97 things to know about Bitcoin !!

Hello, first of all welcome to Cryptomite.

I wanted to give you all a crash-course on Bitcoin and how it is responsible for creating a revolution and in doing so , ushering an era of digital currency and cryptos. Here are a few ways of thinking about this that might help.

The below list is not exhaustive in nature, its only intended to brush up a few key points which differentiate a virtual currency from the fiats (Dollar, Euro). You can try and understand the concept via google, and gain valuable knowledge in this upcoming field. If you notice any flaw, or you wish to add something of your own, please do so in the comments section below.

So here we go, 97things I’d like new Bitcoiners to know:

1. Bitcoin is open source software, created in early 2009.
2. Open Source software is one, where the code is universally available and with the help of multiple variations, a common satisfying conclusion can be reached.
3. It so happens that multiple groups or users of the software, can find different versions satisfying, so the eventual state includes multiple versions
4. A need for continuous improvement leads to the overall betterment of the product. It causes those projects to increase in performance, security, inclusion and other values
5. Forking means releasing a modified copy of the software. We are treating bitcoin as a software in this context for better understanding, although it is a virtual currency.
6. A good software developer can fork Bitcoin
7. Since bitcoin was created for the community, the word Bitcoin is not trademarked.
8. This means that different versions of the word like “Bitcoin Super” or “Bitcoin Platina” can be freely used, although it does not have any official status
9. Bitcoin’s was developed to eliminate the dependence on a third party, while performing a transaction between two entities.
10. Bitcoin’s obvious mass acceptance was due to the fact that the government intermediaries were not honest to their customers and this had lead to frustration, a need for a different solution was felt.
11. There is no physical backing to Bitcoins, no “intrinsic” value (it isn’t backed by an asset like gold etc) this leads to massive volatility on a daily basis.
12. The US Dollar has lost about 80% of its value since 1970
13. The US Dollar used to be backed by Gold until 1971.
14. This is in part due to the US Government printing more money, or quantitative easing.
15. Bitcoin’s inventor is unknown and used the pseudonym “Satoshi Nakamoto”.
16. Satoshi Nakamoto used to be an active member of the bitcoin community but is no longer sending or responding to emails.
17. Bitcoins can be bought in small fractions aswell, know as Satoshi.
18. The smallest unit of Bitcoin you can own is called a “Satoshi”. 100 Million Satoshis equal one Bitcoin.
19. Since Bitcoin can go upto 8 decimal places, it can always be bought in small denominations. So the circulation would not be restricted due to the high valuation of one single coin. People should be more concerned as to whether bitcoin as a whole is expensive or cheap
20. Bitcoin uses a public ledger called the block-chain, where all the transactions are publicly visible.
21. The block-chain is secured by elliptic curve cryptography
22. There are zero documented cases of a computer mathematically breaking into a bitcoin wallet by finding the private key from a bitcoin address, though there have been recent successful hack attempts at various crypto exchanges across the world, which has lead to loss or theft of the coins.
23. Bitcoins are controlled by a private key, they are a string of characters held by individual account holders.
24. Anyone who knows the private key can spend or transfer your bitcoins. He is basically the owner of your account and can use your coins like his own.
25. If you don’t know what your private key is, and you own bitcoins, it’s likely that your coins are sitting on an exchange like Coinbase or Bittrex.
26. It is not advised to leave your coins on an exchange, it’s quite possible that the exchange itself could steal your coins, or an employee at the exchange, or it’s possible that the exchange could be hacked and you could lose your coins. You can stay safe by transferring your coins to a hardware wallet like Trezor.
27. You can back up your private key by printing it out on a sheet of paper, this paper is then known as a “Paper Wallet”. This is the safest way of storing your private keys.
28. “Your” bitcoins are not stored on your laptop or phone or on any single device.
29. “Your” bitcoins are stored on the bitcoin block-chain, and thousands of copies of that block-chain are stored across thousands of computers, a public ledger.
30. Don’t share your private key with anyone, else you risk the loss of your bitcoins.
31. All addresses on the block-chain as well as all transactions are a matter of public record on the decentralized ledger, but essentially anonymous. Not completely anon, as your IP is still traceable.
32. Bitcoin transactions are irreversible unless the recipients deliberately sends the exact amount back to the original sender. So be very careful before transferring your coins.
33. Bitcoin is decentralized, meaning it has no company, president, government or bank that controls it. This ensures a common ground for everyone.
34. Part of the design of a decentralized system is preventing “free riders” from stealing value from the system, at the same time as rewarding network participants (such as bitcoin “miners”)
35. Bitcoin has inspired many open source cryptocurrencies, but not all cryptocurrencies are open source. All have their own systems in place.
36. People who focus on price movements and predicting what other people will do are called Bitcoin speculators
37. People who understand Bitcoin and support it are called investors
38. Selling or buying when you think others are selling or buying is a form of speculation called momentum investing
39. Selling or buying emotionally (panic selling, fear of missing out) is likely to cause you to lose money
40. Institutional investors (professionals) can make money from retail investors and speculators (amateurs) by pumping up the price and then dumping. This is market manipulation.
41. Professional investors are now trading bitcoin futures
42. In futures trading it’s possible to take both “short” and “long” positions
43. In a long position, the trader “bets” that the value of the asset will increase
44. In a short position the trader “bets” that the value of the asset will decrease
