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Day 1: A Unique (and Hard to Believe) Origin Story
Welcome to the course!
My name is 8BIT, an award-winning software engineer, technologist, and entrepreneur who loves giving away all that he knows to as many people as possible!
Over the next ten days, you’ll learn the basics and fundamentals of bitcoin, what it is, how to purchase it, and perhaps most importantly, the question of why it matters to our culture and society as a whole.
Today, I’ll give you a quick primer and overview of the history of bitcoin and how it all got started, which is actually more important than most people know.
The origin story is both unique and an absolute requirement for learning about Bitcoin, so you can philosophically understand how it continues to grow, expand, and capture the attention of the world.
Who Created Bitcoin?
No one actually knows.
Well, that’s not entirely true, as someone must know, but if they do (and if they are still alive), then it’s one of the best-kept digital secrets of our time.
The point is that no one actually knows who originally created bitcoin, but we do have a name: “Satoshi Nakamoto.” This person (or collection of persons) (co)authored a whitepaper titled, Bitcoin: A Peer-to-Peer Electronic Cash System, on October 31, 2008, a few months after the top-level domain name, “bitcoin.org,” was registered on August 18, 2008.
This whitepaper started the proverbial wheels of fortune, as it was posted to a cryptography mailing list and sent out to a handful of folks to read, ponder, and comment on.
What could this mean? What could this new technology do?
On January 3, 2009, the bitcoin network was deployed with the first open-source application (i.e. software client), as well as the first issuance of 50 bitcoins. The alias continued to be visibly present and public until April 2011, when the alias left the development of the technology to a growing group of passionate volunteers.
But It Must Have Come from Someplace, Right?
Yes, bitcoin did have a bit of a prehistory, as there were a number of technologies and digital protocols utilized in the creation of bitcoin and consequently, a number of individuals and creators behind those inventions.
Specifically, here are a few technology inventions that “Satoshi Nakamoto” uses, mentions, and gives credit via his whitepaper:
- a digital cash technology and protocol called ecash by David Chaum and Stefan Brands
- a “proof of work” system called hashcash by Adam Back for spam monitoring and control, which was eventually built upon by Hal Finney, who created a reusable proof-of-work protocol
- a distributed scarcity system built upon “b-money” created by Wei Dai
- a technology called “bitgold” by Nick Szabo that proposed a mechanism for market inflation control
Again, it’s important to note that all these folks have denied being Satoshi Nakamoto or being part of the collective that may be canonically understood as “Satoshi Nakamoto.”
Why Does This Matter?
The key takeaway here is that the original author(s) is completely unknown, and although you may occasionally hear of someone who suddenly claims ownership of the identity of Satoshi Nakamoto, it’s generally and culturally accepted that we may never know the original creator’s identity.
And that’s a good thing.
You see, there are many important reasons, but here are two to get you started: Firstly, it’s important that no one knows (and will ever know) who they are because what makes bitcoin so exciting is that it is simultaneously open source (people like you and me can download, use, and profit from the original software anywhere and anytime we like), and secondly, it’s “decentralized,” meaning that no single person or entity or organization “owns” or ultimately controls bitcoin’s utility and value.
Bitcoin and the underlying technologies and protocols were created and designed to be freely given to the world to usher us into a new way of thinking, engaging, and transacting with others. In many ways, you have just as much claim (and right) to say that you are Satoshi Nakamoto as anyone else does.
Tomorrow, we’ll jump right in and learn more about what exactly bitcoin is and the principles and properties that govern this exciting new technology!
- Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto
- Advances in Cryptology Proceedings (ecash) by David Chaum
- Bit gold by Nick Szabo
- Reusable proof of work by Hal Finney
Day 2: What Is Bitcoin and What Makes It Different?
Hello and welcome back to the second lesson of this course! Yesterday, we walked through a very top-level primer of who the creator(s) was and who was responsible, as well as why it matters. Today, we’ll dive in deep and give you a broad sweeping overview of what it is and how we can better understand it.
Currency, Technology, Software, Network, or Philosophy?
