Bitcoin Will Save Us ₿

Principles of Bitcoin

  • Bitcoin Is the greatest technology for sovereignty and freedom the world has ever seen
  • Bitcoin Is the ultimate property of the human race (credit Michael Saylor)
  • Bitcoin encourages self-education and critical thinking
  • Bitcoin is misunderstood by those that benefit from the fiat system
  • Bitcoin is the best form of energy use the world has ever seen
  • Bitcoin is a bloodless revolution
  • Bitcoin will remove the power of governments to print money to fund their wars and broken policies
  • Bitcoin will be sought out by all
  • There will only be 21 million Bitcoin
  • Bitcoin is digital real estate in cyberspace
  • Bitcoin in 2021 is similar to the Internet in the early 90s
  • Bitcoin is the ultimate insurance policy against just about everything
  • Bitcoin is the only way you can take your wealth with you wherever you go no matter what and no one can take it from you
  • Bitcoin gets stronger when it is attacked (antifragile)

The Bitcoin Revolution is Underway

It is no coincidence that the powerful are tightening their grasp as their power is weakening.

2020 and now 2021 has brought this out into the open.

And Bitcoin is at the center of this crumbling of institutions whose time has come.

It's our responsibility to civilly disobey and peacefully opt-out and Bitcoin is the best way to do that.

I'm Colin.

I believe Bitcoin is our best chance at building a better world.

Fix the Money 💰 Fix the World 🌏

₿ Bitcoin is Sovereignty for 7 billion humans



My Projects

🎙 Better Human Pod

📺 YouTube

🌎 Better Human Co

🦌 Wild Foods

I use Swan Bitcoin to buy Bitcoin
This site will help you understand money, the dangers of fiat, and how to take control of your financial sovereignty with Bitcoin.

✍️ My Bitcoin Articles

The Bitcoin One-Pager
Start Here
My Thoughts on Alt-coins
Short Thoughts

🎙 The Bitcoin Will Save Us Podcast

Bitcoiners Are The Remnant
How Government Gets Power By Controlling Money
Stock-to-Flow: An Important Monetary Concept
Why Bitcoin is A Trojan Horse For Freedom
Gresham’s Law: An Important Monetary Concept
How To Be A Bitcoin Hodler (Holder)
The Properties of Money: Apples, Pots, and Bitcoin
Bitcoin Doesn't Care About Your Feelings
Mining: Part 2
Mining: Why Do We Need It?
If You Believe in Property Rights
The Cantillon effect
Do you need to understand the technology To Use Bitcoin And Benefit?
Bitcoin FUD: Is Bitcoin For Criminals?
What is Money Part 2: Money is Everything
Orange Pill Live With a Canadian Son and Mom
The Simplest Way To Think About Bitcoin
Bitcoin Will Save Us: Building The Better Human Company Publicly
What is the Goal of Money?
Bitcoin is a Mathematical Revolution
History of Money and Inflation: The Slave Trade Part 1
What is Money Part 1: Properties of Sound Money
Why the world needs Bitcoin (and so do you)
Bitcoin - Start Here
Bitcoin Fud: Can Bitcoin Be Hacked
Bitcoin and Energy FUD
Bitcoin and Freedom: A Trojan Horse
Is Bitcoin Bad For The Climate?
Am I willing to lose it all for what I believe?
Why Does Bitcoin Have Value
What Does Fiat Mean and Why You Should Care
Is Bitcoin the Next Myspace?
Is Bitcoin a Bubble?
What is Proof of Work?

Bitcoin Reference Area (Constantly growing)

Bitcoin Reference
Beginner Bitcoin Resources

Beginner-friendly resources to send your friends and family.

If these don't convince them, nothing will ;)

#1 Michael Saylor + Ross Stevens Interview

This 60-minute interview might be the most compelling exploration of Bitcoin I've ever heard. It helps to have a little financial background but not required. 

