8 Immutable Truths About Bitcoin You Need To Know
A return to basics is never superfluous.
In life, no matter how successful you are, there always comes a time when you need to get back to basics. This allows you to become aware of the essential things that make you who you are and why you move forward every day.
This need to get back to basics can also apply to companies or technologies. Today, everyone is talking about Bitcoin, looking forward to its third Halving scheduled for May 2020.
Behind this expectation lies the willingness of some to anticipate the start of a possible very strong bull market for Bitcoin in 2020. All these questions related to the current and future price of Bitcoin would almost make you forget why Bitcoin is a revolution with such a promising future.
In this story, I propose a return to the basics with 8 immutable truths about Bitcoin that you need to know.
There Are 21 Million Bitcoins
When he created the Bitcoin Blockchain, Satoshi Nakamoto decided to set a maximum number of Bitcoins that could be created via mining.
There will be a maximum of 21 million Bitcoins that will be mined.
Different assumptions exist as to why Satoshi Nakamoto chose to set this limit at 21 million, but no one really knows why this figure was chosen.
What we do know is why Satoshi Nakamoto decided to set a maximum quantity for the number of Bitcoins that can be put into circulation.
Satoshi Nakamoto designed Bitcoin to simulate a commodity such as gold.
Bitcoin had to exist in finite quantities with increasing difficulty in obtaining new ones over time.
This second property was made possible by Bitcoin Halving which takes place every 210,000 blocks of validated transactions. This Halving reduces by half the amount of Bitcoin newly created and awarded to miners as a reward after a block has been validated.
Bitcoin Halving aims to keep the inflation of the number of Bitcoins in circulation under control.
The 21 million limit will be reached in 2140 and from then on, the Bitcoin Blockchain will have to be secured only through transaction fees.
1 BTC Today Will Always Be Equal To 1 BTC In The Future
Inflationary policies pursued for decades by Western governments only devalue what you own over time.
The real value of the U.S. dollar has declined steadily since 1980.
An American must therefore have $312 in his possession in order for his buying power in 2020 to be equivalent to his buying power of $100 in 1980
In other words, the U.S. dollar of 2020 lets you buy less things than the U.S. dollar of 1980.
In the future, things are not going to work out with the current monetary and financial system.
On the other hand, Bitcoin offers you an easily verifiable guarantee: a maximum of 21 million Bitcoins will be put into circulation.
By buying 1 Bitcoin today, you buy 1 BTC out of 21 million. In the future, no matter what happens, you will always have 1 in 21 million Bitcoins at your disposal.
So Bitcoin protects what you own better than the U.S. dollar ever has and ever will.
You Do Not Own Bitcoin But You Own Cryptographic Keys To A Portion Of Bitcoin Blockchain
As a user choosing to buy Bitcoin, you don’t need to understand all the inner workings of the Bitcoin Blockchain. However, you do need to understand some of the fundamentals.
Among the fundamentals you should have in mind is the following fact:
You do not own Bitcoin when you buy it but you own cryptographic keys to a portion of Bitcoin Blockchain.
This technical precision may seem unimportant.
However, it is an essential prerequisite for understanding the next point in which I will explain why you only own your Bitcoins if you have the associated cryptographic keys.
Not Your Keys, Not Your Bitcoins
Many people buy Bitcoins through market-leading trading platforms such as Binance and Coinbase. These are entry points for the general public and there is nothing wrong with that.
What hurts is that many people make the mistake of leaving their Bitcoins on trading platforms.
As long as your Bitcoins are on trading platforms, you don’t actually own them.
These trading platforms can be hacked, as was the case with Mt. Gox in 2014, or decide to prohibit you from using your Bitcoins in the same way a bank would.
Today, it is estimated that nearly 3 million Bitcoins are lost forever. Their owners have lost their cryptographic keys or in some other cases, their Bitcoins have been stolen from hacking on these platforms.
So you should always keep in mind the following sentence:
Not Your Keys, Not Your Bitcoins.