The term “bitcoin” is simultaneously a number of things, as it’s a currency unit (an exact and specific “coin”), but it’s also used to describe the open-source software, as well as a technological framework and network of a new digital monetary ecosystem.
Not ironically, bitcoin can be described as a collection of concepts, principles, and technologies, just as “Satoshi Nakamoto” is often understood as a collection of inventors and inventions.
But for our purposes, we shall more often use the term bitcoin as a unit of currency, which is the easiest way to understand how it’s most widely used in conversation.
Bitcoins, as a unit of currency, are used to store and transmit value between participants in the much larger bitcoin ecosystem and network. They do this by communicating through the internet via many different types of machines, applications, and devices, such as your home computer or mobile phone. A bitcoin could be even encoded as an emoji or as an assortment of images in the background of your holiday card.
Participants will be able to use this unit of currency to buy and sell goods and services, just like you do today, although most countries are just beginning to recognize bitcoin as a currency. For instance, the US, the Netherlands, Canada, South Korea, and a few other countries are progressively open to bitcoin as payment. Also, participants can send money to other participants (individuals and organizations) on the bitcoin network (or off of it), as well as exchange them for other units of value or currency.
To a very real degree, the utility of bitcoin is only limited to one’s own imagination because it’s an entirely virtual form of currency, and to get super technical, it is understood as a “content type,” which means it can be transmitted anywhere on anything in any form!
What Makes This So Different?
Well, do you mean besides the fact that it’s an entirely virtual currency with no physical coins (or paper)? And if we’re to be completely technically accurate, bitcoins are also not even digital coins, per se. The coins are implied in the actual transaction between participants, the sender and the receiver.
As mentioned, there is not a central authority that mints or controls the value of a bitcoin, like a bank or physical monetary exchange. Ultimate control and agency is managed, maintained, and declared via each individual participant, including you. This means that you, philosophically and pragmatically, are your own bank. Bitcoin has no borders (is “borderless”) and does not require anyone’s permission to be used or activated. It is censorship-resistant and impossible to stop. Bitcoins and the transactions between participants are fast, secure, and relatively cheap.
Finally, it is simultaneously anonymous and transparent, meaning that participants can send and receive value without ever having to identify themselves (i.e. share personally revealing information like names or physical addresses) and that every transaction is recorded for everyone to see in a publicly available ledger, called blockchain (we’ll talk about blockchain in more detail in the next lesson).
This is a lot to take in, so we’ll end the lesson here as you think and reflect on these fundamentally different principles and characteristics of bitcoin. Tomorrow, we’ll dip our minds into the concepts of bitcoin mining, which is important because it not only creates new bitcoins but also serves as the basis of validation.
- The Ascent of Money — A Financial History of the World
Day 3: Bitcoin Mining (and Blockchain)
Welcome back to Day 3 of bitcoin basics! I’m seriously glad you’re here and that you’re still tracking with me.
Yesterday, we took a very serious and hard look at the principal characteristics of bitcoin and what makes it very, very different than other forms of currency. In fact, as you now already know, the differences are so distinct that it can be really hard to believe. When you can literally send bitcoins encoded through a home-built, DIY shortwave radio (yes, people have done this!), it would make anyone sit back and scratch their head for a moment.
And you wouldn’t be the only one. So, don’t be discouraged if you don’t quite “get it” at first or if you feel like it’ll take time to warm up to the concept of bitcoin and bitcoin technology—you’ve got time and I’m here for you.
But let’s continue upping the ante and take a quick look at bitcoin mining, as it’s an essential part of your bitcoin understanding.
How Mining (and Blockchain) Works
Bitcoin is a distributed, peer-to-peer system, and bitcoins are created through a process more popularly called “mining.” Any participant that mines bitcoin can be effectively called a “miner.” Another term that has been historically used is “maintaining,” and those who participate in the bitcoin network have often been called “maintainers.”
Mining isn’t difficult to understand because at its core, it is most simply a process of computers attempting to solve math problems. Now, there are two important principles to note in the process of mining: The first is that the mathematical problem is difficult to solve, and the second is that miners (or maintainers) are competing to solve the mathematical problems before one another.