#2 Alex Gladstein: "Why Bitcoin Matters for Freedom"

This is a perfect introduction for people who resonate with Bitcoin as a tool for freedom, rather than an investment.

Here's a

5-minute video version

that is

#3 Vijay Boyapati: Bullish Case for Bitcoin

Written in 2018, this article has "orange pilled" more people than anything. Readers will understand the economic argument for Bitcoin in about a 45-minute read. 

#4 Lyn Alden: "3 Reasons I'm Investing in Bitcoin"

Lyn Alden is a traditional investor who became bullish on Bitcoin in 2020. Great resource for traditional finance types who want a dispassionate analysis.

#5 Preston Pysh: "Tell me about Bitcoin"

Here's the shortest introduction to Bitcoin we've found. Send this one-pager to anyone with a short attention span ;)

#6 Yan Pritzker's book "Inventing Bitcoin"

Swan is dedicated to education and we're giving this book away for free at SwanBitcoin.com/freebook.

It's a perfect introduction for someone who wants to understand how exactly bitcoin works in an easy-to-understand format.

Teach Yourself Bitcoin

The Bitcoin Whitepaper

What is Money?

Money: Fiat, Currency, Inflation
What is money? (Not finished)

The History and Evolution of Money

Money is a store of value, a medium of exhcange, and a unit of account

Money is energy storage - Introduced by Michael Saylor. This blew my mind.

You convert energy from your brain (thought) to your limbs to an external source. This energy creates value of some kind that someone else is willing to pay for. When you get paid, this represents energy you created that you will now store for a future energy exchange.

When you buy something in the future, you are buying someone else's energy.

Fascinating way to think about commerce and money.

Processed food was a revolution because we could safely store energy in a panty for long periods of time.

What is good money?

Fungible - the same as other forms

Durable - not easily waste away (tobbaco, sea shells, etc)

Portable - easy to move and transact with

Recognizable - easy to verify in person, gold, etc.

"Inflation is taxation without legislation." -Milton Friedman
What is fiat?

FIAT: By decree - Latin "be done"

Simply put, it’s backed by nothing and thus those that control it can manipulate it in whatever way they want

Commodity money, gold or silver backed money, is pegged to a physical commodity that then controls the supply and maintains the scarcity of the currency

What is inflation?
  • Inflation results in the decrease of purchasing power of a currency over time.
  • This happens via the expansion of the monetary supply (or expansion of anything subject to supply and demand)
  • The opposite is deflation, which is an increase in purchasing power.
  • Called "The Silent Tax" because you pay it without knowing it.
What $100 from 1913 is worth today

1913: $100

1923: $57.89

1933: $76.15

1943: $57.23

1953: $37.08

1963: $32.35

1973: $22.30

1983: $9.94

1993: $6.85

2003: $5.38

2013: $4.25

2019: $3.87

Graphic of the Dollar last 100 years
Inflation Tweets
"Inflation takes from the ignorant and gives to the well informed." -Venita VanCaspel
What is a gold standard? Why would that be better?

Currency is pegged to gold which stabalizes the value due to the difficulty of mining gold and it's relatievly constant inflation rate (around ~3% a year mining inflation)

A Bitcoin-backed dollar would be even better becuase Bitcoin has true scarcity and cannot be altered, manipulated, or increased in anyway outside of its already set supply schedule.

2020: The Year Bitcoin Became Humanity's Only Hope

In 2020, about 1/5 of all US dollars in existence were added to the monetary supply. (~$9 trillion)

In 2021, another 3 trillion was just passed with the current president talking about 3-6 trillion more for infrascture and possibly another stimulus.

This puts our current inflation rate at around 20% for the last year.

This means that every dollar you own is now worth only ~80% of what it was worth only 12 months ago.

If I went into your bank account and took out 20%, how would you feel?

When the government does it, you accept it because that's what everyone else does. Right?

Let's now assume that the current adminstration will keep pumping dollars into the system so they can virtue singal about how great they are and how they are going to fix all the problems.