Once you’ve bought your Bitcoins, the best thing to do is to secure them on a hardware wallet.
By owning the crytographic keys to your Bitcoins, you will actually own them and can use them as you wish without the risk of censorship.
Bitcoin Has No Leader
Bitcoin was created by Satoshi Nakamoto in 2009. Well aware that its creation could be a real revolution for everyone, Satoshi Nakamoto chose to offer it to the world.
Bitcoin belongs to all its users and has no leader.
Bitcoin’s success is also due to the fact that it does not have a leader and that everyone can contribute.
Bitcoin is a true democracy that gives power back to its users. The Bitcoin Blockchain is permissionless and trustless.
From now on, you can choose to download Bitcoin Core to become a node of the Bitcoin Blockchain. No one will be able to stop you.
If you are a developer, you can also choose to contribute to the Bitcoin source code which is totally open source.
Bitcoin belongs to everyone and that makes all the difference.
Bitcoin Is Backed By Math
Fiat currencies are in the hands of central bankers and politicians. The ever-increasing money supply of the U.S. dollar is something you can do nothing about while it devalues what you own.
Do the monetary and economic policy choices made over the past several decades still make you want to have confidence in your rulers?
For me, the answer is clearly no.
These same politicians would have us believe that Bitcoin is based on nothing at all. They are mistaken.
Bitcoin is based on mathematics and also people who trust the network.
The mathematical properties on which Bitcoin is based are known to everyone and can be accessed by anyone in the source code.
The fundamental value of Bitcoin is therefore in the mathematical computations necessary to secure transactions and create new Bitcoins.
If you prefer to believe in the word of politicians, Bitcoin may just not be for you.
On the other hand, if you want to believe in something that is not arbitrary and is immutable since it is based on mathematics, you should take a closer look at Bitcoin.
Bitcoin Is Transparent
One of the arguments that often comes up in the mouths of Bitcoin’s fiercest opponents is that its Blockchain promotes criminality by allowing the laundering of dirty money.
This is a totally false argument and the general public should understand that no other currency has shown such a level of transparency in history as Bitcoin.
Bitcoin is totally transparent and the content of its Blockchain is freely available to everyone.
All the transactions made since the creation of Bitcoin are therefore available to everyone, which explains why the Bitcoin Blockchain has now reached a size of 300 GB.
Since the transactions are not anonymous, people carrying out illicit activities via Bitcoin can be potentially identified.
Returning to the subject of money laundering, several studies conducted during 2018 have shown that the risk of money laundering with Bitcoin is minimal.
Bitcoin Can Not Be Stopped
The fact that Bitcoin has no leader makes it even more resistant to censorship by governments around the world. Indeed, no one can be sued to make Bitcoin stop working.
Bitcoin can’t be stopped.
Since the creation of Bitcoin, Western governments have been at a loss as to what to do about Bitcoin.
They are faced with a dilemma.
Some governments choose to ban Bitcoin and cryptocurrencies for their citizens.
This ban at the level of a country’s users does not change the fact that Bitcoin works well and that these users can still use it in a roundabout way.
Other governments are choosing to legalize it, thinking about regulating it so that they can take advantage of the financial windfall it represents in terms of capital gains taxes.
On the other hand, some point to the fact that Bitcoin would not work if the Internet were to be shut down across the board.
I would like to tell them that this is exactly the same for the current financial system. It is therefore not a problem specific to Bitcoin but generalized to all distributed systems.
In addition, some startups are working to develop solutions to make Bitcoin resilient in the event of an Internet outage by deploying an emergency network using specific satellite connections.
With the third Bitcoin Halving on the horizon, everyone is focused on the price of Bitcoin for the coming months and years. The price of Bitcoin is an important thing, but it is only a small part of the Bitcoin revolution.
In order to better measure how revolutionary Bitcoin is, I think it’s interesting to go back to the basics that make Bitcoin so strong and promising for the future.
The 8 immutable truths about Bitcoin that I have just highlighted to you will have made you more aware of what makes Bitcoin so different and so important for the future.