It is essentially a race between mining participants to see who can not only process bitcoin transactions the fastest but also simultaneously discover the solutions to these complex mathematical problems. The winner of the race not only serves the larger bitcoin network by validating transactions between participants on the network but also is awarded bitcoin for their time, effort, and investment in solving those problems.
Finally, a technology intimately tied to bitcoin is “blockchain,” and an entirely different course could easily cover this technology and protocol. But all you need to know for now is that blockchain is a distributed ledger, a record of all of the bitcoin transactions that have ever happened in the network, and these records are validated via mining. One of the neatest things about the blockchain is that it powers many of the characteristics of bitcoin, such as being tamper and fraud-resistant.
Why It Is So Popular
You can begin to see why mining is so attractive to folks (and organizations), as there is real potential of earning bitcoin for their work. Based on the underlying programmatic algorithm and protocol, bitcoin awards are given out to miners approximately every ten minutes, which regulates the delivery and issuance of bitcoin and halves the rate of bitcoin created every four years.
Consequently, there is a finite number of bitcoins that will ever be issued, and that number is 21 million, which will occur around the year 2140. This is why you may hear that bitcoin is a “deflationary financial instrument,” unlike all other currencies, which are fundamentally inflationary.
But here’s the most important part of bitcoin mining: You can mine it yourself as long as you have a computer (of any size and shape) running the bitcoin protocol software (or “full stack”) from anywhere in the world. Your participation is not limited to the transfer and receiving of bitcoin, you can create it as well.
This is why you can truly be your own bank, issuing a currency that has real value and utility without permission and without any central controlling authority outside of yourself. How many times can we say “revolutionary” in these lessons?!
Tomorrow, we’ll take a look at buying your first bitcoin and how you can experience this new revolutionary digital currency for yourself.
I can’t wait!
- Mastering Bitcoin for Starters — Mining, Investing, and Trading
Day 4: Okay, Let’s Buy Some Bitcoin (or Get Prepared to Do So)
Welcome to the fourth lesson of the basics of bitcoin. Now you can confidently say that you have more of a foundation around the underlying technology than most people on the planet (and this will be truth for quite some time).
Today, we’re going to do something so exciting that I can barely contain myself as I type these words: You are going to investigate and prepare yourself to buy bitcoin.
The First Thing to Do
The beautiful thing about bitcoin is that it is a technological marvel in its complexity but also approachable and useful as a real form of value immediately.
But unfortunately, it’s not so easy to buy and acquire bitcoin, at least not at the moment. In the very foreseeable future, we’ll all be able to transact and bring new “bitcoiners” (holders of the bitcoin unit of currency) into the fold quickly and easily, but again, we’re still in the very early days. And unlike getting a dollar, euro, or yen from someone, you can’t just purchase bitcoin without actually having a place to store them.
In other words, you need to first get a bitcoin wallet before you purchase and acquire any bitcoin. And this makes sense, as you want a place to store your value before you have any value to store.
So Many Bitcoin Wallets to Choose From!
First, a bitcoin “wallet” is most technically understood as a user interface to the bitcoin system and larger network, very much like your everyday web browser that you use to interact and engage with the larger world wide network and internet.
There currently are many implementations and even brands of bitcoin wallets (and more being added daily), so it’s really up to you as to what you’d like to use and even your underlying reasons.
At a very high level, there are five types of wallets that you may choose from:
- A Desktop Software Wallet describes the software you could use via macOS, Windows, or Linux operating systems and that can be easily (but often insecurely) used. This is not recommended unless you know how to securely configure the underlying operating system.
- A Mobile Wallet is exactly what you think it is: a piece of reference software running on any mobile operating system like iOS (for iPhone) and Android. This is the most common form of wallet, as it most closely mirrors someone’s physical wallet and is most easily understood by new bitcoiners.
