Bitcoin for dummies — Crypto made (really) simple

Congratulations! You’re about to become part of the future. You’ve watched the hype on the news, enviously watched as Dave from finance bought his first lambo and heard whispers in the wind about this magical internet money called bitcoin. But it isn’t magical, nor as complicated as it seems

Introduction to Bitcoin and Cryptocurrency

Bitcoin is a type of digital cash or store of wealth which no central authority (such as a bank) has control over. It is peer-to-peer cash, similar to bittorrent or other file sharing programs you may have used to download movies (and often viruses) in the past. Before we begin keep in mind that Bitcoin is just one Cryptocurrency and Cryptocurrencies are not just digital cash. Later on we will cover the underlying technology Bitcoin and Cryptocurrencies use which is called Blockchain. There are many applications for Blockchain but for now let’s keep it basic and stick to the simplest use cases.

TLDR: Online money which is not controlled by a bank, government or any other company, which in turn makes it far more secure, safer when used properly and less corrupt. Alongside being used for money Cryptocurrency can be used to create better apps, handle sensitive data without breaches and a host of other useful services. Cryptocurrency is essentially the future of the internet and money. A much needed solution and the natural evolution to the way we handle money, data and a host of other things.

Welcome to the Blockchain. The tech which makes Bitcoin and Cryptocurrencies possible.
The blockchain is essentially an open, accessible to everybody and virtually incorruptible database capable of storing all sorts of data and records (don’t worry about the techy words too much), but, there is an important distinction: instead of being monopolised (controlled by) by, an institution, for example a bank, with exclusive access to the servers (which makes it inherently unreliable), it exists on the internet in the form of an open ledger and it’s intertwined within a large network of computers. An open ledger that is modified, updated and checked by everyone involved.

Yes that is right…everyone can join the fun!

This is where it gets juicy, a key aspect, arguably the thing that makes it special is the concept of decentralisation (being free from one central controlling force) cryptocurrencies are not governmental, they cannot be manipulated the way governments manipulates official currencies (we call these Fiat) . Cryptocurrency can be used like any other currency but there are two key fundamental differences when compared to Fiat.

It’s absolutely transparent.

Every computer that chooses to participate in maintaining the blockchain (these are called miners) has a copy of the ledger (database where information is stored), where the blockchain lives, and this ledger is updated in real time every minute of every hour. Which means that anyone can see what is going on, thus total transparency. A good example would be this: User X sent 5 bitcoins to User Y, the record of this transaction can be clearly seen on the ledger and will stay there forever. It can not be changed, corrupted or interfered with. Once it has been sent, it’s sent.

And now we can address the second point, one of utmost importance…

It’s virtually completely anonymous.
On the ledger nobody knows that you are a dog. Or a toaster. Or even a gender neutral attack helicopter. On the ledger we don’t use names. We use long strings of letters and numbers (called addresses). We have dates, we deal with amounts.

Each string of numbers is a user. Everybody knows how many transactions happened, nobody knows why or who exactly is concerned, and that’s a proverbial good thing, especially in a world where companies and governments are tracking, abusing and manipulating innocent citizens data.

A number of transactions are stored within a block of information and as soon as the block is completed (reaches a set number related to memory/size) it becomes part of the blockchain — get it? A chain of blocks of data! New blocks can always be added but never changed or removed. The blockchain CAN NOT be manipulated. Thus you are in total control of your assets! Since every computer has a copy of the ledger, nobody can make changes on his/her own, because they will be invariably be rejected, via the consensus mechanism (everyone essentially approving the correct transaction occurred). Consensus is reached because everyone has the exact same version of the blockchain updated in real time and if one person is the make a change/include a transaction that should not be there, it will be unanimously rejected. This is getting slightly techy but hang in there OK. Re-read this paragraph and things will start to click together.

Once we know what the blockchain is we can talk about the real world applications.

