difficult, checking if the solution is correct is very easy. The more "miners" there are, the more secure the ledger is. To prevent dishonest bookeepers from sabotaging the system, a "proof of work" is used that requires a great amount of electricity to be invested to become a volunteer miner. The more miners there are competing to solve or mine the "block" of transactions, the more energy each one needs to consume in trying to mine the blocks. When the price of Bitcoin is high enough so that the reward in mining is profitable, miners will invest in special equipment and move to areas where energy cost is low. It is commonly said that bitcoin is “backed by electricity”. Because cryptology is used to ensure the software is secure from hacking, many say that bitcoin is “backed by math”.

Bitcoins themselves are not stored either centrally or locally. They exist as records on a distributed ledger called the blockchain, copies of which are shared by a volunteer network of connected computers. To “own” a bitcoin simply means having the ability to transfer control of it to someone else by creating a record of the transfer in the block chain. ECDSA is a process that “signs” data in such a way that third parties can verify the authenticity of the signature while the signer retains the exclusive ability to create the signature. With bitcoin, the data that is signed is the transaction that transfers ownership. ECDSA has separate procedures for signing and verification. Each procedure is an algorithm composed of a few arithmetic operations. The signing algorithm makes use of the private key, and the verification process makes use of the public key. The private key is just a very large random number. The public key is derived from the secret private key in way that it is not possible to work backwards and derive the private key from the public key, but it is easy to verify that the public key pairs uniquely with the private key it was derived from.

To keep accounts anonymous and out of any centralized control, the private keys are chosen randomly from a number that is greater than the number of atoms in the entire universe. This ensures that all addresses are unique and private. This also ensures that anybody can create their own private keys and as many as they like at any time without permission or registration. They can then use their private key to create as many public addresses that only they can open. When your Bitcoin encrypted data and account is on a distributed file sharing network, like a peer to peer (P2P) network running a non proprietary open software, you do not need to trust and pay anyone to manage it for you. You can in effect replace the necessity of trusting a single, central authority with the ability to trust a network of decentralized actors.

The ledger is continuously checked for any changes to it by a system called "hashing" You can think of "hashing" any sized text into a fixed length text listing the number of pages, lines words, letters, spaces, etc.. to describe the document. Any changes to the document can be immediately seen by different hashes.

A cryptographic hash is a kind of ‘signature’ for a text or a data file. Hashes are convenient for situations where computers may want to identify and compare files to see if they have been modified. Cryptographic hash algorithms produce irreversible and unique hashes. Irreversible meaning that if you only had the hash you couldn’t use that to figure out what the original piece of data was, therefore allowing the original data to remain secure and unknown. One example is factoring prime numbers x and y. You can think of secretly choosing 2 very large numbers x and y and multiplying them to get a number N that you make public. Guessing the numbers x and y is very difficult and can only be found by chance. Verifying it is easy by just multiplication.

SHA-256 is a cryptographic hash function that takes an input of a random size and produces an output of a fixed size. SHA-256 generates a unique 256-bit (32-byte) signature for a text. Hash functions are powerful because they are ‘one-way’. It is easy for anyone to use a hash function to produce an output when given an input; however, it is impossible to use the output of the hash function to reconstruct its given input. This powerful feature of the SHA-256 hash function makes it ideal for application within the Bitcoin network to verify that past blocks in the blockchain are not changed.

To construct a block there are 6 parameters that must be filled in by the miner. These include: – Version number of the Bitcoin software – Reference to the hash of the previous block – A representative hash of all transactions included in the block – The time at which the block was created – Nonce ,the variable used in the proof-of-work process.

The nonce, is a variable that is changed repeatedly, and upon hashing of the block using the SHA-256 function. This process is followed by all the miners untill a result is obtained that starts with a certain number of zeroes that determines the difficulty of getting this result. This is used to ensure that blocks of transactions are added to the blockchain and new bitcoins are issued every 10 minutes, regardless of how many miners there are mining.

A Bitcoin node in the bitcoin network is a computer that listens for Bitcoin transaction requests and broadcasts them to the other nodes. Each Bitcoin miner node in addition contains the whole block chain of transactions and verifies that the transactions are valid to Bitcoin's consensus rules. If a transaction or block violates the consensus rules, then it is rejected. This requires expensive and very power intensive processing with special Bitcoin ASIC equipment. Proof of Work algorithms are used to ensure "trust in a trust-less environment." Cheating is only possible with a coordinated attack by more than 50% of the total computing powers of Bitcoin miners. Proof of Work is also used to prevent spam that could potentially cripple a network with unwanted and false data that could shut it down with a Denial of Service attack.

The expense of running a Bitcoin miner node is paid for by playing a sort of lottery where winners are selected randomly every 10 minutes. All the Bitcoin miners compete for the reward of newly issued Bitcoins and all the transaction fees for each block of transactions. All Bitcoin miners try to randomly guess at a solution of a problem which is very difficult to solve, but very easy to verify. The first lucky Bitcoin miner to solve this puzzle gets the reward, as long as more than 50% of the other miners verify that the transactions in his block are valid to Bitcoin's consensus rules. All other nodes then have to accept his block as confirmed, add it to the chain of blocks called blockchain and start working on a new block.

Each P2P computer in the bitcoin network functions like a bank. It continually looks for fraudulent transactions such as double spending and creates new supplies of money. Conventional fiat money created unpredictably and without any limits to cover debts, cheapens it value at the detriment of everyone. Bitcoins on the other hand are created at a predetermined rate that eventually reaches a limit whereby no more Bitcoins can be created. Unlike money issued by banks, Bitcoins are free to store and are not tied to a particular nation.

Like cash, bitcoins allow for trade that is irreversible, anonymous and person to person, requiring no middlemen. Because no middlemen are required, transfer of funds is fast and cheap making micropayments of just a few cents feasible.

The following example tries to explain the “Proof of Work” challenge and the role it plays in avoiding fraud. The challenge example is finding the 2 numbers that add up to a certain random number called the sum. As an example, If the chosen sum is 9, then possible answers to this challenge would be 1+8, 2+7, 3+6, and 4+5. The only way to find the solution to this problem is randomly trying combinations by brute force and checking each time if the 2 numbers are the correct answer. The size of this random sum determines how many random tries need to be made to find the right 2 numbers. Once the answer is found by one of the computers, they can be very easily verified by all the other computers by adding them to see if they add up to the required sum.

The level of difficulty to each challenge is increased or decreased by increasing or decreasing the size of the sum. If the challenge is solved in less than 10 minutes, the difficulty level is increased. If it is solved in more than 10 minutes, the difficulty level is decreased. As the number of miners increase, the difficulty level is increased to always allow only one winner every 10 minutes. As the power to mine is increased, the difficulty level is increased appropriately to keep the one winner per 10 minutes results. As long as the combined power of honest computers is greater than the power of one dishonest computer, the challenge will be won by one of the honest computers, no matter how little processing power it has, because solving the challenge is purely random making the challenge much like a lottery. To increase chances of winning, computers join pools and share the rewards if one of the pool members win.

Blocks of transactions cannot be changed without redoing the work that was required to create each block. The chain of blocks with the most number of blocks serves not only as proof of the sequence of transactions, but also records that this sequence was verified by a majority of the Bitcoin network's computing power. As long as a majority of computing power is controlled by nodes that are not cooperating to attack the network, they will generate the longest chain of records and outpace attackers.

The Bitcoins that are transacted on the Bitcoin network and verified on the Bitcoin Blockchain have all the characteristics that ideal currencies should have. Their creation is not determined by central banks, like it is with fiat money, but rather has a fixed rate of issue that is reduced with time, making it more like mining gold than like printing fiat notes. This virtual money called Bitcoin finds its value in an open market by speculators who hope that as more and more people use Bitcoin for their financial transactions, its value or worth will increase in the future.

There are many other alternate crypto currencies, but Bitcoin is very unique. Introduced in 2009, it is the first one that is internationally adopted and used on the internet. It promises to change the world as far as banking is concerned. From the dismal performance of the banksters, especially those considered "too big to fail", it is high time they were replaced. The politicians, especially those that are "too slick to nail" are also worried. The ground that supports them is slowly sinking. In the meantime, the man who started this revolution has disappeared, either in hiding or caught. No wonder, he stepped on too many toes. There is talk about making Bitcoins illegal. But being a distributed network with encryption that hides users and no one in charge to arrest, there is hope that Bitcoins will survive.

No doubt it will be attacked by the system that faces to lose so much by Bitcoin`s success. Fortunately any attempts of attacks quickly become computationally impractical if honest nodes control a majority of computer power in the bitcoin network. The P2P nodes vote with their computer power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. This makes the system inherently democratic.

To deal with trust issues between sellers and buyers that transact in Bitcoin, escrow services are used. The bitcoins are placed by the buyers in the control of independent and licensed third parties called “escrows”. Only when both seller and buyer verify that the transaction has been completed per terms set is the money released. Any disputes between the parties in the transaction are resolved by the neutral escrow agent.

Email was first used in the 1960s by research and development departments of companies to communicate with each other. Other departments deemed it too difficult to use and it was not trusted by the management who preferred to use letters sent by the postal services. It was only 20 years later in 1995 that companies began to use email to communicate with customers.

Bitcoin was first used in 2008 only by geeks. It was largely unknown by the general public. It was only 10 years later that it became known and easy enough to be used by a few early adopters. It is just a matter of time that most people will use Bitcoin just like they use email.

Litecoin

Litecoin also refered to as LTC is based on the Bitcoin protocol but differs from Bitcoin in that it can be efficiently mined with consumer-grade hardware as opposed to the special ASIC based hardware needed to mine Bitcoins, also refered to as BTCs. LTCs, provide transaction confirmations every 2.5 minutes on average compared to the 10 minutes for BTC. Creation of LTCs is limited to 84 million LTCs compared to the 21 million limit for BTCs. The amount for both LTCs and BTCs decreases exponentially and are halved every 4 years. 90% of coins will have been created by about the year 2020. After the year 2140 creation of the coins will have stopped. Miners of both LTCs and BTCs are bookkeepers of transactions. The creation of new coins is their reward for keeping the transaction ledger up to date. As the creation of coins decreases, the incentive to do the necessary bookkeeping will be replaced by transaction fees which is expected to exponentially increase due to the amount of transactions expected in the future.