We could guestimate that this number will be between 5% and 15% and come to 10% as a reasonable estimate.

If the inflation rate averages 10% of the next 5 years, you will HALF of your dollar purchasing and earning power.

You now have to make at least 10% more each year just to tread water.


What is Bitcoin?

Bitcoin is a cryptocurrency, a digital currency, made possible by the internet and cryptography, hashing, and P2P networks.

You own Bitcoins by buying them from someone else and that gets recorded on the public ledger. As long as you have your private keys, you have access to that Bitcoin forever and no one can take it from you.

Bitcoin is a peer to peer electronic cash, a new form of digital money that can be trans­ferred between people or computers without any trusted inter­me­diary (such as a bank) and whose issuance is not under the control of any single party.

Think of a paper dollar or metal coin. When you give that money to another person, they don’t need to know who you are. They just need to trust that the cash they get from you is not a forgery. Typically people do this with physical money using only their eyes and fingers or using special­ized testing equip­ment for more signif­i­cant amounts.

The majority of payments in our digital society are made over the Internet using a middleman service: a credit card company like Visa, a digital payment provider such as PayPal or Apple Pay, or an online platform like WeChat in China.

The movement toward digital payments brings with it the reliance on a central actor that has to approve and verify every payment. The nature of money has changed from a physical object you can carry, transfer, and authen­ti­cate yourself to digital bits that have to be stored and verified by a third party that controls their transfer.

As we give up our cash for conve­nient digital payments, we also create a system where we give extra­or­di­nary powers to those who would seek to oppress us. Digital payment platforms have become the basis of dystopian author­i­tarian methods of control, such as those used by the Chinese govern­ment to monitor dissi­dents and prevent citizens whose behavior they don’t like from purchasing goods and services.

Bitcoin offers an alter­na­tive to centrally controlled digital money with a system that gives us back the person to person nature of cash, but in a digital form. Bitcoin is a digital asset that is issued and trans­ferred over a network of inter­con­nected computers that each indepen­dently verifies that everyone else is playing by the rules.

Short summary for Why Bitcoin

Because we don't have sound money.

Why don’t we have sound money? Human error/avarice/mismanagement.

Sound money is the foundation of a fair and equitable society. Without it, you get massive inequality and an ultra-powerful elite that can maintain power for generations.

  • Bitcoin is the first censor-proof money in existence.
  • You can’t control it, manipulate it, print it, inflate it, or ban it.
  • It is a discovery akin to fire or the wheel and is going to be paramount to the next phase of humanity.
Why Bitcoin will win

Everything there is, divided by 21 million.

As more people realize that the product of their labor (i.e., their wealth, their savings and their money) is constantly being eroded, they are going to seek to store it in something that cannot be diluted. Bitcoin is the best possible option. It is accessible all around the world, and can be stored as pure, unadulterated, unconfiscatable information.

  • It’s the perfect store of value: I know exactly how much I have in relationship to the whole, and I know that it cannot be diluted, altered or co opted.
  • It’s the perfect medium of exchange: I can send what I want, to whom I want, whenever I want and there is no power in the universe that can stop me from doing so.
  • It’s the perfect unit of account:
  • I can measure all other goods and services in sats and as the purchasing power grows, it’s pure digital nature means we can continue to sub-divide the units to measure smaller and more fractional goods and services, forever.
  • The best money always wins.
  • There is no outcome where Bitcoin loses, because the best money always wins by the sheer force of natural selection and survival.

Money is the grandest, oldest language and energy transmission medium of all. It’s how we measure, store and transact human action and it has been with us since the beginning of time.

As a result, money is a winner-take-all game.

Because it’s the most important language of all, and because each individual wants to naturally select that which performs each function of money best, the hardest, soundest, most powerful money comes out on top.

Today, the USD reigns supreme not through merit, but because it is enforced by a kabal. Bitcoin will be the global standard, not because of some fiat decree or the force of the nation state, but through natural, market selection.