- A Web Wallet is a bitcoin wallet that is accessed via your electronic device (desktop computer or mobile device) on a web browser such as Google Chrome, Apple Safari, Mozilla Firefox, or Opera. These wallets are owned and managed on a server(s) owned by a third-party provider. Many new bitcoiners will start here, but it is not smart to keep a lot of bitcoins on these systems, as they can be hacked or compromised with very little recourse for you, the end user.
- A Hardware Wallet are physical digital devices typically operated via USB or a similar hardware protocol and is one of the most secure and proven ways to store bitcoin and other digital currencies. You can, of course, lose them, and there is always the risk of them getting damaged or accidentally destroyed.
- A Paper Wallet is exactly what you imagine it to be: a physical printout of the bitcoin (or the keys referencing and controlling the representative value) on physical materials, such as paper. Creative folks have even etched their keys into other materials like wood, stone, and metal. This low-tech, offline solution is highly secure and is often called cold storage.
It is worth noting that many people “diversify” their wallets for security purposes, so it’s not uncommon for a single participant to have all types of different wallets, many for specific types of transactions or use cases.
It is, of course, entirely up to you.
This is a good stopping point, as now you have an important first step in sending and receiving your very first bitcoin. Tomorrow, we’ll finally walk through one implementation on how you can get your first bitcoin.
Chat tomorrow, friends!
- The Age of Cryptocurrency — How Bitcoin is Changing Global Economic Order
Day 5: Becoming a Bitcoiner (Getting Your First Bitcoin)
Welcome to the fifth lesson of the course!
Before I start, I just want to thank you personally for virtually walking with me through the last four days. As we get through the first half of the course, I just want to tell you that it is an absolute privilege and honor to be introducing and teaching you about bitcoin. The only payment I’d like in return is for you to successfully complete the course and then send it to as many people as possible.
But today’s the day I’d love to help you get your first bitcoin.
The easiest and fastest way to become a bitcoiner is to receive it from a friend or family member. If you happen to know of another bitcoiner in your own relational sphere, then calling them up and asking them to help you can be one of the most rewarding experiences for both parties.
But I’ll assume that you don’t have anyone immediately available for that type of transaction and exchange of value. So, I’ll walk you quickly through a few other ways to acquire your first bitcoin because as of this moment, it is not easy to get new bitcoin, as you cannot (yet) purchase bitcoin from your bank or a physical foreign exchange system (like the ones you see in an airport).
Here are four other ways to get started:
- Besides a trusted friend, colleague, or family member, the second best way to get your first bitcoin is to attend a local bitcoin or blockchain meetup, easily done via the social networking site, Meetup.com. Just like your family and friends, you’ll find friendly and enthusiastic
bitcoinerswho would love to get you started.
- Visit LocalBitcoins.com, where you can find people in your own area to sell you bitcoin in person via your own local fiat currency, like US dollars. Many require a minimum transaction size, but I’ve seen it as low as $5.00!
- Visit a bitcoin ATM in your city. This is not available everywhere (yet), but it’s a safe and secure way to exchange your local currency for bitcoin. Some ATMs have limits to the size of transaction, but most will accept small transactions. Of course, most of these ATMs have fees that you’ll pay so they can continue to operate. CoinATMRadar.com is a great place to start. Head to one, transact, and don’t forget to take a selfie!
- Use a bitcoin currency exchange and purchase via your connected bank account, credit card, or even PayPal (fees will be incurred). You can find accepted exchanges for your own local currency and country on sites such as BitcoinAverage.com. Sign up, head to “Price Data,” and then “Currency Markets” to find links to accepted exchanges.
What to choose? Honestly, I highly recommend that you try your best to do one of the first two on the list because, besides getting bitcoin, you’ll also make new friends and start learning that this entire community is friendly and welcoming to all new folks.
The ATMs are fun, especially if you take some friends, and the last option, using a web service and currency exchange, is neat, but you can do that at home by yourself, which isn’t nearly as exciting as getting it from a family member or (new) friend.
So, you’ve got some homework to do, and it might take a bit of time for you to get your first bitcoin, but it’ll be worth it.