Bitcoin wallets

In order to send and receive BTCs, a Bitcoin wallet must be used. Each wallet acts like a letterbox, having a public address so that anyone can send and insert BTCs into it and a private key to access, remove or send and spend any of the BTCs it holds.

A Bitcoin wallet is a free open source program called a "BTC client" that randomly generates public addresses and private keys. The public addresses are analogous to letter boxes and the private keys to the keys to open them. They come in a variety of forms, from mobile wallet apps for mobile devices, software wallets like "Multibit" for computers and web wallets available from Websites. Just like email, all wallets can interoperate with each other. Your BTCs are not really stored in the wallet, but rather in the Bitcoin network that produces a ledger of all Bitcoin transactions called the "blockchain". Your Bitcoin wallet only stores your public addresses used to receive BTCs and your private keys used to spend by sending your BTCs to another wallet.

Mobile wallets allow you to bring BTCs with you in your pocket. You can pay with your BTCs by scanning a QR code or using Near Field Communication Technology (NFC) for "tap to pay" ease. Software wallets are installed on your computer. They give you complete control over your wallet. You are responsible for protecting your money and doing backups. Web wallets allow you to use BTCs anywhere with less effort to protect your wallet. The public addresses and private keys of wallets can be stored on a memory stick or printed out on paper so that the wallet can be recovered if the phones or computers fail or get lost, or the web sites are shut down.

Once you have a Bitcoin wallet, there are 2 ways to fill it with BTCs; mining and buying. Mining involves running a Bitcoin Mining program on your computer that records all BTC transactions in the Bitcoin peer to peer (P2P) network. Your computer becomes a bookkeeper that keeps a ledger of all BTC transactions that are relayed to you and that you relay to every other BTC miner. At the same time each miner works on solving a very difficult puzzle that can only be solved heuristically by trying various solutions at random. Like a lottery, someone has to eventually hit on the solution by chance. If you are the first to solve this puzzle, then the ledger of the transactions you recorded are verified by every other miner and once verified, they are accepted by consensus. Then you get rewarded with new BTCs generated. This can be compared to mining for gold and being lucky to find some.

An easier and much quicker way to acquire BTCs is buying some. You must register at a commercial Bitcoin exchange where you can send a money transfer from your bank to buy or sell BTCs or sell them for fiat money if you wish.

To keep your BTCs safe, if you have your wallet stored on your computer or mobile phone, make sure to keep the software up-to-date. Follow general internet safety protocols like not downloading anything you don’t trust, using a virus checker and choosing passwords that are at least 13 characters long with a mixture of upper and lower case letters, numbers and symbols. Always create a paper wallet - a paper print out of your wallet`s address and private key. If you lose your private key, you will not be able to access your BTCs and will lose them. If you lose your public key, you will not be able to receive any BTCs.

Treat the print out of your wallet just like cash - if your Bitcoin wallet contains a great deal of BTCs, then keep your print out in a fireproof safe or a bank security box. Like cash, if you lose it, whether stolen, destroyed or spent, you can never use it again.

“Trezor”, a hardware wallet for Bitcoin and Litecoin

With NSA spying on everyone, hackers hacking websites and computers, greedy banksters protecting their turf, corrupt politicians protecting the banksters, and the mass media brainwashing people, it is no wonder that most people either have not heard of Bitcoin, or are very skeptical about it. The security of Bitcoin wallets needed to use BTCs is the largest concern that is holding back mainstream adoption of Bitcoin use as a currency. Many secure methods, such as paper wallets or cold storage computers disconnected from the internet, have the potential to provide high levels of security but with significant impairments to ease of use.

The use of Bitcoin private keys make bitcoin transactions secure. There is no centralized server that registers, monitors or controls the generation and designation of private keys. Bitcoin users generate their own private keys using a bitcoin wallet that runs an algorithm that generates a random integer between 1 and 10⁷⁷or 2²⁵⁶^..This number is greater than the number of atoms in the entire universe. The odds of ever picking 2 identical numbers is concidered to be zero.

Exponentials are ways of writing numbers that would be too long to write down. For example 2¹ =2, 2²=4, 2³=8, 2⁴=16, ….. 2¹⁰= 1,000, 2²⁰=1M, 2³⁰=1B, 2⁴⁰=1T, …..2²⁵⁶=?

or 10¹=10, 10²=100, 10³=1000, 10⁶=1M, 10⁹=1T.. …....10⁷⁷=?

2¹ :1 in 2, or the odds of guessing a coin toss.

2²⁸ :odds of winning the Powerball or MegaMillions.

2⁵⁶ :odds of winning both the Powerball or MegaMillions in the same week.

2⁷⁰ :number of stars in the observable universe.

2¹⁶⁶ :number of atoms on Earth.

There are more ways to shuffle a deck of 52 cards than there are atoms on earth.

2²²⁷ :number of ways to shuffle a standard deck of 52 cards.

2²³¹ :number of atoms in the Milky Way galaxy.

2²⁵⁶ :number of possible bitcoin private keys.

A private key is used to generate one or more public keys which generate bitcoin addresses. Transactions from a sending address to a receiving address must be signed by the private key of the sending address. This ensures transactions are secure from any falsification and are easily verifiable by all. While the simplicity of private keys makes bitcoin so powerful, it nevertheless is its weakest part. Losing your private keys results in losing all your bitcoins. It is recommended to write down your private keys on a paper and keep it away from fire, and spying eyes found in monitors, printers, copiers, and smart phones which can be hacked or broken. To make writing your private keys easier, they are translated into 24 commonly used short English words called the seed. This seed allows you to restore your private keys and your wallet if your wallet breaks or gets lost.

On-line wallets hold the private key that allows sending Bitcoins from your wallet. Anyone else that knows your private key has access to your wallet. On-line wallets hold the private keys and if the web site holding the keys to your wallet gets hacked or closes, then you lose access to your wallet. "Trezor" runs open sourced software and is the first mass-produced Bitcoin hardware wallet that promises to give Bitcoin the much needed boost by offering BTC transactions security with ease of use. Trezor is a single purpose computer which functions as a Bitcoin wallet. It has a display that is secure to hackers. The private key never leaves the hardware wallet and malware cannot read it thanks to the wire protocol used which transfers unsigned transactions to the device and signed ones out of the device.

To generate your private key, it uses a series of 24 random common English words called the seed. They are short and unambiguous and easy to write down and even to remember chosen from a published list of 2048 words. To protect against the hardware wallet getting broken, or lost, the seed is written down on a piece of paper. Anyone who has access to this paper has access to your wallet. If you lose this paper and your hardware wallet gets broken or lost, unless you have your seed memorized, you have lost all your Bitcoins. Your wallet can only be restored with the 24 words.

If you want to update your hardware wallet with new features, you have to have your seed ready in case you need to recover your private key. If your seed is lost, you can never make a recovery on your hardware wallet. You must get a new hardware wallet and send it your Bitcoins from your old wallet to the new wallet. Your old wallet, now empty, can be wiped and used as it was a new wallet with a new seed. Wallets with a significant amount of Bitcoins that are meant to be inherited many decades in the future need special care for their seed, like your local bank safety locker that can be only opened by your inheritors when you die.

Value of Bitcoins

The US dollar has been adopted by the world as the world reserve currency. The currencies of all other countries are backed by the US dollar. Before 1971, the dollar was backed by gold. But since the amount of gold is limited, and USA had a great amount of debts to pay for fighting wars and rebuilding the destruction afterwards, the USA adopted petroleum as the commodity to back the dollar. There is more petroleum to be found than gold and mining for it is much more complicated than mining for gold. Petroleum is not only used for energy and making plastics, but also for making fertilizers and pesticides for the agro industry and medicines for the pharma industry. It has a much higher supply and demand than gold bars sitting in vaults have. All countries have agreed to buy and sell petroleum exclusively in dollars. In return, the US government promised to help develop, mine and protect their oil fields. Because of the unprecedented opportunity to create unprecedented wealth, unprecedented greed created unprecedented debt. With the "too big to fail" mentality and the fear of the "too big" failing, the poor and small have been getting poorer and smaller and the rich and big have been getting richer and bigger.

Unfortunately most of the people have not even heard of Bitcoin because it is not in the interest of the elite for people to consider it. Unfortunately, most who have heard of Bitcoin are brainwashed by the mass media to be skeptical and to believe that it is a scam to rob them of the little money they have. They are told that BTCs are not worth anything because they are not backed by anything and not regulated by any governments. People fail to realize that BTCs have an intrinsic value in the electricity used to create it.

Value is created by people and their ideas, opinions, desires, needs, hopes and trust. The early adopters of Bitcoin did not trust the greedy banksters and corrupt politicians and preferred to have a decentralized system that allowed cheaper, faster and easier transactions. They value Bitcoin for the anonymous and secure store of value that it offers. They resent the wars that are fought to support the debt-base creation of conventional money. They value the advantages of an alternate digital currency just like they value the advantages of digital technology in their typewriters, copiers, watches, audio and video players, modems and phones. One of the greatest advantages to Bitcoin is the promise of getting money out of the control of greedy banksters and corrupt politicians.

Unfortunately, people are too brainwashed and too afraid to rock the boat. They do not know the power they have when they vote with their wallets. Most people are addicted to the little money they have and are enslaved by it like addicts are enslaved by drugs. Despite the promise of Bitcoin to free them from this enslavement, most are too afraid to jump on the Bitcoin bandwagon. Sadly, unless the sleeping people wake up in time, the banksters and politicians will eventually jump on this bandwagon and change its course to the direction they want it to go. The first thing they will change is the creation mechanism of BTCs so that they could create as many of them as they need to fight wars and fill their pockets. They will impose the high handling costs of transactions that everyone is so used to. And the duped public will be thankful and feel "safe".

Reaction from banks world-wide regarding Bitcoin is very revealing. The central bank in China treats Bitcoin seriously and unlike the many "scams" that they ignore, they have banned Bitcoin. The banks in the "free world" have not treated Bitcoins as one of the many "scams" that are tolerated. They instead treat it seriously. This is a lot more troublesome than the reaction from China as it points to the possibility that the western banksters might one day jump on the Bitcoin bandwagon and take over its control.