That’s what makes it so powerful.

Scarce: Bitcoin is the discovery of absolute scarcity, akin to discovering the number 0
Where did Bitcoin come from?

Bitcoin was invented by a person or group known by the pseudonym of Satoshi Nakamoto around 2008. No one knows Satoshi’s identity, and as far as we know, they’ve disap­peared and haven’t been heard from for years.

On Feb 11, 2009, Satoshi wrote about an early version of Bitcoin on an online forum for cypher­punks, people who work on cryptog­raphy technology and are concerned with individual privacy and freedom. Though this isn’t the first official release announce­ment of Bitcoin, it does contain a good summary of Satoshi’s motivations

From Satoshi

I’ve devel­oped a new open source P2P e‑cash system called Bitcoin. It’s completely decen­tral­ized, with no central server or trusted parties, because every­thing is based on crypto proof instead of trust. […]

The root problem with conven­tional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat curren­cies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electron­i­cally, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micro­pay­ments impossible.

A gener­a­tion ago, multi-user time-sharing computer systems had a similar problem. Before strong encryp­tion, users had to rely on password protec­tion to secure their files […]

Then strong encryp­tion became avail­able to the masses, and trust was no longer required. Data could be secured in a way that was physi­cally impos­sible for others to access, no matter for what reason, no matter how good the excuse, no matter what.

It’s time we had the same thing for money. With e‑currency based on crypto­graphic proof, without the need to trust a third party middleman, money can be secure and trans­ac­tions effortless. […]

Bitcoin’s solution is to use a peer-to-peer network to check for double-spending. In a nutshell, the network works like a distrib­uted timestamp server, stamping the first trans­ac­tion to spend a coin. It takes advan­tage of the nature of infor­ma­tion being easy to spread but hard to stifle. For details on how it works, see the design paper at http://www.bitcoin.org/bitcoin.pdf

Why Bitcoin? (Long)

P2P stands for peer to peer and indicates a system where one person can interact with another without anyone in the middle, as equal peers. You may recall P2P file-sharing technolo­gies like Napster, Kazaa, and BitTor­rent, which first enabled people to share music and movies without an inter­me­diary. Satoshi designed Bitcoin to allow people to exchange e‑cash, electronic cash, without going through an inter­me­diary in much the same way.

The software is open source, which means that anyone can see how it works and contribute to it. We don’t need to believe anything Satoshi wrote in his post about how the software works. We can look at the code and verify how it works for ourselves. Further­more, we can evolve the function­ality of the system by changing the code.

It’s completely decen­tral­ized, with no central server or trusted parties…

Satoshi mentions that the system is decen­tral­ized to distin­guish it from systems that do have central control. Prior attempts to create digital cash such as DigiCash by David Chaum were backed by a central server, a computer, or a set of computers that was respon­sible for issuance and payment verifi­ca­tion under the control of one corporation.

Such centrally controlled private money schemes were doomed to failure; people can’t rely on money that can disap­pear when the company goes out of business, gets hacked, suffers a server crash, or is shut down by the government.

Bitcoin is maintained by a network of individ­uals and compa­nies all over the world. To shut Bitcoin down would require shutting down tens to hundreds of thousands of computers around the world, many in undis­closed locations. It would be a hopeless game of wack-a-mole as any attack of this nature would simply encourage the creation of new Bitcoin nodes, or computers on the network.

…every­thing is based on crypto proof instead of trust

The Internet, and indeed most modern computer systems, are built on cryptog­raphy, a method of obscuring infor­ma­tion so that only the recip­ient of the infor­ma­tion can decode it. How does Bitcoin get rid of the require­ment of trust? Instead of trusting someone that says “I am Alice” or “I have $10 in my account,” we can use crypto­graphic math to state the same facts in a way that is very easy to verify by the recip­ient of the proof but impos­sible to forge. Bitcoin uses crypto­graphic math throughout its design to allow partic­i­pants to check the behavior of everyone else without trusting any central party.

