Getting Started with Crypto Currency:
Part 1
You may have seen comments from Bill Gates on the future of the block chain. Or seen a YouTube video of someone saying Bitcoin is going to a million. Maybe you heard Jamie Dimon, President and Chief Executive Officer, calling Bitcoin a "Fraud". And found yourself wondering if that is so, then why mention it at all? Whatever the reason your here the series aims to help answer a lot of the questions you may have in trying to learn about crypto currency.
Sadly I have known about Bitcoin since the near the beginning. But I am no multi-millionaire. I quietly watched from the side, and only recently have I really began to participate.
In that process, I quickly came to realize that there is a lot to know. This prompted me to write this series of articles, to shed insight on the things that one needs to know to fully take advantage of the new world of crypto currency or the block chain.
Before diving right in lets take a step back and ask, what is currency? Wikipedia tells us the that currency means: "money in any form when in actual use or circulation as a medium of exchange".
Crypto currency is not an object you can hold in your hand. It is a distributed digital ledger system, called block chain. The block chain tracks all transactions in a decentralized way, by distributing the ledger among all the nodes of the network.
The block chain has a record of every delivery address that has ever received currency. Then it has the records of any addresses that would have been sent to afterwards. Because of this ledger, there is an inherent trust in the system. At any given time every final 0.00000001 (satoshi) is accounted for and can be trusted its at that address.
To keep this simple for now we will focus on the beginning with just the Bitcoin block chain. The block chain itself is powered by the witnesses or "miners" that witness and process by hashing the transactions.
The transactions are then lumped into whats called blocks. Generally speaking the first "miner" to validate the block is rewarded the reward. In the case of Bitcoin that reward reduces over time by design of the protocol.
This is done to control the supply. Bitcoin is designed to never have more the 21 million coin in circulation, this is achieved in part because Bitcoin was designed to be able to be broke into 100 million pieces (0.00000001) or satoshi’s as they are now commonly referred.
So lets now touch a bit on the fundamentals of how Bitcoin is valued. The value of Bitcoin is largely based on the over all market capitalization, or monetary value overall of what has been invested in it.
As of writing this article in October 2017, the market cap for Bitcoin is ~95 billion and has touched 100b a couple of times(credit . At the same time the United States I.R.S. has deemed Bitcoin and other cryptos as assets. This makes capitalizing transactions, or crypto coin for cash, eligible for taxes.
The real strength in block chain technology is its open source and protocol based nature. Its impossible to devalue a cryptocurrency whose total circulation is controlled by protocol.
I must mention there are new cryptos and block chains surfacing and in use that the circulating and total supply is not controlled by protocol. Personally, I can't help but be skeptical of the long term health of a crypto currency who has a group or people in charge of the circulation.
Lets conclude with a little of the backstory of Bitcoin and Satoshi Nakamota. Who published the white paper which was basically the beginning of the era of the block chain. A lot of mystery sounds the story of Satoshi, and an entire article would barely scratch the surface. But his name is forever engraved into Bitcoin as the smallest piece is named after him 1 satoshi 0.00000001 BTC.
Thanks everyone for reading my first article, hopefully you enjoyed and now have at least a better understanding of Bitcoin. If you enjoyed please make sure to read the second part of the series, Alt Coins and the Block Chain Revolution, where we will follow up with alt coins, and continue to discuss the revolution that is block chain.
The following sites were used in writing this article:
https://en.bitcoin.it/wiki/Main_Page
https://bitcoin.org/bitcoin.pdf
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STOPConsidering its only my second view I will take it thank you very much!