Bitcoin, the topic on every Thanksgiving dinner table on that glorious November 2017, if we had only documented how Bitcoin was explained to Parents, Siblings, and even Grandparents, and done a thorough analysis of these descriptions, we might have a single benchmark Bitcoin 101, but we don’t, though I’m sure if you do a quick Google search you can find pages and pages of results with thorough guides, that’s not what you’ll find here.
For our shot at explaining Bitcoin, we’re pretty much distilling the most relevant ideas for you to get started. First, we need to give you a very brief tour of its history, so let’s begin with Mr. Nakamoto.
SATOSHI NAKAMOTO
2008. The height of the financial crisis. Satoshi Nakamoto, the mythical founder of Bitcoin, launched the notorious Bitcoin Whitepaper, a document in which he (or they) outlined in detail the concept of “Bitcoin,” unknown until then. The document presented Bitcoin as a digital currency that would live on the internet, and address the main problems that digital money would suffer from.
Trusted third parties: By removing intermediaries and making it Peer-to-Peer, No third party would be needed.
The double-spend problem: Consensus would have to be achieved to approve any transaction, so, no transaction could be processed twice.
Incentives for miners: to achieve critical consensus, Bitcoins would be offered in exchange for the computing power required to validate transactions.
Privacy: All transactions would be encrypted (hidden behind a code that has to be solved)
ECONOMIC TURMOIL
The following year, January 3rd, 2009, the first Bitcoin was created, and embedded in the code was “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” after a New York Times headline published on that same day. The message serves as a sign of the times, and this post-08' feeling of powerlessness driven by the US federal government’s “elastic” monetary policy, only helped propel Bitcoin forward.
According to Chainalisys, a Blockchain analytics firm, unstable countries are responsible for driving retail crypto adoption, Ukraine, Russia, Venezuela, China, and Kenya being the top 5.
Bitcoin has helped people from these troubled economies to have a safe store of value, compared to their native inflation prone currencies.
A TALE OF 2 PIZZAS
Fast forward one more year to May 2010. A Florida man pays 10,000 Bitcoin (BTC for short) for a couple of pizzas from Papa John’s, that’s US 107,283,000 in today’s money.
Try not to think about the infamous transaction in terms of how much money the guy who bought those pizzas would have today. Instead, let it serve as an indicator of how far Bitcoin has come in these 10+ years.
Those two famous pizza pies were the world’s first “real world” purchase using Bitcoin, or any cryptocurrency for that matter. Today, however, there are more than 15,000 businesses accepting Bitcoin and other Crypto payments, including giants such as Microsoft and Overstock.com. Additionally, there are more than 5,000 Bitcoin ATMs around the world.
HOW TO BUY
To use Bitcoin, you would typically need a few tools. First, you need a digital wallet, which you can download and install (like Metamask), store physically (like the ledger nano), or delegate to a 3rd party app/exchange (like Binance or Coinbase). Each wallet has its pros and cons. if you’re new, we recommend you dig deeper into the differences between wallet types.
Then, you need to deposit regular money (fiat) into one of these exchanges, and then proceed to trade your fiat money into bitcoin.
Once the transaction is complete, you have a few choices, you can withdraw the BTC to your private wallet, you can leave it in the exchange, or these days you can even have your crypto working for you while you HODL (hang on for dear life), either through trusted third-party apps which provide collateralized loans with your cryptos and in turn earn you interest, such as Celsius or Nexo.io, or riding the DeFi (Decentralized Finance) boat, a new ecosystem of decentralized apps, which provide a truly peer-to-peer financial ecosystem, revolutionizing finance as we know it, more on DeFi in an upcoming post.
HOW TO SELL
If you want to exit the crypto space and convert your Bitcoin to USD or any other traditional currency, you have to find an exchange that provides an off-ramp, such as Binance or Coinbase, however, this is when your capital gains will likely be taxed, so do your homework.
The Bitcoin community is a welcoming one, with Bitcoin embassies in all major cities, hosting meet-ups, trading contests, and helping newbies in making the leap, so jump right in!