We have to trust [the banks] with our privacy, trust them not to let identity thieves drain our accounts

Unlike using your bank account, digital payment system, or credit card, Bitcoin allows two parties to transact without giving up any person­ally identi­fying infor­ma­tion. Central­ized repos­i­to­ries of consumer data stored at banks, credit card compa­nies, payment proces­sors, and govern­ments are giant honey­pots for hackers. As if to prove Satoshi’s point, Equifax was massively compro­mised in 2017, leaking the identi­ties and finan­cial data of more than 140 million people to hackers.

Bitcoin decou­ples finan­cial trans­ac­tions from real-world identi­ties. After all, when we give physical cash to someone, they don’t need to know who we are, nor do we need to worry that after our exchange, they can use some infor­ma­tion we gave them to steal more of our money. Why shouldn’t we expect the same, or better, from digital money?

The central bank must be trusted not to debase the currency, but the history of fiat curren­cies is full of breaches of that trust.

Fiat, which is Latin for “let it be done,” refers to govern­ment and central-bank issued currency, which is decreed as legal tender by the govern­ment. Histor­i­cally, money emerged from things that were hard to produce, easy to verify, and easy to trans­port, such as seashells, glass beads, silver, and gold.

Any time something was used as money, there was a tempta­tion to create more of it. If someone came along with superior technology for quickly creating lots of something, that thing lost value. European settlers were able to strip the African conti­nent of its wealth by trading easy to produce glass beads for hard to produce human slaves. The same happened to the Native Ameri­cans when the colonists discov­ered the ability to quickly produce wampum shells, which were consid­ered previ­ously scarce by the natives.

Over time and throughout the world, people realized that only gold was scarce enough to act as money without fear that someone else could create lots more of it. We slowly shifted from a world economy that used gold as money to one where banks issued paper certifi­cates as claims on that gold. Nixon ended the inter­na­tional convert­ibility of the US dollar to gold in 1971 with a tempo­rary order that quickly became permanent.

The end of the gold standard allowed govern­ments and central banks full permis­sion to increase the money supply at will, diluting the value of each note in circu­la­tion, known as debase­ment. Although govern­ment-issued, redeemable for nothing, pure fiat currency is the money we all know and use daily, it’s a relatively new exper­i­ment in the scope of world history.

We must trust our govern­ments not to abuse their printing press, but we don’t need to look far for examples of breaches of that trust. In autocratic and centrally planned regimes where the govern­ment has its finger directly on the money machine, such as Venezuela, the currency has become nearly worth­less. The Venezuelan Bolivar went from 2 Bolivar to the US dollar in 2009 to 250,000 Bolivar to the US dollar in 2019.

Satoshi wanted to offer an alter­na­tive to fiat currency whose supply is always expanding unpre­dictably. To prevent debase­ment, Satoshi designed a system of money where the supply was fixed and issued at a predictable and unchange­able rate. There will only ever be 21 million bitcoins. However, each bitcoin can be divided into 100 million units now called satoshis, producing a final total of 2.1 quadrillion satoshis in circu­la­tion around the year 2140.

Before Bitcoin, it was not possible to prevent a digital asset from being infinitely repro­duced. It is cheap and easy to copy a digital book, an audio file, or video and send it to your friend. The only excep­tions to this are digital assets controlled by middlemen. For example, when you rent a movie from iTunes, you can watch it on your device only because iTunes controls the delivery of the movie and can stop it after your rental period.

Similarly, your bank controls your digital money. It is the bank’s job to keep a record of how much money you have. If you transfer it to someone else, they autho­rize or deny such a transfer.

Bitcoin is the first digital system that enforces scarcity without any middlemen and is the first asset known to humanity whose unchange­able supply and schedule of issuance is known entirely in advance. Not even precious metals like gold have this property since we can always mine more and more gold if it is profitable to do so. Imagine discov­ering an asteroid containing ten times as much gold as we have on earth. What would happen to the price of gold given such abundant supply? Bitcoin is immune to such discov­eries and supply manip­u­la­tions. It is simply impos­sible to produce more of it.

