Yea….So, I’m just gonna lay this out there. Hi, my name is Clayton and I’m a Bitcoin addict! No, but in all seriousness, Our Trippy Tribe has been on a serious mission to get some answers about Bitcoin and cryptocurrency, we need to find out what all the rumblings are about.
Now If you’re late to the party (don’t worry we literally just walked in), you probably do not know what bitcoin is. Bitcoin is defined as a worldwide cryptocurrency and digital payment system. It’s basically a currency that operates electronically. Now when I initially heard of about Bitcoin I couldn’t help but think it was some virtual money for tech nerds or fantasy fiat in some gamer’s candy crush bank or something. After further investigation, we had a chance to see ‘Oh How Real’ Bitcoin actually was. There seems to be a major redistribution of wealth taking place, is it possible we are somehow missing the boat? A Pisces rising like myself, I can’t be missing any boats now, sooooooo I’m going to learn all I can about Bitcoin.
I’m not at all embarrassed to say that even after listening to multiple podcasts, browsing online literature, and watching youtube videos, it took this $3 book on Amazon Kindle book (this is an affiliate link) for me to really grasp what Bitcoin was, how it works and what it means for the future of our “money”. Did I mention this book was written by a seven (7), eleven(11), and thirteen (13) year old…talk about parents being ahead of the curve, HATS OFF to them!
Here are some of the answers I found to my common “newbie” questions about Bitcoin.
The most common question one might initially have is, exactly what is Bitcoin? As mentioned earlier, Bitcoin is a digital payment system. It is a decentralized, peer-to-peer payment network powered by its users with no central authority or middleman in the mix (i.e bank, government, etc). So basically a virtual currency powered by people directly.
Now once a little light is shed on what Bitcoin is, naturally, the next question becomes Why would anyone want or even need a Bitcoin in the first place? This is a great question and has been the cause of much controversy. Let’s maybe revisit this question after we present a little more of the backstory of how Bitcoin has arrived at this point, as I write this in October of 2017.
The first mention of Bitcoin takes us back to the now infamous “White Paper” published by Satoshi Nakamoto in 2009. This open source 9-page paper detailing the new peer-to-peer electronic cash system became the foundation on which all the components of Bitcoin were laid out. It was made open source, which is a technological way of saying any programmer, developer, or anyone for that matter, could freely see and analyze the Bitcoin protocol and the code behind it. So basically they could review the code, and if they saw fit they could make their own modifications to the code. This has resulted in the creation of many new cryptocurrencies commonly referred to as “Altcoins” (i.e. Etherium, Litecoin, Dashcoin, etc) which operate on blockchain technology.
Since we are referencing a currency, (something used and exchanged for something else of value), the concept of security becomes an issue. Many want to know If Bitcoin is decentralized (has no central location or authority) who owns the network and how exactly does it function.
According to bitcoin.org “no one owns the network just like no one owns the technology behind emails”. Bitcoin is governed and validated by all the users of Bitcoin worldwide! Although changes can be made to the code, users must comply with pre-established rules of Bitcoin’s protocol that allows for a level of uniformity across Bitcoins global networks.
Ok, that was a mouthful…Confused yet? Don’t worry it took me some time to understand but I assure you it begins to make a lot more sense when given the proper amount of attention. The monetary incentive usually becomes the catalyst that locks people in, go figure!
So exactly how does Bitcoin work? Bitcoin operates through a mobile application or computer program where one creates a digital wallet (we chose blockchain and bread wallet available for Android and IOS), this wallet allows users to send and receive Bitcoins. On the back end, Bitcoin works by creating a public ledger (a digital record of transactions) called a blockchain. This blockchain consists of every transaction ever processed and is verified by the global network of Bitcoin users running the Bitcoin Protocol. This blockchain is made of digital signatures (think of the ‘pin’ one creates as a digital signature to e-file taxes), as well as other details associated with the transaction ( i.e the amount of exchange, the digital address of sender and receiver, and a public key). Anyone can verify and validate the bitcoin transactions! All they need is The Bitcore Client (which can be downloaded for FREE) and specialized hardware (antminer s9 seems to be the industry leader) which uses the machine’s computing power (electricity) to process the different transactions taking place all over the world. This process of using specialized equipment to verify the other user’s transactions across the global network is referred to as mining.
Mining is an integral part of upholding the integrity of Bitcoin. Miners are encouraged to verify the respective transactions with the incentive of receiving Bitcoins as a reward for doing so. When a blockchain is validated and the proof-of-work (the blockchain) has been verified, Bitcoins are then rewarded to the miner for its services (current Bitcoin reward is 12.5 BTC…valued at over $120k). Herein lies the key to Bitcoin’s breakthrough technology, and how this decentralized network of peer to peer electronic cash flow has taken the world by storm.