Though you can do the last option by yourself, I can’t possibly leave you hanging like that! Tomorrow, I will walk through one such currency exchange as an example (with images) so you can understand the general sign-up experience and transaction flow.
A full walkthrough awaits you tomorrow, friends!
- Cryptocurrency: Ultimate Concise Guide (Audiobook)
Day 6: Walkthrough—Buying Bitcoin via Online Currency Exchange
Hello and welcome back to lesson six of ten! We’re more than halfway through. If you are still feeling a bit nervous about making your first bitcoin purchase, I’ve created a quick visual walkthrough of one local currency exchange that can give you a good feel for how it will operate.
I’ll use one of the more popular US-centric currency exchanges, called Coinbase (aff link!), to capture screenshots and walk you through the process.
A Quick But Important Note on Privacy
As a reminder, depending on where you are, not all currency exchanges are readily available online, so you’ll have to double-check BitcoinAverage.com for ones for your own geography and country.
It’s important to note that once you engage with a country-specific currency exchange, you are bound to local laws and regulations that may require sensitive and personal data. Remember, bitcoin has the advantage of keeping your personal information completely private, meaning that you do not have to reveal your name or physical location/address to send and receive. But the moment you use a country-specific currency exchange, which touches the traditional systems and markets, these country-specific regulations come into play, and you will most likely have to give up your identity to participate.
Once this is done, all associated bitcoin transactions to your address(es) can be identified and tracked. This is one of the reasons why many bitcoiners keep and maintain dedicated accounts that aren’t linked to these types of exchanges and wallets.
A Visual Walkthrough
As mentioned, I’ll show you how everything works on Coinbase, but it has a similar experience to many of the online exchanges that could be used as well.
First, you’ll have to create a new account with all your information. Make sure you use a very secure password—it’s even better if you use a system like LastPass or 1Password to create a really difficult password that’s hard to guess or crack.
After you confirm and verify your email address. you’ll be able to log in and see the currency exchange dashboard with the current exchange rates.
One thing to consider before purchasing any bitcoin through any digital currency exchange is to audit the security systems they have. That means if they don’t have, at the minimum, two-factor authentication, then I’d move on and try another service (make sure to close down and delete your account).
So, the best next thing after you log in is to walk through any security measures that the exchange has and add as much security as possible. This may include authentication via SMS (text message) or even using a separate application, such as Google Authenticator or Authy.
After securing this new account, you have the opportunity to add a payment method, which may include your bank account, PayPal, or credit card:
I’ll go ahead and add a credit card for this demonstration. Then the system will request confirmation by making two withdrawals on my account, which I will have to verify:
Coinbase and many others transact immediately, so verification is quick, but this isn’t the case for all services.
Next, I’ll verify my identity, which is typically a government-issued ID card such as a driver’s license and/or passport. Each system will require something different, so make sure you have these handy.
This can take a bit of time to verify, so hang in there. Systems like Coinbase are growing wildly right now, so they’ve had some scaling issues. Patience is a virtue, as they say.
Finally, the next step is purchasing your first bitcoin. As you can see on the image below, I’ve purchased $100 USD worth of bitcoin, which gives me at the current currency exchange value of $18,944.56 per BTC, a total of 0.0051 BTC.
I’m officially in the game! And if you’ve followed along using one of these systems, you are now the proud owner of bitcoin.
But Wait, What If I Want to Sell My Bitcoin?
That’s a great question, and thankfully, these currency exchanges allow you to also sell your existing bitcoins in the same interface. Selling them is as simple as purchasing in most instances. Of course, if you sell bitcoins at a higher rate than when you bought them, then you’ll make a nice little (or big) profit.
Tomorrow, we’ll talk a little about why this matters outside the unit of currency itself and where this might all head in the short- and long-term future.
- Mastering Bitcoin by Andreas Antonopoulos
Day #7: Why Bitcoin Matters More Than Just Its Own Currency
In many ways, the birth of bitcoin is very much like advent of the internet. Can you imagine a world without it? As difficult as it may be to comprehend the value created by the internet, it is equally as difficult to scratch the surface of what bitcoin will bring to us individually and collectively.