Data could be secured in a way that was physi­cally impos­sible for others to access, no matter for what reason, no matter how good the excuse, no matter what. […] It’s time we had the same thing for money

Our current methods of securing money, such as putting it in a bank, rely on trusting someone else to do the job. Trusting such an inter­me­diary not only requires confi­dence that they won’t do something malicious or foolish, but also that the govern­ment won’t seize or freeze your funds by exerting pressure on this middleman.

However, it has we have seen time and time again that govern­ments can and do shut down access to money when they feel threat­ened. It might sound silly to someone living in the United States, or another highly regulated economy, to contem­plate waking up with your money gone, but it happens all the time. I’ve had my funds frozen by PayPal simply because I hadn’t used my account in months. It took me over a week to get restored access to “my” money. I’m lucky to live in the United States, where at least I could hope to seek some legal relief if PayPal froze my funds, and where I have basic trust that my govern­ment and bank won’t steal my money.

Much worse things have happened, and are currently happening, in countries with less freedom.  Banks shut down during currency collapses in Greece. Banks in Cyprus used bail-ins to confis­cate funds from their customer. The govern­ment declared certain banknotes worth­less in India.

The former USSR, where I grew up, had a govern­ment-controlled economy leading to massive short­ages of goods. It was illegal to own foreign curren­cies such as the US dollar. When we wanted to leave, my family was allowed to exchange only a limited amount of money per person to US dollars under an official exchange rate that was vastly divorced from the true free market rate. Effec­tively, the govern­ment stripped us of what little wealth we had by keeping an iron grip on the economy and the movement of capital.

Autocratic countries tend to imple­ment strict economic controls, preventing people from withdrawing their money from banks, carrying it out of the country, or exchanging it for not-yet-worth­less curren­cies like the US dollar on the free market. This allows the govern­ment free reign to imple­ment insane economic exper­i­ments such as the socialist system of the USSR.

Bitcoin does not rely on trust in a third party to secure your money. Instead, Bitcoin makes your coins impos­sible for others to access without a unique key that only you hold, no matter for what reason, no matter how good the excuse, no matter what. By holding Bitcoin, you hold the keys to your own finan­cial freedom. Bitcoin separates money and state

Bitcoin’s solution is to use a peer-to-peer network to check for double-spending […] like a distrib­uted timestamp server, stamping the first trans­ac­tion to spend a coin

network refers to the idea that a bunch of computers are connected and can send messages to each other. The word distrib­uted means that there is not a central party in control, but rather that all the partic­i­pants coordi­nate to make the network successful.

In a system without central control, it’s essen­tial to know that nobody is cheating. The idea of double-spending refers to the ability to spend the same money twice. Physical money leaves your hand when you spend it. Digital trans­ac­tions, however, can be copied just like music or movies. When you send money through a bank, they make sure that you can’t move the same money twice. In a system without central control, we need a way to prevent this kind of double-spending, which is effec­tively the same as forging money.

Satoshi is describing that the partic­i­pants of the Bitcoin network work together to timestamp (put in order) trans­ac­tions so that we know what came first. There­fore we can reject any future attempts to spend the same money.

Satoshi tackled several inter­esting technical problems to address the issues of privacy, debase­ment, and central control in current monetary systems. In the end, he created a peer to peer network that anyone could join without revealing their identity or having to trust any other participant.

How has Bitcoin evolved over the last decade?

When Bitcoin launched, only a handful of people used it and ran the Bitcoin software on their computers to power the Bitcoin network. Most people at the time thought it was a joke, or that the system would reveal serious design flaws that would make it unworkable.

Over time, more people joined the network, using their computers to add security to the network. People started exchanging Bitcoins for goods and services, giving it real-world value. Currency exchanges emerged that swapped Bitcoin for almost every tradi­tional fiat currency in the world.