Bitcoin apps for Contracts and Votes

The Bitcoin network can be used to safely, reliably, and easily transfer a series of numbers representing digital money called Bitcoins from one Bitcoin wallet to another. This allows you to be your own bank.

The very same network running the very same protocol can be also used to transfer a series of numbers representing anything you want. If your wallet contains a contract, then the Bitcoin network can be used to transfer that contract to another person. You can then be your own lawyer.

Registered voters can be assigned a crypro wallet and vote tokens can be sent to them that they can send to the polititian of their choice. Blockchain technoligy can ensure the integrity of the votes. Just-in-time voting can be used to vote on any issue at any time. Being able to replace bankers, lawyers and politicians should certainly make this world a better place.

Dollars, Gold and Bitcoin

There are about 165,000 tons of gold in the world. This can be represented by a cube with an edge length of about 20 meters. At 1,000 US$ per troy ounce of gold, all the gold in the world would cost 5.3 US$ trillion. There are about 4 trillion US$ worth of coins and paper currency in circulation in the world. There are about 7 billion people in the world, and about 1 million of them hold BTCs. There are about 14 million BTCs in circulation. At 400 US$ per Bitcoin, all BTCs in the world would cost 5.6 billion US$, a thousandth of what all the gold would be worth.

If all the BTCs were equally divided, each person would have 0.002BTCs or about 0.80 US$. Enough to buy a piece of bread. If all the gold was divided equally, each person would have 0.75 troy ounces of gold worth 750 US$. Enough to make 5 finger rings. If all the currency was equally divided, each person would have 570 US$.

Fiat currencies, like the US dollar, are not backed by anything except empty promises. Throughout history, they have a 100% failure rate of maintaining value. The US dollar lost 95% of its value since its creation by the Federal Reserve in 1913 by being indiscriminately printed to hide an ever increasing debt that enslaves people. History keeps on repeating our mistakes and we never learn from them. We keep swinging like a pendulum from quality money like gold to quantity currencies like debased coins or fiat paper notes and back again. Gold always delivers the knockout blow to debased currencies.

When currency is debased by printing too much of it, prices inflate and when people lose the purchasing power of their currency, they bid the price of gold up till it reaches or exceeds the value of all the currency in circulation. This has been repeated throughout history. Because the currency of all countries are fiat currencies that are backed by the US dollar, this repeating cycle is now happening for the first time at a global scale.

The cycle starts with the country issuing good money based on precious metals. The country develops economically and socially and builds public works and grows in affluence and influence. To defend their economic affluence and politic influence, they build up a military complex. The military is eventually used and expenditures explode. To fund the wars, governments steal the wealth of the citizens by debasing their coinage with base metals and expanding currencies in unlimited quantities. As the loss in purchasing power of the expanded currency supply is sensed, prices increase and confidence in the currency decreases. A mass movement out of the currency into precious metals and tangible assets eventually collapses the currencies and raises the gold price.

There has never been a fiat currency in history that has survived. When the US dollar eventually dies, there will be a great world crisis because the dollar is the world reserve currency holding up all other currencies of all the other countries. For every crisis, there is a great opportunity. When the dollar collapses, new currencies have to replace it. Like the cycle of history shows, it will be based on precious metals in the beginning. Many of the few rich will lose their wealth. Wealth never gets destroyed, it just gets transferred, and a few of the many poor will become very rich.

At present, there is a global lack of confidence in the US dollar that is accelerating rapidly. The change to a new monetary system is inevitable and will be chaotic. One new candidate to replace the dollar is Bitcoin.

Both gold and BTC have their strengths. Gold has been in use as money for over 6,000 years and has a proven record to be one of the best ways to store wealth. Bitcoin is only a few years old based on new technology. It has been proven to be a reliable, safe, cheap and convenient method of payment. It is electronic cash that cannot be counterfeited, stolen and controlled and produced by any central authorities like governments and central banks, all of which have a proven record of over printing their currencies until they are worthless.

Gold and BTC make a great pair to act as a world currency. BTC by its definition and protocol can never be printed to any excess. The amount of its creation is inherent in its design and cannot be changed. Its cryptology protects it from being counterfeited, and its decentralized nature protects it from being hijacked by any centralized criminals be they legal banksters and politicians or illegal mafia. Its digital form makes it convenient to be transferred in our digitalized world. It upholds all the requirements of money as an accountable medium of exchange with purchasing power such as portability, durability, interchangeability, divisibility and guarantee of not being counterfeited. The only requirements that are not met by BTC is its lack of having any inherent store of value over long periods of time. Gold has proven to be the best at that. BTC can act as digital gold and be like digital cash for transactions made on the internet. BTC together with gold fulfills all the requirements that money should have, including that they cannot be indiscriminately printed to excess till they are worthless. When fiat currency reaches its limits of sustainability and looses its worth, nations will revert to gold as the reserve currency. When countries make holding of gold and the use of cash illegal as a measure of national security, Bitcoin will fill the vaccuum and its adoption will raise its price astronomically.

Of the about million people who have BTCs, most of the BTCs are owned by only about 1,000 people. About a 100 of the 1,000 own most of the BTCs. Unfortunately, money, whether fiat paper, glittering gold or virtual BTCs breeds greed. Once a form of money is created that cannot be owned by individuals in amounts greater that what they need and cannot be horded in amounts greater than they can spend, then and only then will world poverty be eliminated.

It is hoped that the new rich, the early adapters of the new monetary system, will be more like robin hoods than barons. If that happens to be Bitcoins, then there is a chance of that happening, because the early adapters of BTCs are mostly intelligent geeks born without a silver spoon in their mouths and born with the fortune of having experienced the humility of poverty and strengthened by the misfortune of being exploited economically. May their humbleness overshadow any inherent greed in their souls, and their strength help them in their resolve to blaze out new trails to world prosperity.

Blockchain, the public ledger of transactions you can trust

The internet connects people via their computers. That is very empowering, especially to the owners of centralized computers that offer porn, entertainment, commerce and information. It is however the decentralized form of the internet and the peer to peer network it supports that is truly empowering. This enables people globally to freely communicate and share information without the control of centralized powers. The blockchain technology running on this decentralized peer to peer network is the most empowering. It frees people to make money transactions without banks, legal transactions without lawyers, and allows people to vote and voice their opinions without politicians.

The blockchain is a public ledger that records transactions. It is a distributed transaction database maintained by volunteers called bitcoin miners. The miners document transactions made by users. Users broadcast transactions they want to include in that ledger, and the miners transcribe the transactions in that ledger. The ledger is verified by consensus of the miners. The only way that the ledger can be falsified is that 51% of the miners cooperate to agree to a falsified version of the ledger. There is no centralized point of control, as the ledger is distributed. The transactions can be Bitcoins or any other transactions like ownership of assets or contracts.

The blockchain is referred to as a "trust-less database" in that there is no centralized authority to maintain it. The database of all transactions is distributed amongst anonymous users who all share this database and verify it with a 51% consensus. Using mathematics, each block of transactions are "signed" in a way that the signature is derived from all previous transactions, making any changes immediately noticeable and rejected. Just like finding 2 factors of a large enough number becomes more and more dificult, verifying the solution is very easy. Like the database, open to anyone, the protocol is open source so anyone can change it, but the changes have to be accepted with a 51% consensus. With anyone able to anonymously generate their private keys, and also to keep the database and secure and honest, the bitcoin network has no centralized point to shut down. The main aspects that allow such a system to be implemented is the mathematics of cryptology, the internet, the distributed network of computers, and geeks that maintain that network not because they want to hack or control it, but because they want to keep it honest.

In order to independently verify the ownership of transactions, each miner stores its own copy of the transactions. Every 10 minutes, the blockchain of one of the miners is chosen. It is then checked and when it is verified, it is accepted.

The maintenance of the blockchain requires expensive computers that need a lot of power to run. To keep the blockchain from being compromised needs a sufficient number of miners. As an incentive to have a sufficient number of miners, each miner who is randomly chosen for his copy of the ledger is rewarded by new Bitcoins issued and any fees charged for transactions. To sufficiently reward miners for their efforts and costs, they usually work in pools and share the reward when one of them in their pool is rewarded.

Bitcoin mining

The intrinsic vaue of bitcoins is the electricity used by the volunteer bookkeepers that validate and document all the bitcoin transactions. Each 10 minutes, one lucky miner gets to have his block of transactions either rejected or accepted by more than 51% of all the other miners. The more miners there are, the more secure the bitcoin network is against miners who cheat. Once a block passes the consensus, the miner who mined that bock receives an issue of newly created bitcoins and all transaction fees in that block.

The more electricity the miner uses, and the faster his specially designed computer is, the greater is his chance of having his block selected, and receiving his winnings. As the price if bitcoins increased, mining bitcoins became a growing business with warehouses of computers running in areas of the world with cheap electricity used by the fast running computers and the fans used to keep them from overheating. Smaller miners from home group into private mining farms, or public mining pools to coordinate their efforts to win and to share their winnings.

The number of miners vary with the profitability of playing. This is determined by their expected profit margins. Profit margins are determined by the cost of running mining gear. The cost of mining is assumed to decrease with time. following Moore's law. As the cost of mining Bitcoins decreases, the amount of Bitcoins mined decreases and the amount of transaction fees increases, assuming adaption of bitcoin use increases.. This dynamic ensures the profitability of mining and a sufficient number of miners to keep the Blockchain secure.

The low to high fluctuating value of Bitcoin is determined by the miners, the speculators and the users. The miners determine the low by selling their Bitcoins at a price where they can make a profit and invest in more equipment. The speculators set the high. As Bitcoin users increase, the price of bitcoin increases following "supply and demand“ dynamics.

Bitcoin mining is so called because it resembles the mining of gold. Bitcoin mining requires cost and exertion and it makes available new bitcoins at a decreasing rate that resembles the diminishing supply of gold as it is mined from the ground. The process of mining bitcoin involves guessing the answer to a complex cryptographic puzzle, much like picking a winning lottery number or finding a nugget of gold by chance. The more powerful computers the miners use, the better chances they have of being winners. By doing this, winning miners are providing ’proof of work’ that is rewarded with bitcoins.