But for starters, there are two high-level areas that I’d like to quickly explore with you, and then your own imagination can take you from there.
There are many debates on the utility of bitcoin and blockchain technology, but no one will disagree with the fact that bitcoin is a complete breakthrough in the realm of computer science, specifically in the areas of cryptography and cryptographic sciences and currency.
To be even more exact, there’s been a long-standing conundrum within the realm of computational science called The Byzantine Generals Problem. The original paper shares the fundamental problem thusly:
We imagine that several divisions of the Byzantine army are camped outside an enemy city, each division commanded by its own general. The generals can communicate with one another only by messenger. After observing the enemy, they must decide upon a common plan of action. However, some of the generals may be traitors, trying to prevent the loyal generals from reaching agreement.
The question ultimately is one of trust between unrelated parties over a network that cannot be fully trusted. This problem exists in today’s economy and infrastructure. This problem has existed in everything we do online and on the internet.
You see, bitcoin is the first pragmatic solution to this computer science problem that has been, up until this point, unsolvable. Just think about that for a moment, and let it sink in.
With bitcoin, we can transact with each other without having to necessarily trust the other party. Why? Because the underlying technology and protocol (i.e. the mathematical algorithm) is what we trust. In other words, every participant in the network (e.g. miners, purchasers, sellers of bitcoin) trust the mathematical principles instead of each other. This shared trust in the program logic is what makes bitcoin so groundbreaking.
Consequently, we can send information securely and with confidence, guaranteeing delivery with the ability to audit post-transmit with global accountability.
This is self-evident in the fact that bitcoin itself is a unit and network of currency. But the principal characteristic that we must remember is that this is an entirely decentralized financial system where you, as an individual, can become your own bank, issuing yourself currency through mining while maintaining complete autonomy and agency unto yourself.
You can transact with people anywhere in the world without friction and without fear. Fraud and tamper-resistant, you could never be as confident with any other form of currency as you can with bitcoin because there are no intermediaries between one participant and another. Bitcoin is like a single firm handshake, while any other form of currency flow requires multiple “handshakes” (like through payment processors, banks, clearing houses) for the money to arrive, adding to the cost as well. When you send bitcoin, you know it’ll get to where you want it to go.
This Is Just the Start
We’re already starting to see local organizations, governments, and financial and technological systems transform as a result of the bitcoin and blockchain protocol. For instance, can you imagine a more safe, secure, and accurate way of voting in public elections? Blockchain can solve many of the issues around voter registration and identity verification necessary to have a fair and balanced vote of public officials. Startups like Democracy Earth and Follow My Vote are two companies building these tools.
And this is just a tip of the iceberg. So, let your imagination run wild with what all these innovations mean, for you, for us collectively, and for our world.
Tomorrow, we’ll talk a bit more about how one specific technological area has been born and what you should do about it.
Day 8: The Birth of the Altcoin
It’s impossible to talk about bitcoin without talking about the many other technologies it has given birth to. This is, of course, unsurprising because bitcoin itself was and is an open-source project, and anyone at any time is fully licensed to create their own “alternative coin” off the original bitcoin project.
In fact, you can quite literally (and legally) copy bitcoin’s core technology, not change a single line of code, and release it under whatever name you choose. Heck, people would even invest in it and maybe even use it. Many have tried and many more will continue to try.
The rise of these alternative coins (or cryptocurrencies) is a positive consequence of not only open-source philosophy but also the proliferation of decentralized technologies. We can welcome these brothers, sisters, children, distant cousins, and relatives of bitcoin with open arms. This is the direct consequence of expansive innovation unfettered by governance and thick bureaucracy.
So, What’s the Difference?
That depends on the altcoin. You see, many of these altcoins share similar properties of the original bitcoin, such as a distributed and decentralized ledger (i.e. record keeping), peer-to-peer transactions, mining systems, and processes to incentive and drive adoption.