Ten years after its inven­tion, Bitcoin is used by millions of people with tens to hundreds of thousands of nodes running the free Bitcoin software, which is devel­oped by hundreds of volun­teers and compa­nies world­wide. The Bitcoin network has grown to secure more than a hundred billion dollars worth of value.

Computers that partic­i­pate in securing the Bitcoin network are known as miners. They operate indus­trial opera­tions across the world, investing millions of dollars into special­ized mining hardware that only does one thing: ensure that Bitcoin is the most secure network on the planet.

Miners expend electricity to make Bitcoin trans­ac­tions secure against modifi­ca­tion. Because miners compete with each other for scarce number of bitcoins produced per day, they must always find the cheapest energy sources on the planet to stay profitable. Miners operate in places ranging from hydro­elec­tric dams in the far reaches of China to wind farms in Texas, to Canadian oilfields that produce gas that would other­wise be vented or flared into the atmosphere.

Although Bitcoin is highly publi­cized and debated in the media, we estimate that only a few million people in the world have started saving Bitcoin regularly. For many people, especially those who have never lived under oppres­sive regimes, this inven­tion of a new form of digital money outside the control of govern­ment can be very challenging to under­stand and appre­ciate. That’s why we’re here. We want to help you under­stand Bitcoin and own your future!

Why was Bitcoin's breakthrough?
Double spend problem

The Byzantine Generals Problem is a term etched from the computer science description of a situation where involved parties must agree on a single strategy in order to avoid complete failure, but where some of the involved parties are corrupt and disseminating false information or are otherwise unreliable

When Bitcoin first appeared, it marked a major advance in computer science, because it solved a fundamental problem of commerce on the internet: how do you transfer value between two people without a trusted intermediary (like a bank) in the middle?

As Mike Maloney explains in his recent documentary, the Byzantine Generals’ Problem can be summarized as a question: How do you make sure that multiple entities, which are separated by distance, are in absolute full agreement before an action is taken?

the importance of decentralization

Satoshi mentions that the system is decen­tral­ized to distin­guish it from systems that do have central control. Prior attempts to create digital cash such as DigiCash by David Chaum were backed by a central server, a computer, or a set of computers that was respon­sible for issuance and payment verifi­ca­tion under the control of one corporation.

Such centrally controlled private money schemes were doomed to failure; people can’t rely on money that can disap­pear when the company goes out of business, gets hacked, suffers a server crash, or is shut down by the government.

Bitcoin is maintained by a network of individ­uals and compa­nies all over the world. To shut Bitcoin down would require shutting down tens to hundreds of thousands of computers around the world, many in undis­closed locations. It would be a hopeless game of wack-a-mole as any attack of this nature would simply encourage the creation of new Bitcoin nodes, or computers on the network

How are Bitcoins made?

Miners, which are just computers controlled by private individuals, validate transactions and maintain the public ledger, which is why you can't hack it or centralize it or censor it. Miners get rewarded bitcoins for providing computer power to maintain the network. They then sell these coins to the market to pay thier energy costs.

How is BItcoin valued?

Price is determined by supply and demand and if supply is abundant demand shrinks and if supply is scarace demand increases.

There will be 21 million Bitcoin only forever. About 4-5 million are already lost and never coming back. Every 4 years, then amount of Bitcoins coming to the market from mining activties is cut in half.

How do I store bitcoin?

Cold storage - storage not connected to the Internet

Hot storage - a wallet or excahnge always connected to the internet

You could write down your private key on a piece of paper and bury that in your front yard and that would be cold storage.

What is a blockchain?

How does a blockchain work - Simply Explained

Bitcoin is an implementation of a blockchain, and a blockchain is an implementation of a DLT. Source

A blockchain, however, is simply a database that is public (no one owns it), distributed (there is no centralised server), continuously updated by everyone, and secured by cryptography that each participant constantly validates.

A blockchain refers to the public ledger of transactions. It is immutable, chronoligcaly, and grows with every new transaction.