All miners keep a ledger of all bitcoin transactions broadcast on the bitcoin network. The ledger of the winning miner is validated by all the other miners and if found valid, it is accepted by all as the valid ledger. This ensures that bitcoin miners reach a secure, tamper-resistant consensus of the transaction ledger. The number of miners competing to win this lottery and the collective computing power they use varies accordingly. As the value of bitcoin increases, more miners mine for bitcoins and they use more powerful computers. As the value of bitcoins decreases, the number of miners decreases accordingly.

The difficulty level of solving this puzzle varies in order to ensure that mining expenses for equipment and the power needed to run them are covered by the amount of bitcoins that are rewarded for solving the puzzle. The difficulty level of solving the puzzle also varies to ensure that there is a winner once every 10 minutes regardless of the number of miners and the power of the computers they use. As the price of bitcoin increases, the number of miners who can make a profit increases. That encourages more miners to mine which results in the need for a difficulty increase.

Mining is intentionally designed to be resource-intensive and difficult to ensure that there are not too many miners looking after too limited amount of bitcoins. This balance and feedback of varying difficulty levels, and the fixed amount of bitcoins available to be mined ensures that there is always enough bitcoin miners that mine at a profit regardless of the value of bitcoin and that the supply and the rate of bitcoins mined is always determined.

Mining is a business process that generates crypto coins using powerful computers. The main costs are electric bills and cooling equipment. The mining businesses are located in parts of the world where electricity is cheap. Powerful hardware is connect to a network that manages a specific cryptocurrency and runs specialized software to perform a lot of computations which requires a lot of electricity. By doing this, they process and validate transactions for the network and maintain its integrity. The more computing power for the network, the more difficult it is to corrupt it for a potential attacker. In return, the crypto network pays miners for their services in its own cryptocurrency. Only crypto networks based on a Proof of Work algorithm require mining. Rewards for mining are only paid to miners who perform the calculations the fastest. This resulted in a constant race between miners who want the most powerful hardware to finish computations first. Miners join forces in mining pools, to average out the chances of receiving the mining reward, just like lottery pools.

Just like in a lottery, each dice that is rolled has an equal chance of winning, and each miner will roll his dice as fast as he can, and using the most power he can afford. The more dices you roll, and the faster you roll them, the higher are the chances of winning. There is a winner every 10 minutes. With Bitcoin mining, the dices are the computers, and the rate of rolling them are the power requirements of the computer. As the price of Bitcoins increase, miners invest in faster computers that run on more power to reap the higher rewards. The Bitcoin protocol changes the difficulty of winning to keep one winner every 10 minutes.

The higher the value of Bitcoin, the more miners there will be and the more power they will be using. This raises the difficult of winning. As miners invest in their mining business, there comes a point where their specialized equipment gets outdated and their profits drop making their business nonviable.

The lower the value of Bitcoin, the less miners there will be and the less power they will be using. This lowers the difficult of winning, allowing small time "home" mining using regular computing power as was the case in the beginning when each bitcoin user was a Bitcoin miner.

Bitcoin mining is like playing the lottery. Each dice thrown has the very same chance of winning as all the other dices thrown. When you play the lottery, you play knowing that for every dice you are able to throw, there are millions of other dices being thrown, and your hopes of winning the very big jackpot are very small. For small "home" Bitcoin miners, they get to share the winnings of any of the small "home" miners in their pool, but the main reward is knowing that they are keeping the Bitcoin Blockchain secure.

The price of Bitcoins is very volatile, and is determined freely on the open market by miners, speculators and adopters. The low price level of Bitcoin is largely determined by the cost to produce it because it is the miners who eventually issue Bitcoins and determine the price of selling them. The cost of powering the mining computers is the main factor. That is why most of the Bitcoin miners are in China where hydro power is cheap. The high price level of Bitcoin is largely determined by speculators who eventually buy Bitcoins and determine the price of buying them. The more Bitcoin is adopted, the higher price people are willing to buy them for. The price of Bitcoin regulates the amount of miners and how they naturally group into mining pools. The mining pools are either "small" home miners or mining farms with expensive mining gear. "Farm" mining has the immediate advantage of having better chances of winning, but they have high costs of infrastructure and maintenance and high profit margins. "Home" mining individually has lower profit margins and expectations and are not able to compete with "farm" miners. But collectively in large enough numbers, and long-term goals, they can compete with "farm" miners.

There is a determined amount of Bitcoins to mine which is decreasing at a determined rate. Just as with gold mining, the first miners are "small" miners with their pans. Then the big miners with their machines start to mine until it is no longer profitable for them. Then the panhandlers return to get the rest. Then smaller solar powered equipment will become available and mining pools catering to them will be organized. Then Nakamoto`s vision of each Bitcoin user being a Bitcoin miner will be realized ensuring that the Blockchain remains secure.

Energy to mine Bitcoin vs. energy to mine gold.

Bitcoin is often described as digital gold. Just like gold, it requires energy to produce and people to give it value.

Bitcoin mining is supported by geek programers, speculators, equipment manufacturers, and energy providers.
Gold mining is supported by human miners, speculators, equipment manufacturers, and energy providers.

While the geek programmers mining Bitcoin work in air-conditioned office, often from home, the gold miners, many of them children, work in dangerous conditions that harm them physically and emotionally, and also poison their environment.

The energy needed to mine Bitcoin is inherent in its Proof of Work design so that it could be trusted. The miners are the bookkeepers we must all trus and the more miners there are, the more energy that they use and the more the network can be trusted. Bitcoin started with just a few miners using their computers. The success of Bitcoin is seen by photos of warehouses filled with so much hot running hardware mining Bitcoin that special cooling equipment is required. Shocking as that seems, the energy used to mine gold is many factors greater. While mining Bitcoin uses about 0.07% of world wide electricity capacity, mining gold uses about 0.27% of world wide oil consumption.

The energy needed to mine gold is determined by its scarcity. The large scale miners scrape away all life in their search for gold. When all is scraped away, the small illegal miners come like vultures and kill the environment with mercury to leach out any traces of gold remaining.

Summary of article in:

https://en.longhash.com/news/bitcoin-uses-a-lot-of-energy-but-gold-mining-uses-more

The great amount of energy needed to secure the bitcoin network by increasing the number of miners is to many people a waste of energy. Energy must be transmitted to people at great cost on lines that are limited to their distance as they are leaky. To make a profit, bitcoin miners move their operation to remote sources that are not profitable because they need too long transmittion lines.

Bitcoin Transactions and transaction fees

A bitcoin wallet is the interface to the bitcoin network of bitcoin miners. Miners listen to, list and relay to other miners requests to send bitcoins. The list of requested transactions is ordered with transactions having the largest transaction fees in the front, and transactions with less fees at the back. Those with zero fees are at the very back and are ordered chronologically with the recent ones listed behind the older ones. Miners use their list to make their ledger of requested transactions called a “block”. The block has a size of 1 million bytes (1MB).

The amount of bytes that a transaction needs does not depend on the amount of the payment, but rather on the number of inputs and outputs it uses. Each input contains different amounts of bitcoins that have been at one time received and uses about 180 bytes. An input can be considered as a token or coin with a certain denomination. The average transaction uses about 250 - 500 bytes allowing about 2,000 -4,000 transactions per block.

The blockchain contains all confirmed transactions. As an example, when Alice wants to send Bob 5 BTC and Alice optionally includes a transaction fee of 0.05 BTC, a miner who wants to include this requested transaction in his block will filter from the blockchain all the inputs that have been previously sent to Alice. He then removes all inputs that have been sent or spent already in previous confirmed transactions. He selects as many of those unspent inputs as are needed to add up to at least 5.05 BTC. He designates one output of 5 BTC to be transferred to Bob`s wallet, another output of 0.05 BTC to go to his own wallet and a third output for any “change” left over to go back to Alice. Each output uses about 40 bytes. Outputs of confirmed transactions become inputs to be sent and spent in subsequent transactions. Miners fill their 1MB blocks with requested transactions and play a kind of lottery called “solving the block” by making calculations on the bytes in their block until they have a predefined value defined as the “solution”. The first miner to “solve the block”, announces his solution which is then checked by all the other miners. If the solution is verified to be correct by a consensus of more than 50% of the miners, the block is accepted by all other miners and included as a confirmed block in the chain of blocks called the blockchain.

While the solving of the block is very work intensive and totally random, the verifying of correctness of the solution is very simple and fast. The difficulty of solving the block is increased or decreased to ensure that there is a solution every 10 minutes. If many miners are trying to solve their blocks and a solution is reached in less than 10 minutes, then the difficulty to solve it is increased for the next block. Conversely fewer miners will need more than 10 minutes to find a solution, so the difficulty is decreased for the next block. If more than one miner solves their block at the same time, then the miner with the fullest or biggest block is considered the winner. The winner collects the newly issued bitcoins created as well as all optional transaction fees that were defined for each transaction in his block.

Transaction fees are incentives for miners to include requested transactions into their blocks. They are calculated by the bitcoin wallets depending on how many inputs and outputs the miners have to process. Miners include transactions with the highest transaction fees first to increase their potential reward. At present, the reward of newly issued created bitcoins for each block is much higher than the transaction fees in the block. In the future, as the amount of newly issued bitcoins decreases and adoption and use of bitcoin transactions increases, then the reward from transaction fees will play a greater and greater role. In the year 2140, there will not be any more newly bitcoins created and issued and rewards will be 100% from transaction fees. It is in the miner`s interest to have as full or big of a block with as many transactions as it can contain because when more than one miner solves the puzzle at the same time, the one with the biggest block is declared the winner.

It is in the miner`s interest to fill his block as fast as possible because being the first to solve his block is a race against time and the sooner he has a filled block, the sooner he can start to find the solution, and the better chance he has of being the first. Because of this, miners quickly fill their blocks with transactions with zero fees instead of waiting for transactions with high fees. Transactions with zero fees that are left waiting to be included in the blockchain can be expected to be left waiting for as long as a few days, but eventually the longer they are left waiting, the higher up in the list of waiting transactions they will find themselves in and the sooner they will be included in a block.