At Bitcoin’s inception, anyone could download the Bitcoin software and mine bitcoin from their personal computers. As more and more users took to Bitcoin, the proof-of-work gradually became more difficult to mine (aka verify the transaction), and the computing power needed drastically increased requiring a more specialized machine to get the job done.
Just to put a little perspective on the insane volatility of bitcoin; In 2010, at its peak, 1 BTC (Bitcoin) was worth the equivalent of a whopping .39 cent in USD (U.S.Dollars). Fast forward to today as I write this blog and 1 BTC is valued at over $5,900USD! Remember that Re-distribution of wealth I spoke about earlier…UM. YEA!
Here is a list of some general pros and cons I was able to compile about Bitcoin.
- Anyone can open up a wallet and earn money. Children especially can learn to manage money at an earlier age, letting them be creative, empowered, and entrepreneurial
- Bitcoin can be sent to anyone, anywhere, at any time from a tablet, smartphone, or computer.
- Security is much safer, anyone at anytime can verify a transaction, it’s a public network which deters corruption
- Inflation (There will only be 21 million Bitcoin mined EVER)
- Zero to very little fees with sending bitcoin except an optional fee to send money faster (roughly 6-10cent)*
- Safe for merchants to use since no personal info is attached to the transaction so its protects privacy
- Lower fees than PayPal, Credit Cards, Western Union, or MoneyGram.
- People need to continue to be educated on Bitcoin/cryptocurrency, consumers and businesses alike
- Limited amount of Bitcoins (14mil of the 21mil Bitcoin have been mined) and demand is increasing every day
- Limited amount of businesses directly take bitcoin (although new business are getting on board every day)
- Bitcoin’s price is fluctuating every day (very volatile but up trending since its inception…this could very easily be under the “Pros” list)
- Bitcoin is in beginning stages and still very very young (Bitcoin is literally 7 years old, talk about a 7-year itch…)
Bitcoin does not show any signs of slowing down and the technology behind it has already been adopted by many organizations and governments across the globe.
As parents, we are really excited! We will continue to investigate and gather information about Bitcoin so newbies like ourselves and others can position themselves and their families to take advantage of this modern day virtual gold rush.
I’ve heard in the past “Man, I wish I could’ve invested in Microsoft, or Apple, or Facebook way back when”. One thing is for sure, most of us could have at least learned more about them and been better prepared to take advantage of those platforms when they were just getting their engines revving. Well as it appears, it may be a good time to get familiar with Bitcoin and how you may be able to get involved now.
No matter how exciting all the Bitcoin craze is, one should do their due diligence and research as much as possible before making any financial decisions about Bitcoin or any other cryptocurrency. Nothing in this blog is to be considered financial advice, do your own research pleeeeeease!
BREAKING NEWS ALERT
Since the original writing of this blog Bitcoin has been making new waves.
Bitcoin Price climbed to an All-Time High!!! $6,415
BREAKING BREAKING NEWS ALERT
During the process of editing, this blog Bitcoin Price climbed to $7,355!!
BREAKING BREAKING BREAKING NEWS ALERT
Clearly, our editors can’t keep up with the Bitcoin prices which currently sits at 8,222!!!!
BREAKING BREAKING BREAKING BREAKING NEWS ALERT
The face you make when the final edit is in and ready to post and Bitcoin is $9,969 WHOA sorry to our readers if missed out on this 60% (and counting) swing in a month’s time :-0
Just to get an idea of how big this Bitcoin brand actually is, Bitcoin’s $168 billion market cap has surpassed the likes of Netflix (87bil), Goldman Sachs(92bil), UPS(93bil), Nike(92bil) oh yea and McDonald’s (106bil). I’ve been all over the world…I’ve seen those freakin’ golden arches everywhere. Bitcoin’s current market valuation is even higher than the annual GDP (gross domestic product) of Germany and Japan.
How a Supernova like Bitcoin can be known to less than 2% of the people in the world is kinda wild.
Either way, I hope you will follow Our Trippy Tribe as we continue to explore the world of Bitcoin.
Are you familiar with Bitcoin or any other cryptocurrency? Are you curious or maybe even a little concerned about what virtual currency means for the future? We would love to hear your thoughts and comments below.
Are you an entrepreneur who is looking to get together with other bitcoin/ cryptocurrency enthusiast? Email us @Clay@OurTrippyTribe.com and let’s organize a meet-up.