But that’s where the similarities may end, as many altcoins add features that their own creators believe enhance the original vision of a fully distributed and virtual currency. Some of these innovations include different transaction speeds, privacy controls, different consensus and mathematical problem-solving requirements for mining (e.g. proof-of-work vs. proof-of-stake, DNS, and encryption resolution(s)), and more.
Some altcoins have become culturally relevant and extremely popular, rising among the ranks to gain huge market share and market capitalization. Most of them can be purchased on the same currency exchanges that you may purchase bitcoin on.
Although many have challenged bitcoin for dominance, it is currently difficult to imagine any altcoin becoming larger. However, this isn’t impossible, and it’s entirely likely that a newer innovative blockchain-based coin could prove itself to have more utility (and thus, have more understood and perceived value) than bitcoin.
The More “Popular” Altcoins
The idea of popularity, in many ways, is counter to the fundamental principles of bitcoin and decentralization because it assumes that there must and should be a “winner” in a race to a knowable end. But the reality is that the most “popular” coin, including bitcoin, is the one that you specifically find to be the most pragmatic and useful to your own set of needs as you transact and exchange with others in the digital space.
But to play along, the most common way to determine popularity is through market capitalization charts, which is the market value of the coin’s outstanding shares or issued coins (also called “tokens” in many instances). One of the more popular websites is CoinMarketCap.com, which as of December 2017 shows these ten as the most popular coins (including bitcoin):
- Bitcoin Cash
Now, compare this list from December, 2017 to today’s (June, 2021) list:
- Binance Coin
- USD Coin
(It’s worth considering the “alts” that have survived the longest…)
As you might imagine, this list changes frequently, and if you are interested in staying on top of the prices, especially if you speculate and invest, sites like CoinMarketCap are useful tools.
Overall, it is my firm recommendation to engage slowly and carefully, especially in the beginning, reading as much as you possibly can about the projects and doing as much due diligence as possible.
Many of these projects are inherently and intrinsically risky, so proceed with maximum prejudice and caution. You should research the team behind the project, how the team intends to use the funds, who else is supporting the project, their foundational whitepaper (like Satoshi Nakamoto’s bitcoin whitepaper), etc.
Tomorrow, we’ll talk a bit more about things to consider when buying cryptocurrency and how to protect yourself in the best way moving forward.
See you tomorrow!
Day 9: Staying Safe in This Brave New World
History has shown us that whenever and wherever new wealth is being created, the crooks and the unscrupulous are not too far behind.
In this distinctly financial market and economy, there have been many new and deceptive attempts at defrauding folks of their honest money as they explore this new technological landscape. This course was never about financial investing, and nothing in this course should be interpreted as financial advice, but the old and wise adage for all of us still persists:
Only invest what you can afford to lose.— Everyone
You’ve probably heard this before (your father may have even said that to you once or twice—I know mine did!). Beyond that, there are two particular growing types of scams and/or questionable behavior within the bitcoin and cryptocurrency space that I want you to look out for.
The Initial Coin Offering (or ICO)
Due to bitcoin, exciting new developments in every single field and market imaginable now have real potential. As such, entrepreneurial and industrious people are studying and analyzing opportunities to apply bitcoin and blockchain technology to existing (and future) problems within our world.
I believe every industry under the sun will inevitably be changed by blockchain. You’re going to start seeing (or have already seen) bitcoin- and blockchain-based projects in agriculture, medicine, bio-informatics, robotics, artificial intelligence, journalism, new media, sports, manufacturing, and many, many more. So, a lot of people are trying to be the first to capitalize on those opportunities, and they are financing these operations through Initial Coin Offerings (or ICOs) which is a type of crowdfunding via the use of cryptocurrencies.
At a very high level, these organizations are selling a percentage of the newly issued (or soon-to-be issued) cryptocurrency tokens at a discount in exchange for fiat currency (legal tender) or other more stable digital currencies, like bitcoin. You, the potential owner of these tokens, are then promised a future value or utility when the project materializes or when it reaches market scale and profitability. This is very similar to buying game tokens at your local video game arcade, except there’s a possibility that the machines may not end up working when you arrive.