Your bitcoin wallet can be considered like a piggy bank that contains coins in various denominations that are put into it by many different people. You use the coins in your piggybank to make a transaction. The more low denominated coins you use for a payment, the more work you give miners and the higher transaction fees are needed to ensure rapid insertion to blocks. The fewer but higher denomination coins you use to make your payment, the less work is needed by miners and lower transaction fees can be selected.

Bitcoin wallets determine what fees they recommend in order that miners will include the transactions into their blocks so that the transactions get confirmed. These recommended fees rise and fall as the volume of transactions changes. In the worst case of using many low denomination coins for payments with zero transaction fees, then requested transactions can wait as long as 10 days before they are put into a block that is confirmed. Bitcoin wallets also determine when a transaction that fails to be confirmed is sent back to the sender. Some wallets send back failed transactions after a few days of waiting to be confirmed.

Many bitcoin wallets offer a choice of several transaction fees with several expected confirmation times. A fee marked “high” corresponds to an expected confirmation time of less than 30 minutes, a fee marked “normal” to less than an hour, “economy” to less than 5 hours. A fee marked “low” can be expected to have a confirmation time of up to 8 hours.

Bitcoin checks and balances

There are many players with many interests who are involved in the bitcoin system.

“Developers” provide the free and open source software for the bitcoin network. They are largely volunteers with some who are paid by foundations, universities and mining equipment suppliers.
“Mining equipment suppliers” ensure that miners can profitably process and verify bitcoin transactions
“Miners” document all bitcoin transactions that are broadcast on the network. They are paid by the reward they get when they “solve the block”. The reward is in the form of the newly issued bitcoins (BTCs) and any optional transaction fees. At the beginning, 8 years ago, miners used ordinary computers to mine BTCs. BTCs were just merit tokens without any monetary value. The more CPU power you had, the greater were your chances of getting BTCs as rewards. As more and more people wanted to have BTCs and were willing to pay a higher and higher price for them, more and more miners began to mine with more and more powerful computers that were more and more specialized, more and more expensive and consumed more and more power. As the price of BTCs increased, the greed to get more and more BTCs resulted in an industry of mining equipment suppliers that supplied miners who set up mining farms and organized mining pools.
“Wallet providers” provide the interfaces to broadcast transactions on the bitcoin network. They are either unpaid volunteer altruists, or commercial ventures that hope to benefit by a wide bitcoin adaptation.
“Exchanges” sell bitcoins for a fee.
“Stores and services” that accept bitcoin as a form of payment and micro payments because of the secure, convenient, cheap, fast, non-reversable and anonymous transaction it offers. It has all the benefits of cash without its disadvantages.
“Users” save BTCs as a store of wealth and buy products and services with them.

To ensure that the bitcoin system with all its many players functions as it was designed to, the bitcoin system uses new technologies with checks and balances inherent in their design.

Open source software code ensures that nobody can own and control the code that runs the bitcoin network. Anyone can write code or change code that every miner can see, change and chose to run.
The blockchain technology, the open distributed ledger of all transactions documented by the miners ensures that it can be trusted without having to trust any of the players.
Encryption ensures that hacking and falsification is not possible.
P2P network over the internet ensures a level playing field for all players.
The decentralized nature with no central node ensures that the blockchain, the chain of bitcoin transactions, cannot be shut down, censored or manipulated.
The reward for “solving the block” of bitcoin transactions ensures that miner`s expenses in power consumption and mining equipment are covered and that there are enough miners, even though the profit margins stay small. The greater number of independent miners there are, the more difficult it is for a particular miner to cheat the bitcoin network. To cheat, a miner, or a coordinated group of miners, need more computing power than all the other miners on the network combined. As individual transactions on the network are relatively small, double spending and cheating is more expensive than playing by the rules.
The changing difficulty in “solving a block” of bitcoin transactions ensures that a block is confirmed and verified every 10 minutes regardless of the number of miners, the power of the computers they are using, and the value of the BTCs they are mining.
The number of new BTCs issued, when they are issued, and their fixed supply of 21 million BTCs is inherent in the bitcoin design. This ensures that bitcoin serves as “honest” money.
The value of BTC, is determined by supply and demand and it increases as demand and adoption increases. Once all 21 million BTCs have been mined, the supply cannot increase anymore and as long as the population increases, Bitcoins value will continue to increase. In 2140 there will be no more Bitcoins issued and transaction fees will be the sole source of income for miners.

Looking 100 years into the future, we can be ensured that if societies still function, technologies will be sufficiently improved to allow the increased number of BTC transactions. This will allow BTC mining to continue to be profitable. This will ensure that bitcoin system will continue to offer a payment and micropayment service that is as secure, convenient, cheap, fast, non-reversable and anonymous as it is at present.

Bitcoin – Forks

Bitcoin is the very first decentralized currency. At present, the bitcoin network can handle only about 300,000 transactions per day or 3.5 to 7 transactions per second. Visa processes almost 480 transactions a second worldwide and can handle up to 47,000 a second at peak times.

Bitcoin transactions need 10 minutes to be confirmed and transactions without any fees can wait up to several days for being confirmed or be forever stuck in the congestion. There is no guarantee that the winning miner included your zero fee transaction in his block. And there is no guarantee that the next luck miner will. The 10 minutes per block is set by design so that enough time is given for requested transactions to propagate around the network. The 3.5 - 7 transaction per second limit is also set by design to allow the smaller miners to better compete with the mining farms. To be certain that the transactions are permanently on the blockchain, it is advised to wait for 6 confirmations, or 1 hour.

Bitcoin’s early developers imposed a cap on the number of transactions that the network could process as a necessary safety measure against potential attackers who could overload the system. Now, some developers claim that the blockchain is robust enough that it doesn’t need any limit at all. While most agree the blockchain is stronger, critics claim that removing the block size limit is a risky move which will leave bitcoin vulnerable to governments and global banks. Without a limit, large organizations could use their resources to out-muscle smaller miners and effectively take control of the blockchain and bitcoin itself.

The developers are divided on the way to scale the network so that it will accommodate more transactions faster and without needing excessive transaction fees so that it can be more useful for micro- transactions. Developers, miners, and other stakeholders are locked in a heated debate over how best to scale the network, with chances steadily rising of irreconcilable differences causing a so-called "hard fork" or a permanent divergence of the blockchain that would split bitcoin in two separate coins.

Hard forks are changes to existing consensus rules so are not backward compatible. Forks that are additions to existing consensus rules are called "soft forks." They are backward compatible as existing consensus rules are not changed. Only new ones are added.

Bitcoin software uses free open source code that ensures anyone can freely use it and modify it. The miners can chose to use any version of software to mine blocks of transactions. If they are lucky to be the first to “solve the block” then the other miners can decide whether they want to reject his block and deny him his rewards for solving the block, or verify it and accept his block of transactions to be confirmed onto the blockchain. The following are the most important versions of bitcoin software that are used by the miners. There have been various proposals to increase transaction capacity but so far no single proposal has been accepted by the majority of miners.

Bitcoin Core, the original protocol, continues to be the software that is used by the majority of the miners. It claims that larger block sizes could benefit larger miners and move the Bitcoin network from the decentralized smaller miners towards the centralized mining farms. It favors developing scalability solution off the blockchain towards other layers and platforms. It claims that a better approach to easing transaction congestion is to make the blockchain more efficient without the centralization and control of the miners. It proposes 2 solutions - Segregated Witness, called Segwit for short and off-chain channels called Lightning Network. Both of these solutions are "soft forks" as they are backward compatible. SegWit uses a method to verify transactions that doubles the transactions per second capacity by separating signatures that validate transactions. Lightning Network, a layer-2 solution, allows for essentially instant confirmations at little or no cost. It promises greater functionality and an off-chain scalability that an on-chain approach would be hard pressed to match. This solution is viewed by many as the network’s best hope for long-term scalability that would allow for instant micro-payments for processing billions of transactions per second. This would make possible for any devices or services connected to the internet to be charged or to pay micro-payments for “pay as you use” features as promised by the evolving technology called “Internet of Things”.

Bitcoin Core hopes that bandwidth, memory and computer power will improve with time following Moore`s laws that have till now proven to be true. Moore`s law states that computers get cheaper, smaller, and faster with time. For Bitcoin Core, the decentralization factor is most important as it is one of the tenants of Bitcoin – that the bitcoin network works independently of central banks, governments and established financial systems, with no single centralized source of power or control.

Bitcoin XT increases the size limit of each block from 1MB to 8MB. The current 1MB maximum block size in the network was imposed in response to some denial-of-service attacks. This cap effectively restricts the number of bitcoin transactions to about 3.5 transactions per second. Visa, by contrast, routinely handles thousands of transactions per second. Bitcoin XT proposes to automatically increase the block size exponentially, doubling every 2 years. Opponents argue that mining larger blocks would require more computing power, thereby discouraging small operators in favor of the massive mining farms that have gradually concentrated the network into fewer and fewer hands. The proposal has not gain the necessary support and its use has been in steady decline.

Bitcoin Classic is less aggressive. At the start, it promoted a single increase of the maximum block size from 1MB to 2MB but changed to a solution that moved the limit out of the software rules into the hands of the miners. It is an attempt to move the technical governance of the decentralized and independent bitcoin project from the developers of Bitcoin Core to a voting process involving a larger community of miners, businesses, developers and users. The proposal has not gain the necessary support and its use has been in steady decline.

Bitcoin Unlimited claims that the current 1MB block size limit is preventing further adoption of Bitcoin as a digital cash system. It proposes to remove the hard-coded block size limit of 1MB, allowing the miners to dynamically regulate the block size by consensus in line with user demand and progress of technology to allow greater number of transactions as bitcoin adoption increases. This in effect gives miners control over what transaction fees users need to give in order for their requested transactions to be included in their block. Requested transactions are listed in a waiting list with those having the highest fees at the front, and those with zero transaction fees at the back. It is hoped that by regulating the size of the block, transaction fees as low as 0.020 USD will be able to be put on the block without having to wait. This, they hope, will increase the adoption rate of Bitcoin users and make micro-payments more feasible. Opponents to this proposal claim that it gives miners too much control of the network and increases the dangers of centralization of miners. Bitcoin Unlimited, like its predecessor Bitcoin Classic, also seeks to democratize the software development process. The software's lead developer or maintainer is to be elected annually.