45. Large investors or hoarders (whales) can manipulate markets by causing prices to inflate rapidly (pump) and decrease rapidly (dump)
46. The best protection against pump and dump is to invest in things you understand and to avoid speculation, buy and hold for the long-term.
47. Warren Buffett says the best holding period is “forever”.
48. HODL or “Hold On for Dear Life” is a phrase from bitcoin talk forums signifying the desire to not sell Bitcoins despite price volatility.
49. Bitcoins are deflationary
50. The restriction on the total circulation of bitcoin contributes to its ability to store value. Conversely, a cryptocurrency that continuously increased the number of coins in circulation should decrease in value per coin.
51. There will never be more than 21 million Bitcoins in existence, a number which is enforced by the source code
52. If you lose you wallet private key, those bitcoins are gone
53. It’s estimated that as many as 4 million bitcoins are out of circulation due to this or similar mechanisms
54. Bitcoin uses a peer-to-peer mechanism for verifying transactions called Nakamoto Consensus
55. Nakamoto Consensus is based on a class of algorithm called “Proof-of-work”
56. Proof of work algorithms involve doing computational work, in essence paying a price in order to participate in the Bitcoin block-chain
57. The work includes validating transactions, thus helping to secure the network
58. In addition to validating transactions, every ten minutes or so, the bitcoin block-chain elects a computer to write down all of the transactions that happened in the past ten minutes
59. This set of transactions is called a “block”
60. Each new block is added to the end of a chain of blocks and the new block contains a “hash” that represents the previous block, hence it is called a block-chain
61. Bitcoin consensus can work on separate versions of the “truth” but is designed to converge to a single truth at the point when each block is written
62. The election process for choosing who writes down the block is a computational race involving calculating the solution to a math problem
63. This math problem is a cryptography problem, and has the property of being quite expensive to solve, but extremely easy to check the answer.
64. The requirement that it has a very easy to verify answer, and yet it is an adjustable hard problem to solve is the main reason why the computation and thus the electricity used on this problem are considered “wasted”
65. Because of this consensus algorithm, Bitcoin is criticized for being ecologically wasteful. In recent time there have been multiple variations and upgrades, in order to reduce this wastage.
66. This block computation race as well as securing transactions is an activity known as Bitcoin mining, and miners get bitcoins by transaction fees, but also by winning the computational race described above.
67. The winner gets a fixed number of bitcoins and it is winner-take-all.
68. A “mining pool” distributes the compute proof of work over the pool, and pays everyone regardless of whether the pool wins the block or not. The amount the individual pool workers receive, depends on their compute power, and the current difficulty to achieve winning the block. Most small miners are part of a pool, since individually mining for a block of bitcoin, at current difficulty levels, would, on average, not be achieved in one’s lifetime.
69. Mining is responsible for creating “new” bitcoins
70. Another way of looking at mining is buying bitcoins with electricity
71. The difficultly level of mining is adjusted in the software and generally increases programmatically at specified block intervals
72. Bitcoin is not the only cryptocurrency. There are more than 2000+ crypto currencies in the market currently, with new ones being added everyday.
73. In fact there are multiple cryptocurrencies with the name Bitcoin including Bitcoin Cash and Bitcoin Gold
74. Many more Bitcoin forks are coming up
75. Bitcoin’s primary utility is as a hard-to-censor store of value that enables that value to be transmitted across a distance
76. There are other cryptocurrencies optimized for payments and other financial applications
77. Bitcoin is considered “property” by the US IRS and so its use by US Citizens and Residents is considered taxable
78. New cryptocurrencies are issued all the time
79. The initial availability of a new cryptocurrency to be bought or sold is called an ICO or Initial Coin Offering
80. A large number of ICOs are built on a standard called ERC20 which means that the tokens are based on the Ethereum block-chain
81. Not all ICO tokens are ERC20, some tokens are based on the Waves Platform, some on Stellar and others are either based on more obscure block-chain or they are completely novel block-chain
82. Investing in ICOs is very risky, you never know if the concept they display would ever come to reality.
83. The second most popular cryptocurrency as of this writing is called Ether
84. The cryptocurrency is called Ether, the block-chain is called “Ethereum”
85. Unlike Bitcoin, Ether has a known founder, Vitalik Buterin, and this provides for greater centralization, for better or for worse
86. Ethereum is designed to be a general purpose framework for computing
87. The Ethereum block-chain is currently working on a new consensus algorithm called “proof-of-stake” that does not require ecologically wasteful cryptography block races.
88. Bitcoin has recently gained the ability to execute smart contracts via a project called “Rootstock”
89. On coinbase the third coin available besides Bitcoin and Ether is Litecoin
90. Litecoin is very similar to Bitcoin only it writes blocks more often and it often gains features (like lightning and segwit) before Bitcoin.
91. Litecoin was created by former Coinbase employee Charlie Lee, referred to on twitter as Charlie Lee
92. If you want to see a list of the most valuable cryptocurrencies you can do so on http://coinmarketcap.com
93. You can spend bitcoins using a bitcoin debit card, though this service is not available in all countries as of now.
94. The value of all the gold in the world is about 8 Trillion dollars
95. The current value of all the bitcoin in the world is $278 Billion dollars
96. The value of bitcoin changes fairly quickly, so the value on line 95 will seem odd in a few short days
97. If you want to exchange Bitcoins for other major coins, please use www.cryptomite.co

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