Bitcoin and Crypto Currencies

Josh Ellithorpe - December 7th 2019
@zquestz

The Beginning

• bitcoin.org is registered August 18th, 2008.
• The bitcoin whitepaper Bitcoin: A Peer-to-Peer Electronic Cash System is released October 31st, 2008 by Satoshi Nakamoto.
• The bitcoin network launched January 3rd, 2009.

So what is Bitcoin?

When people use the term Bitcoin they generally are referring to the currency.

However, Bitcoin is much more than a currency, it is an entire system designed to enable peer to peer cash.

How does Bitcoin work?

Bitcoin is a Global Ledger

At its core, Bitcoin is a global ledger that records every user's transactions.
 

This ledger is shared on thousands of computers.

Bitcoin was the first currency to leverage a blockchain. This helps guarantee the integrity of the ledger.

What is a blockchain?

The Blockchain

A blockchain is a data structure composed of a series of blocks. Blocks are merely containers that can store any type of data.

The blocks are cryptographically linked to prevent manipulations of the recorded data.

Now back to Bitcoin...

The Bitcoin Network

• Miners add blocks by solving a computationally intensive challenge.
• Blocks are filled with transactions.
• The miner is awarded bitcoins for his work!
• There will be a maximum of 21 million bitcoins created.

The Initial Promise

• Fully peer to peer with no middlemen.
• Decentralized and censorship resistant.
• Nearly instant transactions.
• Low transaction fees.
• Pseudonymous and open to all.

Now fast forward to today...

The Industry Has Expanded

• There are now thousands of crypto currencies.
• There are exchanges all over the world.
• The top 5 crypto currencies are BTC, ETH, XRP, BCH and LTC.
• There are multiple forks of Bitcoin.
• The market has been flooded by investors and speculators.

There are a lot of options...

Many of them use experimental tech and consensus algorithms.

The Great Debate

Online, the fight for crypto currency supremacy rages on every day. There have been network attacks, misinformation campaigns, propaganda, and censorship on major forums to push the agenda of different projects.

I encourage everyone to do their own research, and really look at the different crypto currency communities to understand their values and mission.

What can crypto currencies enable?

Empowering the Unbanked

There are over 2 billion people that don't have financial services. This is primarily because they do not have any form of government ID, and therefore can't use the banking system. This includes, but is not limited to those that live in poverty and refugees who have had to flee their homes.

Crypto currencies can allow anyone with a phone to participate. No identification is required. Many crypto currencies offer very low transaction fees. They are the ideal fit for this use case.

Direct Humanitarian Aid

Crypto currencies can enable direct transfer to anyone on the planet. This means that for the first time, it is easy to send $1, or even $.25 to anyone. This opens the door for direct humanitarian aid. People can support those in need all over the world, and not worry about the high fees to move dollars or euros to developing nations.

This is already happening with projects like https://eatbch.org and https://givecrypto.org

Safer Transport Through Borders

Refugees and others traveling to new countries have to be very careful when traveling with traditional fiat currencies or other valuables.

With crypto currencies we merely need to remember 12 words and they can restore their wallet to access their funds at any time. This can make it easier for us to travel to a new location and maintain our wealth.

Reduced Reliance On Fiat Currencies

“Give me control of a nation's money and I care not who makes the laws.”

~ Mayer Amschel Rothschild

Crypto currencies finally allow a system of wealth to exist outside of the nation state. Finally a world where everyone is playing by the same rules, and no central power can print money at will.

What makes a good currency?

Monetary Policy

Every crypto currency has different monetary policies. Some have a fixed supply, and some are uncapped. Some are even issued by a single entity which can control the issuance to the network.

If we are looking towards the future, and learning our lessons from the past, we want to try and pick currencies that have a fair issuance, offer low fees, and are truly designed to be decentralized and avoid capture of a single entity.

Exchange Liquidity

In order for a crypto currency to be useful to the world, it should be easy for us to convert crypto to other currencies easily. Therefore we want to try and use currencies that have a high market cap, and plenty of places online to acquire the currency.

Currently the top 5 are BTC, ETH, XRP, BCH and LTC

Tech/Development

Crypto currencies move at a crazy pace. The innovation in the space over the last 10 years has been astounding. When looking at the different options on the market, pay close attention to the ones that have tested tech and active builders.

Developers are key for a number of reasons:

• They build wallets and improve the user experience.
• Increase the scale of the networks to accommodate more users.
• Support the network and extend it with new features.

Community

Pay close attention to the focus of the community. See if people are using crypto currency to be a tool that enables others, or if they value speculation and personal profits in the market.

Ideally to change the world we need to focus on communities that are like minded. That want the rise of peer to peer cash for the planet. Ones that want to empower the unbanked, and help the world see a money free of the nation state.

Privacy

Every crypto currency has different levels of privacy, and this is a hot topic. Currently truly private coins like Monero and ZCash have limited liquidity and are not listed on as many exchanges. Governments are less likely to allow them to trade freely.

The main coins that are listed on exchanges, and most widely used/traded, are pseudo-anonymous. These tend to be the most useful, and allow you to audit all new coins created by miners, and every transaction on the network.

In fact all of the top 5 coins are all pseudo-anonymous.

Thank You!

- Josh Ellithorpe @zquestz

As an added surprise, if you are interested in setting up your first crypto currency wallet, see me after the talk.