As of March 2017 around 11% of the nodes ran Bitcoin Unlimited. Once and if 51% of miners switch to Bitcoin Unlimited, then the Bitcoin Core blockchain will “hard fork” creating 2 separate coins - BTC mined my Bitcoin Core miners, and BTU mined by Bitcoin Unlimited miners. Users with unspent coins on the blockchain before the fork will be assigned equal amounts of BTCs and BTUs, in effect doubling their coins. Their BTCs will no doubt fall in value to accommodate this splitting and find a level that accommodates the newly valued BTUs as determined by the markets.

In 2015, the number of merchants accepting bitcoin exceeded 100,000. Instead of 2–3% typically imposed by credit card processors, users of Bitcoin are face with fees in the range from 0% to less than 2%. Visa networks are scaled to do many thousands of transaction per second. Increased fraud accompanies increased transaction rates and fraud is tolerated and accepted and priced into the system because it is still more profitable for Visa to have such a high rate of transactions despite the risk of fraud. A Chargeback possibility with customers refusing to pay for services and products they bought with their credit cards is another risk. Merchants take these risks as the paradigm of “no risk no gain” holds to be true. Paying by Bitcoin on the other hand is like paying with cash and chargebacks cease to be a risk.

Any hard forks in the bitcoin network that result in implementations that scale the network to make it more attractive for merchants to accept Bitcoin will also make it easier for miners to be involved in double spending scams which are a type of chargeback fraud. This risk is not of great concern to merchants because miners depend on the overall health of the bitcoin ecosystem for maximizing their long term profits and compromising the network to the point where retail stores stop accepting Bitcoin greatly undermines their long term interests.

If Bitcoin Unlimited, or any other proposal, ends up hard forking the blockchain, and cause the BTCs to split, then the users along with the markets who buy and sell BTCs and who buy and sell the new coins will end up deciding new values for them and will in the end have the power to control the miners. The majority of the miners will end up mining whatever coin is worth more.

The users will be ultimately faced by 2 main questions and choices of which coins they want to support:

BTCs with the slow but sure safety of decentralization, the stability of a safe and tested code, BUT higher transaction fees and slower confirmation times. This will help make BTCs function as digital gold for storing value, or
BTUs with the faster but more dangerous centralization, an unproven and untested code, BUT faster confirmation times, more transactions and lower transaction fees. This will help make BTUs function as digital cash.

The general rule about Bitcoin upgrades, therefore, is that upgrades which increase Bitcoin's value will be adopted and those which do not will not. If both BTCs and BTUs are supported equally by users and the markets give them more and less equal values then miners will end up mining 2 different digital coins - BTCs serving as a digital gold and BTUs serving as digital cash.

Cryptocurrencies, the democratization of money

Bitcoin Network claims to have solved 2 major problems that the present systems of banking face - the cost, speed and convenience of money transfers and trusting banks. Bitcoin Network offers to make transfers as cheap and as fast and as convenient as using email. To protect it from a centralized control, it is fully open and decentralized. It is claimed that this, along with advanced mathematics achieves trust in a trustless environment.

As more and more people adopt Bitcoin, its value increases and mining becomes more and more profitable. This challenges the Bitcoin Network with 2 new major problems – congestion for transactions and a danger of it being more and more centralized.

Bitcoin Network is undergoing a revolution to solve these problems as the network evolves. In order to scale the network for mass adoptation, the bigger mining concerns would like the blocks of transactions they mine to be increased to accommodate more transactions. This also gives them a competitive advantage over the smaller miners who would rather solve the scaling problem by moving some of the transaction data off the blockchain and onto external networks.

In the beginning, the people using Bitcoin were hobby Bitcoin miners who used their personal computers to mine. Proof of Work (POW) is used to keep the miners honest. The POW used by Bitcoin Network refered to as the SHA256 algorithm is made purposefully very processor intensive. As more and more people adopted Bitcoin, its price increased to the level that mining became very profitable. Special expensive and power hungry ASIC based computers were developed and mining farms mushroomed putting the lone hobby Bitcoin miners at home out of business. Mining centralization is probably one of the biggest challenges digital currencies face. Many of Bitcoin’s properties, such as censorship resistance and double-spend protection; rely to a large extent on a decentralized mining landscape. But over the years, the Bitcoin mining system has increasingly centralized into fewer hands and fewer geographical regions.

In an attempt to solve this issue of centralization, a new POW was proposed that was memory intensive, instead of processor intensive. “Equihash” is a memory-oriented POW, which means how much mining you can do is mostly determined by how much RAM you have. It is based on a computationally hard problem, which requires a lot of memory to generate a proof but is easy to verify. As a simplified example, the problem to solve could be analogous to listing a million random numbers and finding 3 numbers in that list that when multiplied together gives a fourth number. This involves making a few simple calculations on very many numbers. This is opposed to the present Bitcoin POW which involves making very many complex calculations on a few numbers. Both require heuristic random trial and error methods to get the right answer.

Miners using “Equihash” can use cheaper and easier to obtain general purpose computers and memory chips, instead of the more expensive ASIC based ones produced by a few centralized companies. With this new ASIC resistant POW ”Equihash”, it is hoped that Bitcoin Network will remain decentralized. Equihash has other benefits over the POW presently used. It requires a lot less power to run and the results can one day be useful for many applications, such as number theory, statistics and genome coding. This is opposed to the POW presently used which only generates heat to prove that the miner has properly fulfilled his role as the bookkeeper of the ledger of Bitcoin transactions. Equihash makes other bold promises - such as miners being able to use their smart mobile phones to mine Bitcoin. With Equihash, every Bitcoin user can also be a Bitcoin miner, like in the beginning.

The blockchain technology that Bitcoin runs uses consensus of 51% of the miners in an an open distributed ledger of transactions. This achieves “trust” in a “trustless” environment and has attained great interest from other applications. Bitcoin as a virtual money blockchain application has attracted much interest. This will only increase in the future as more and more people adopt it, and will result in competitors offering virtual currencies with various mixtures of anonymity, security, speed of transactions and acceptability. Competition is always good for the user. When there are more sellers than buyers for a particular currency, its price decreases. When there are more buyers than sellers, price increases. When there are more miners, transactions are confirmed sooner and the difficulty level of solving the blockchain is increased. With less miners, the time to confirm increases.

There are over a thousand different cryptocurrencies and most are similar to and derived from the first fully implemented decentralized cryptocurrency, bitcoin. The safety, integrity and balance of their ledgers is maintained by a community of miners who collectively have a financial incentive to maintain the security of the ledger.

Crytocurrencies are virtual cash that can be used without banks like fiat cash to buy goods and services. To sell bitcoins for fiat cash requires a traditional bank along with a bank or an exchange that deals with cryptocurrencies. With sufficient adoption of cryptocurrencies, it will be more and more possible to pay for things in the internet without ever having to go thru banks, just like it is at present with cash.

It is the users that determine the value of these virtual currencies, which determines which crypto-currency mines are willing to mine for their rewards of newly issued currency and transaction fees for the block.

Whether it be Zcash or BitcoinGold which are ASIC resistant and allow users and hobby miners to mine profitably, Monero for anonymity, Dash for instant transactions, Ripple (XRP) for debt transfer, and many others all with specific features like free transactions, and scalability, the user in the end will decide how each is used and valued. Despite the many improvements with backward compatible soft-forks, and blockchain splitting hard-forks that create new cryprocurrencies. We are still waiting for one that is scaleable to millions of transactions per second of nano payments with nano-fees with confirmation times of a few seconds, and without it having the risk of being centralized. To make cryptocurrencies totally independent of banks, the virtual currencies have to be used as cash is used at present. This is only dependent on adaptation by the public. Many dedicated people are working on this goal which can only be reached with competition.

Once cryptocurrencies are ready to be used like cash - anonymously, instantly, securely, and everywhere, then cryptocurrencies will be used and this will finally lead to the “democratization” of money and give control of money to the users.

Ethereum, the promise of decentralization

With software any reality can become a virtual reality. The Ethereum protocol allows software to be decentralized on a Blockchain. Contracts from lawyers, loans from banks, applications from programmers, votes from voting stations, and any other uses that can be thought of and implemented in software can with Etherium be taken from centralized control and find a home on a decentralized blockchain. The Ethereum network with its tokens called "Ether" is the universal app store allowing creators to build and run applications and charge users that use them without having to worry about underlying “operating” systems and without needing private servers. One of Etherium`s biggest utility opportunity is enabling new capabilities with smart contracts that enable automated payments that allow devices to autonomously participate in the network.

The technology underpinning Ethereum has a lot of real world usage that has yet to be unlocked and money is being funneled into innovative Ethereum projects via ICOs (Initial Coin Offerings). ICOs, each with its own Blockchain containing all transactions, are privately created cryptocurrencies, also known as alt coins or tokens. ICOs are the largest real world use case for Ethereum. They are an innovative way for technology startups to raise money and allow some truly incredible startups to attract the backing they need to push innovation to an entirely new level. Traditionally, to fund ideas, it is necessary to to borrow money from a bank or raise funds from investors. ICOs are democratizing funding and spawning the next wave of innovation from young hungry entrepreneurs all over the world. Ethereum based lending solution, SALT lending is available. The interest rates are expected to be fairer than getting from a bank, and people globally can gain access to financing even without a bank account helping the unbanked get included in this new digital world. SALT (Secured Automated Lending Technology) is Blockchain backed loans. The borrower puts up their crypto assets as collateral and gets fiat loans without any credit checks. At the end of the loan terms when the fiat is returned, the assets are returned. The SALT tokens give users membership access to the platform. There is a fixed total supply of 120 million. Many applications using the power of Etherium have been developed.