How does it work?

Each computer in then network updates and verifies every transaction. This process is akin to the discovery of fire—the abilty to create a trustless decentralized way to agree on something is one of the greatest inventions of humanity.

DLT - distributed ledger technology

At the core of distributed ledger technologies (DLTs) is the distributed ledger, which contains a record of all transactions in a system.

As the name suggests, a distributed ledger is called this because data is stored across a network of computers called nodes.

Proof of Work vs Proof of Stake

A central aspect of blockchain technology is the distributed ledger. Key to the operation of a distributed ledger is ensuring the entire network collectively agrees with the contents of the ledger; this is the job of the consensus mechanism.

Behind many cryptoassets, there is a consensus mechanism. The purpose of a consensus mechanism is to verify that information being added to the ledger is valid i.e. the network is in consensus. This ensures that the next block being added represents the most current transactions on the network, preventing double spending and other invalid data from being appended to the blockchain. In addition, the consensus mechanism keeps the network from being derailed through constant forking. Source

There have been a number of different consensus mechanisms devised, each with their own pros and cons. They all serve the same core purpose as described above, but differ in methodology. The primary difference between varying consensus mechanisms is the way in which they delegate and reward the verification of transactions.


Constant forking of a blockchain is not healthy for a network and leads to instability. In Proof of Work systems, if a blockchain is forked, miners will have to make the decision to continue supporting the original blockchain or switch to the newer forked blockchain. In order to support both sides of the fork, a miner would have to split their computational resources between the two. In this way, Proof of Work systems naturally discourages constant forking from occurring through an economic incentive.

Proof of Stake systems, on the other hand, do not inherently discourage forking. When a blockchain forks, a validator will receive a duplicate copy of their stake on the newly forked blockchain. If a validator signs off on both sides of the fork, they could potentially claim twice the amount of transactions fees as a reward and double spend their coins; this is known as the ‘nothing at stake’ problem. A participant is not required to increase their stake in order to validate transactions on multiple copies of a blockchain, thus, there is no economic incentive preventing this bad behavior.

Bitcoin Mining

In Satoshi Nakamoto’s Bitcoin White Paper, it is theorized that the only way to overpower the network strength of Blockchain networks is through a 51% attack (Read more about 51% attacks in Blockchain Basics) The Bitcoin White Paper proposed the use of a Proof of Work system to prevent an entity from gaining a majority control over the network. Applying Proof of Work in this manner is arguably the central idea necessary for Bitcoin, as it allows for trustless and distributed consensus.

How Bitcoin mining works:

  1. A group of transactions are bundled into a memory pool (mempool).
  2. Miners verify each transaction in the mempool is legitimate by solving a mathematical puzzle.
  3. The first miner to solve the puzzle gets rewarded with newly minted bitcoin (the block reward) and network transaction fees.
  4. The verified mempool, now called a block, is attached to the blockchain.

The type of puzzle miners must solve has a few key features that define the Proof of Work system:

  • The puzzles are asymmetric, meaning it is difficult for miners to solve but the correct answer is easily verified by the network.
  • The puzzles have no skill involved, they require brute force. This ensures certain miners do not gain an unfair advantage over others. The only way for a miner to improve their odds of solving a puzzle is to acquire additional computational power; something that is very energy and capital intensive. Read about the computational power required to gain majority control of the Bitcoin Blockchain in Blockchain Security.
  • The puzzle parameters are periodically updated in order to keep the block time consistent. The Bitcoin protocol, for example, has a block generation target time of 10 minutes. So for example, if the average block time over two weeks has decreased to below 10 minutes, the network will automatically increase the difficulty. This, in turn, increases the number of calculations and the average time required for the puzzle to be solved.
Bitcoin transactions

bitcoin transaction can only transfer rights-to-use of any amount of bitcoin from one bitcoin address to another. The transaction contains basic information of how much bitcoin you’re spending and what address you’re sending the bitcoin to.