A blockchain database system can be used in a myriad of different situations. Facilitate bank to bank transactions . You can even build apps on top of it . Many sectors can benefit from the adoption of the technology: Healthcare, transportation, voting (an end to voter fraud anyone?) and so on. This isn’t just magical internet money but a whole new form (think evolution) of the internet and a new economic ecosystem which is pure and free from the clutches of corruption and manipulation (at least centralised evil).

What is Bitcoin.
Now, Bitcoin has become almost a synonym for cryptocurrency although it is only one of thousands. Bitcoin for now is seen as the standard digital gold. That actually costs many multiples more than gold. And it’s here to stay.

Being the first cryptocurrency ever produced and mined (yes, cryptocurrencies can be mined) Mining is basically the process of rewarding people who confirm blockchain transactions using computer power/resources with more of the currency. Remember earlier we mentioned how people maintain the blockchain. Well this is how they are rewarded for doing so. It was meant to serve as a form of payment to be transferred in a secure, trustworthy way.

Bitcoin is renowned as the non plus ultra of crypto.

The first one.

The behemoth.

The king.

The hype is justified, the numbers prove it.

In 2009 with 1000 bitcoin somebody bought a slice of pizza.

In 2018 with 1000 bitcoin you can buy a small village (along with its inhabitants). disclaimer: we do not condone buying villagers

The core principles of bitcoin are what makes it so precious (then adopted by 99% of the other cryptocurrencies).

Independent from any authority bitcoin belongs to no one and to everyone at the same time. Immutable yet ever growing.

Governments can print an infinite amount of money if they deem necessary, wrecking economies, spiking interest rates and sending people destitute among other things. The supply of BTC is absolutely limited and the total amount of it cannot be increased in any way. This creates value, it creates presence. Almost like a life on it’s own, an entity that you know will always be impartial and store value.

Is crypto safe?
The truth is that there is no straight answer to this. Mostly yes and a little bit of no. Cryptocurrencies are meant to be safe, by investing in Crypto it’s almost impossible to be the victim of misuse of personal data, the immutability of currencies will always ensure that your funds will… well, always be there providing you don’t click any dodgy looking emails or get rich quick schemes. Cryptocurrencies have no bias. It’s the free market baby, it’s essentially as safe as you make it. You can lose money, and lots of it, we are not going to sugar coat it. That’s about it. Do your research, choose a safe wallet to store your cryptocurrency and you will be perfectly fine.

Different projects offer different solutions to different problems. A brief introduction to Cryptocurrency investing.
For example: A project is being built to ensure a proper and accurate tracking of resources funnelled into the healthcare system, along with the protection of medical records of the citizens. Using the blockchain they can ensure a dramatic reduction in data tampering and the misuse of assets, which will result in the improvement of efficiency and expenditure.

The creators of this said project will offer you a chance to buy tokens (coins) on an exchange (website/service which holds many coins from many projects) so you can invest in the project and when/if the value of these tokens increase you have made a profit and can cash them out or continue to keep them.

Of course tokens can be used as currency, but this is not always their primary purpose. It’s somewhat similar to the stock market in some aspects. You buy a stock low and sell high, well you buy a cryptocurrency low and sell high. This is just one speculative way to use Cryptocurrency but remember that Blockchain’s fundamental aim is to provide a safe, secure and immutable resource for real life applications.

By the holy principle of DYOR (do your own research) and with our advice you too will learn how to spot valuable projects that offer meaningful solutions and have great growth potential. This is what we call value investing.

Why should you invest?
We talked about all of the things that make cryptocurrencies special, whether we like it or not, regardless of our opinions and of the political bias, blockchain and cryptocurrencies are the future. We’re heading toward to a trustless and liberated economy (with your help of course).

But know this: as governments fail more and more to keep their promises, as money slowly becomes obsolete and impractical, the Crypto market will grow, it could make you rich and at worst it could give you some security in the long run.

Today is the best day to start, buckle up, we’re in for one hell of a ride.

If you would like to read more about blockchain and cryptocurrencies head over to cryptospecialist.net