The DAO is a digital decentralized autonomous organization that provides a new decentralized business model for organizing both commercial and non-profit enterprises. The DAO is a paradigm shift in the very idea of economic organization. It offers complete transparency, total shareholder control, unprecedented flexibility, and autonomous governance. It is instantiated on the Ethereum blockchain, and has no conventional management structure or board of directors. The code of the DAO is open-source where a central authority of people approve code through peer review. The DAO is stateless, not tied to any particular nation state. The DAO was launched in 2016, with a crowdsale to fund the organization attracting nearly 14% of all ether tokens issued at that date. As a blockchain-enabled organization, The DAO claims to be completely transparent: everything is done by the code, which anyone could see and audit. Investors receive voting rights by means of a digital share token. They vote on proposals that are submitted by "contractors" and a group of volunteers called "curators" check the identity of people submitting proposals and make sure the projects are legal. The profits from the investments then flow back to its stakeholders. The DAO does not hold the money of investors. Instead, the investors own DAO tokens that gives them rights to vote on potential projects. The founders of The DAO established a Swiss based company, DAO.Link, registered in Switzerland. The code behind The DAO has several safeguards that prevents its creators or anyone else from mechanically gaming the voting of shareholders to win investments.

Bisq is a distributed open source project with no company or institution in control. Decisions are made via a DAO in which users and contributors vote with BSQ tokens on major decisions. Bisq is a decentralized, peer-to-peer cryptocurrency exchange. While the transfer of fiat requires the involvement of traditional payment channels like banks or payment processors, With Bisq, users can use Bitcoin to buy a wide range of cryptocurrencies. It is decentralized and there is no single point of failure. The system is peer-to-peer and trading can not be stopped or censored. It is safe as Bisq never holds your funds. The wallet is stored on your PC . Decentralized arbitration system and security deposits protect traders. It is private as no one except trading partners exchange personally identifying data. All personal data is stored locally. It is a secure end-to-end encrypted communication routed over Tor. The code is open source and the interface is very user friendly. Bisq is for those who do not want to forfeit control or privacy to a central authority in order to trade with other individuals. Bisq regards financial transactions as a form of private speech that should be protected from surveillance by banks, governments, and other institutions. Bisq connects buyers and sellers of Bitcoin (and other assets). The trading service is running on blockchain technology, supported by the community. This has several implications, but most importantly hacks are basically impossible and your personal information is not accessible by the owners. Bisq does not control your coins. When connecting to the network you can input several payment methods – your cryptocurrency wallets and/or bank account. Information is only shared with your direct trading counterparties. An arbitration mechanism is in place, in case a conflict occurs and a security deposit is collected from both sides. The deposits are refunded, after both sides confirm the transfer. Exchanges play a critical role in the bitcoin ecosystem. Without them, it would be nearly impossible to buy or sell bitcoins for fiat money. Unlike traditional online exchanges that require “know your customer” regulations requiring verification of users, Bisq does not require registration or approval from a central authority.
On-line gaming based on Etherium have significant advantages over traditional real world casinos as they use smart contracts to process payouts and ensure fairness of game. Many on-line games have started to include ethereum tokens in their on-line games making possible to use the same tokens for different games from different gaming companies.

Mark Zuckerburg started Facebook at the young age of 20 about 13 years ago and it has completed changed the way we interact with our friends and family. Vitalik, founder of Ethereum, started Ethereum also at the young age of 20 about 3 years ago. Within the next 10 years, Ethereum will radically change the way we interact with our world.

IOTA, the democratization of data

Machines are taking over the world. Over the next decade there will be more than 75 billion connected devices that interact forming the IoT (Internet of Things). By 2025, around 95% of all data will be generated by IoT devices in real-time. Data is the fuel of the future and a trustworthy and fail-safe database and a secure and responsible way to use it is needed.

Bitcoin and its many offshoot crypto-currencies run on a Blockchain which promise fast, cheap and secure nano-payments. That bold promise is yet to be kept and is deemed by many impossible to keep on a 1 dimensional Blockchain with small blocks limited in the number of transactions they can contain. With the ever growing demand of users, there is an ever-growing congestion causing exorbitant transaction fees. The high energy consuming Proof of Work of miners that validate transactions has forced them to centralize, undermining the decentralized promise of Blockchain and made miners powerful middlemen playing the role of the bankster that Blockchain promised to eliminate.

IOTA`s Tangle, which is referred to as the next generation Blockchain is an open-source distributed ledger focused on providing secure communications and payments between people and between machines on the Internet of Things. IOTA makes it possible to securely store, sell, and access data-streams. While Blockchain is a linear chain of blocks of confirmed transactions which is prone to congestion when demand is high, Tangle is a multidimensional Blockchain that gets faster as the demand gets higher. A fixed supply of nearly 3 million trillion (2,779,530,283,277,761) IOTAs was created right at the beginning. As there are no miners to validate transactions, no more IOTAs will be created. When users issue transactions, they must validate 2 randomly selected previous transactions, each of which refer to 2 other previous transactions, and so on. To transmit a transaction, users need to conduct a small amount of POW (Proof of Work) to prevent spamming of the network which would otherwise cause DoS (Denial of Service) attacks. A sent transaction must be verified a sufficient number of times by other users in order to be accepted as “confirmed.” As new transactions accumulate, a tangled web of confirmations grows. The IOTA network can be used not only to exchange IOTAs but also data from devices to be shared and sold instantly and securely across the globe. By being a multidimensional Blockchain, the network scales to accommodate as many users as there are and offers free transactions allowing for nano-payments. Moreover by removing the need for miners, IOTA network ensures that the network remains decentralized. The tangle underlying IOTA is quantum-resistant and infinitely scalable. Mining, the waste of energy in bitcoin, is becoming obsolete.

Just as Bitcoin`s Blockchain development can be likened to email, IOTA`s Tangle development can be likened to social networking applications like Facebook. Tangle, the next generation Blockchain promises to make data accessible to the masses. Once IOTA is adopted and data can be bought by anyone anonymously, instantly, securely, and everywhere, then data from the machines can be used to inform the masses and give them the knowledge to make wise decisions for a better life. This will and lead to the democratization of data and free it from the grasp of the mass brainwashing media and the evolving “big brother” trying to control the masses. Then the masses will be able to make informed decisions of how to best vote with their ballots and with their wallets to obtain access to clean water, healthy food, affordable energy, health care, education, and everything else that is necessary for a having a good life in this abundant world.

Cryptocurrencies, a new paradigm for our economy

The world is and always was rich with resources. Nature has and does freely provide for us all. The control of money by the very few is the reason why there are so many poor countries with so many poor people. Debt has, is and always will be the chain of choice by slave masters to keep their slaves enslaved. The more money that they issue, the more debt that is accumulated. In older times, in order to issue more coins, the slave masters debased the metals they used. When fiat currencies were introduced, it suddenly became much easier to issue money just by printing it. Debt, coupled with highly addictive consumerism made us all thankful slaves who are happy with the sad situation we all find ourselves in. The science of economics has become a religion with money replacing god, and economy scientists preaching their theories and replacing the priests and prophets.

“demand creates its own supply.”

Demand-side economics also referred to as trickle-up economics argues that economic growth is created by the ability of the middle class to drive and support the economy. Keynes and Galbraith are the most celebrated of demand-side economic theorists. They claimed that high consumer spending leads to business expansion resulting in greater employment opportunities. They promoted a policy of a progressive tax code with the richer paying a higher tax to ensure a financially strong middle class with the ability to spend more and create more demand. They promoted increased government spending to spur employment opportunities in times of low growth by creating and issuing money and debt into the economy preferring inflation and debt over a balanced budget. In a growing economy, money tends to be “loose” and cheap with low interest rates and the economy tends to be inflationary with increased consumption because people anticipate prices to increase.

"supply creates its own demand."

Supply-side economics also referred to as trickle-down economics argues economic growth is created by lowering taxes and decreasing regulation for businesses. Adam Smith and Milton Friedman are the most celebrated of supply-side economic theorists. They claimed that with lower taxes and less regulation, manufacturers grow and consumers benefit from a greater supply of goods and services at lower prices, and employment increases. They claimed that lower tax rates actually boost government revenue because of higher economic growth. It was the policy followed by President Reagan in the 1980s. They claimed that higher taxation leads to lower levels of specialization and lower economic efficiency.

“self-regulation of free-markets“

Austrian economics advocates consumer sovereignty and political individualism. Consumer sovereignty claims that consumers dictate the quantity, quality and type of products produce are dictated by consumers. Political individualism claims that interests of individuals take precedence over interests of the collective society. Mises and Hayek are the most celebrated of Austrian economic theorists. They claimed that government should not interfere with the markets but rather allow the freedom of sellers and buyers to follow their own judgment regarding quantities, qualities, and prices of products and services. They claimed that only when individuals are given full economic freedom will it be possible to secure political and moral freedom. They along with free-market libertarians support a gold standard where the amount of money issued is determined by the amount of gold available to back it. Because gold is a scarce mining resource, in a growing economy, money tends to be “tight” and expensive with high interest rates and the economy tends to be deflationary with reduced consumption because people anticipate prices to decrease.

“virtual money“

With the advent of technology and the internet, we gradually find ourselves more and more in a world of virtual reality where even our money can be just “virtual“. For the first time in our history, we can now break free of our real chains that keep us enslaved.

“democratization of money“

The emerging Bitcoin economy has many similarities with the economy based on the gold standard. Instead of physical gold being mined, Bitcoin uses virtual gold that is protocol generated with a limited and predictable supply without any central bank or monetary authority to control it. Because of this, it has low or non-existent inflation. The emergence of private digital currencies based on blockchain technology challenges central banks. Bitcoin, Litecoin, and dozens of more crypto-currencies give control of money from the banksters back to the people.

Cryptocurrencies for charities

Wikileaks, whose claim of aim and subsequent fame was to uncover the lowest buried corruption from the very highest levels. Wikileaks is supported by charities. It is no surprise that the financial institutions took steps to block any charities going to Wikileaks. Bitcoin was mature enough to save it from being forced to shut down. The geeks dedicated to making Bitcoin an “honest” and “trusted” and “incorruptible” currency dutifully stepped forward and were able to send Bitcoin thru the blockade trying to strangle Wikileaks to silence.

Bitcoin could revolutionize the way in which charities operate by cutting transaction costs, avoiding charity fraud and corruption and ensuring that more money goes to worthwhile causes. Just imagine a world where you can help any human in need and help them with a push of a button. This is a great potential of Bitcoin. Nano-donations could become the way in which people donate in the future. Without Bitcoin it is not feasible to send tiny amounts of money to the needy who most likely do not have bank accounts.