As a result, the US Securities and Exchange Commission (SEC) has reached clear decisions around ICOs and begun finalizing regulations and guidance for investors. But as this is a new field and new technology, there aren’t many safeguards or even restrictions on who can and who can’t invest, and as a result, many “bad actors” have created fake projects to fool people to send them real currency (or bitcoin) in exchange for vaporware.
For instance, the SEC recently closed down a project that was defrauding investors. The company, PlexCorps, had raised $15 million through their ICO and falsely promised a 13-times return. Many other ICOs make similarly false promises.
This doesn’t mean you shouldn’t investigate these exciting new opportunities, as there are many legitimate projects out there, but it’s best to view most, if not all, projects with skepticism.
A New (Yet Old) Take on the Ponzi and Pyramid Scheme
There has also been a rise of a new type of ponzi and pyramid scheme that looks and feels exactly like one, except that the rabid enthusiasm around cryptocurrency and bitcoin has clouded many tempered minds.
These types of schemes have been well documented historically, and the SEC has provided very clear guidance that is still applicable. If any operation or service includes the following, then you should avoid them at all cost:
- low risk, high returns
- very consistent returns
- unregistered investments
- unlicensed sellers
- complex or secret strategies
- paperwork problems
- difficulty receiving payments
There are already more than a handful of ponzi and pyramid schemes out there that are touting low-risk, high, and consistent returns based on bitcoin and cryptocurrencies. You should steer way clear of these. This brave new world includes a ton of new and exciting opportunities, but it can (and will) catch you sideways if you’re not careful and considerate of your financial decisions.
Tomorrow, we’ll conclude our course with the most important element in your bitcoin education: community!
- Official Statement by SEC
Day 10: Bitcoin Is Really about the Community
My friends, we are at the very last lesson of the bitcoin course! I can’t believe we’ve made it, and I’m glad to include you as a fellow bitcoiner and blockchain enthusiast.
Today, I want to leave you with the most important lesson of all, one that will ensure your continued progress and education in this exciting world: Bitcoin wouldn’t be anything without the community that powers it. Neither could it have been invented without the combined efforts of inventors and creators of the prehistoric technology, nor it could exist without the open-source philosophy that holds it together without the miners who are validating the transactions and being compensated through their service to the bitcoin network.
The point is this: Motivated, passionate, and driven people have tasted the unique qualities that bitcoin intrinsically holds and have seen opportunities to solve problems that were once deemed impossibilities (like the computer science problem of the Byzantine Generals).
Consequently, your lessons and growth in the world of bitcoin have just started.
Keep Learning with the Community
Thankfully, there are a bunch of great communities online that are happy to assist with your growing knowledge and wisdom around bitcoin and blockchain. As they say in Japanese, kaizen (“continuous improvement”)!
Some, like BitcoinTalk Forums, already have millions of registered members who are actively investing time learning together. Here are a few more additional resources and communities that have incredibly active (and helpful) members:
- YEN.CHAT is where I primarily hangout on the internet and am always open to answering any question that you might have! We’ve built an “unstoppable” community and communication platform for decentralized / cryptocurrency projets and businesses! I’d love to hang out with you!
- The Bitcoin Reddit (and BTC subreddit) is where you may find some interesting content about Bitcoin, discuss most recent news, and other Bitcoin-related issues.
- Bitcoin Stack Exchange is where you can ask about everything you always wanted to know about Bitcoin, from most basic information to advanced technical questions (and you’ll receive an answer!).
- This Facebook Group is where you can find other Bitcoin enthusiasts.
- Bitcoin Meetup Groups will help you meet those enthusiasts offline.
Remember to be respectful and always helpful, as you now know a lot about bitcoin and can most likely help others learn from you.
My friends, you’ve spent the last ten amazing days with me. Thank you for your time, and I can’t wait to hear about all your adventures in bitcoin and blockchain. If you’ve received value from this, then I’d just ask that you send it to your friends, family, and anyone else you think would appreciate this material.
Good luck and take care!
- Digital Gold: Inside Story of the Misfits and Millionaires
- The Dark Net: Inside the Digital Underworld