As an example, with Bitcoin you can incentivize reading by paying schoolchildren a cent for every page they read in a book, and continue this as long as the students can verify that they did read the page by writing about what they read.

I am working on 2 projects that promise to empower people to set up and manage their own charities and to involve donors on a personal level by informing them how their donations have been used.

Micro-JITIFA and
Pioneers for Canada

“Micro-JITIFA” is described in the blog

http://micro-just-in-time-financial-aid.blogspot.ch/

This project allows students to publish and manage their own charity projects. They solicit small donations to cover their school fees from their circle of Facebook friends and at the same time solicit help in finding new donors outside the circle of their Facebook friends. This concept can also be used by schools themselves to fund for various school projects, school equipment, school books and school field trips.

“Pioneers for Canada” is a much more challenging project that would allow refugees to become pioneers to open up unsettled land in Canada for the tourist industry. It is described in the blog

http://pioneersforcanada.blogspot.ch

SO WHAT SHOULD YOU DO?

Buy Bitcoin and see how it works. It is a lot easier than what you may think.

The future of Bitcoin

After vears of trying to break the blockchain technology that runs Bitcoin, the bankers and governments finally realized that because blockchiain was a public ledger that kept all BTC transaction and that this ledger could not be hacked or falsified; Bitcoin could not be stopped or blocked. Like email, and i-porn, it used the internet highway and without destroying the internet and its highways of communication, the blockchain technology could not be blocked.

The banks and governments decided on another plan called “If you can`t beat them, join them”. They decided that their only chance was to buy up all the BTCs. They started small and encouraged BTC`s price to drop by demanding regulation, not realizing that the blockchain is just a public ledger that cannot be regulated. The threat of regulation caused the price of BTC to drop, and when the banks and government thought that the price would not go any lower, they started to buy up BTCs. When people realized that the banks and governments were buying up the BTCs, their price soared. This made banks and governments very rich. Bitcoin became to be used as electronic money that could not be falsified or tampered with and that could be used as electronic cash replacing coins and notes.

Nations outlawed cash and made their own centralized and regulated version of Bitcoin called i-coin. The only ones using Bitcoins were the criminals and those afraid of the chip implants and the corrupt banks. Bitcoins were eventually outlawed and became what it started out as -. electronic cash for buying illegal goods anonymously. Because nothing could be bought or sold without using the traceable i-coins, the criminals set up markets that traded i-coins and Bitcoins. They set up legitimate publishing companies that paid for photographs, writing, editing, translating and opinion polls. The files contained embedded i-coin and Bitcoin addresses. If you wanted to sell your illegal Bitcoins, you sold your documents with the embedded Bitcoins for i-coins. If you wanted to buy Bitcoins, you bought with legal i-coins photos and documents that had the Bitcoins embedded.

Predicting the price of Bitcoin

The figure below shows how the amount of Bitcoin mined decreases by half every 4 years, until 21 million is reached. This is shown by the red dotted lines. The price of Bitcoin follows this 4 year halving event like a heart beat. In the middle of each halving event is a price peak formed by a sharp rise followed by a sharp drop. The price drops to about 1/5 of the peak and rises gradually to about 1/2 of the peak where it fluctuates before suddenly rising to a new peak 4 years later.

As the adaptation of Bitcoin increases, so will the price until saturation is reached where it will level out.

The figures below shows the peaks and dips that follows the heartbeat every 4 years. They are scaled to a logarithmic scale because they increase exponentially.

If the price of Bitcoin is determined by its adoption, and the price is shown in a logarithmic scale, we can see how the price shown by the black bars, increases as the scarcity of new Bitcoins increases. The Bitcoin price follows the logarithmic decline of new Bitcoins issued as it is halved every 4 years shown by the blue line.

After 10 years in 2020, we are just in the beginning of Bitcoin adoption. Thus we are just at the beginning of a price increase that can take the price of Bitcoin as high as 1M dollars in the next 10 years.

So HODL your Bitcoins, accumulate them as much as you can. The sooner you start, the more you will have. Store your private key on a hardware wallet and store your recovery seed in a place safe from fire flood and unwanted eyes where it can not be lost. The best place is in a safty deposit box in your local bank where it will be accessable by your inheritors if you die.

To learn more about Bitcoin, please enjoy my videos below.

List of my Bitcoin - Simplified YouTube Videos
Bitcoin - Simplified
An introduction to Bitcoin.
http://www.youtube.com/watch?v=VvGh-Z00SeY

http://www.youtube.com/watch?v=VvGh-Z00SeY

Bitcoin Wallets
In order to send and receive BTCs, a Bitcoin wallet must be used.
http://www.youtube.com/watch?v=_uwWbDW249I

http://www.youtube.com/watch?v=_uwWbDW249I

Trezor for Bitcoin
A hardware wallet that keeps your Bitcoins and other kryto-currencies as safe and easy to access.
http://www.youtube.com/watch?v=BbtQWAIBJPk

http://www.youtube.com/watch?v=BbtQWAIBJPk

Value of Bitcoins
Value is created by people and their ideas, opinions, desires, needs, hopes and trust.
http://www.youtube.com/watch?v=yDd2JGwrGUI

http://www.youtube.com/watch?v=yDd2JGwrGUI

Dollars, Gold and Bitcoin
How gold, the oldest store of value, and Bitcoin, the newest form of money transfer, make a great pair and are the best candidate for replacing the collapsing dollar.
http://www.youtube.com/watch?v=872B88VWm_s

http://www.youtube.com/watch?v=872B88VWm_s

Blockchain
Blockchain, the distributed public ledger of transactions you can trust.
http://www.youtube.com/watch?v=IzJnbrbOzZU

http://www.youtube.com/watch?v=IzJnbrbOzZU

Bitcoin Mining
Bitcoin is like virtual gold and its issuance is like mining gold.
https://www.youtube.com/watch?v=6WXC6DxzjgQ

https://www.youtube.com/watch?v=6WXC6DxzjgQ

Bitcoin transactions and transaction fees
The faster you want the transaction to be processed, the more optional transaction fees you have to pay.
https://www.youtube.com/watch?v=e8QF9yQcSuw&t=149s

https://www.youtube.com/watch?v=e8QF9yQcSuw&t=149s

Bitcoin Checks and Balances
To ensure that the bitcoin system with all its many players functions as it was designed to, the bitcoin system uses new technologies with checks and balances inherent in their design.
http://www.youtube.com/watch?v=8p7mC1iEwKU&t=10s

http://www.youtube.com/watch?v=8p7mC1iEwKU&t=10s

Bitcoin hardforks
Biccoin Core, with its off-chain Segwit and Lightning Network solutions protect smaller miners by limiting the size of the blocks each miner can mine. Bitcoin Unlimited urge miners to grow as large as possible to offer bitcoin users a a fast and cheap way to transact with their bitcoins.

http://www.youtube.com/watch?v=z4Oy2OEgT_E

http://www.youtube.com/watch?v=z4Oy2OEgT_E

Bitcoin - the democratization of money
The greatest promise of crypto-currencies like Bitcoin is to democratize money by giving control to the people, most of whom are bankless.
https://www.youtube.com/watch?v=as29Yn5kKCg&t=1s

https://www.youtube.com/watch?v=as29Yn5kKCg&t=1s

IOTA - the democratization of data
https://www.youtube.com/watch?v=p5lW4IedGRI

https://www.youtube.com/watch?v=p5lW4IedGRI

Etherium, the promise of decentralization
https://www.youtube.com/watch?v=U_tI1XAWPg8

Bitcoin - a new paradigm for our economy
Crypto-currencies like Bitcoin offer a new paradigm for the world economy by giving control of the issuance of money from banksters to the people, most of whom are bankless.
https://www.youtube.com/watch?v=_UxU7q7SW5w&t=10s

https://www.youtube.com/watch?v=_UxU7q7SW5w&t=10s

Bitcoins for charity
Bitcoin empowers people to help anyone at the press of a button.
http://www.youtube.com/watch?v=jTs5CCZxLxI&t=192s

http://www.youtube.com/watch?v=jTs5CCZxLxI&t=192s

The Future of Bitcoin
What is the future of Bitcoin?
http://www.youtube.com/watch?v=u48ccZ27wfQ

http://www.youtube.com/watch?v=u48ccZ27wfQ

The power of Bitcoins at work

If you have found this information useful and would like to make a donation for the work, you can donate to my Bitcoin Address by scaning the code below

or copying and paste the Bitcoin Address seen below

16mtRhRFFEyeZX9GXaZFgci5z5tk4PCVjJ

and use your bitcoin wallet for sending the donation.

Thank you:

Last updated at March 29 2017, Nov 5 2017

For my other videos, go to:
https://www.youtube.com/user/improvemyenglish/videos

Simplification of Everything

Bitcoin is not the only complex concept that requires simplification to be easily understood.

Other complex concepts that are a challenge to understand are:

atoms, gravity, light, quantum mechanics, quantum entanglement, time in physics
acids, bases and redox reactions in chemistry
DNA, life organisms and evolution in biology
numbers and infinity in mathematics
mountain formation and rock cycles in geology
historical cycles in history
dysfunctional societies and politics in sociology
money in economics
tor networks and encryption in communications
dreams, synchronicity, souls and god concepts in philosophy

These concepts and many more are simplified in short, humorous, informative, entertaining and though provoking way in my illustrated book “Simplification of Everything – for a better understanding”.

This book can be ordered from Amazon

https://www.amazon.com/Simplification-Everything-Physics-Chemistry-Simplified/dp/1453618619/ref=sr_1_1_twi_pap_2?ie=UTF8&qid=1490885784&sr=8-1&keywords=Simplification+of+Everything

or from

https://www.createspace.com/3459862

More details on the book are found at:

http://improvemyenglish.webs.com/bookpromo.htm

Bitcoin - Simplified

Saturday, December 25, 2021

NFT

Saturday, November 28, 2020

Predicting the price of Bitcoin

Wednesday, March 29, 2017

Bitcoins - Simplified