BITCOIN: A CRASH COURSE
CHRIS INCIDENT - STASIS
Bitcoin is having a bit of a moment right now. The price of Bitcoin in the past few weeks has reached new all time highs surpassing most of the crypto-communities / everyone's predictions. Big investors are throwing around lofty statements like it will be worth more than $1 Trillion in under 10 years. Cryptonerds and silk road users from 2010 are saying I told you so.
If you're looking to jump in, this is the ultra slimmed down crash course.
History of Bitcoin:
Bitcoin was reportedly started in 2008 by a person or group of people Satoshi Nakamoto (it's still unconfirmed). At this time, Nakamoto posted a message on a cryptography mailing list titled, "Bitcoin P2P e-cash paper." In it was a link to a white paper called "Bitcoin: A Peer-to-Peer Electronic Cash System." Both of these are still available online.
In these papers, Nakamoto laid out the concept for Bitcoin as a decentralized, digital currency. Being decentralized means there is no single administrator but rather a public ledger of transactions that anyone can store on their computer, says Kris Marszalek, CEO of Crypto.com. "Coins can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries."
Jump to 2010 - The first commercial use of bitcoin was reportedly in 2010 when someone reportedly purchased two Papa John's pizzas for 10,000 bitcoin. At the time of writing this, that's roughly worth $228,000,000.00 currently.
Fundamentals of Bitcoin:
Bitcoin is powered by open-source code known as blockchain, which creates a shared public ledger. Each transaction is a “block” that is “chained” to the code, creating a permanent record of each transaction. If you help run transactions on this code (think of it like using your computer to help support the network), it's called mining and you get paid a little bit for adding the new block.
The are a few different way to store bitcoin but for simplicity I'm going to talk about the easiest way which is the web wallet. Web wallets store your private keys (your code to buy and sell) on a server, which is constantly online and controlled by a third party. Different services offer different features, some of which can link to mobile and desktop wallets and replicate your addresses across the devices you own.
The above services all allow you to buy and sell directly from their platforms as well which makes things simple so that you don't have to transfer anything to your wallet.
Why are things popping right now?
It's going off at the moment because the big dogs want in. According to Bloomberg - Mexican media billionaire Ricardo Salinas Pliego recently tweeted that he’s invested 10% of his liquid assets in Bitcoin. Wall Street legends Stanley Druckenmiller, Paul Tudor Jones, and Bill Miller have endorsed buying it. After influential money manager Rick Rieder went on CNBC last month and said Bitcoin “is here to stay,” more than 874,000 viewers watched the clip on Twitter, attracting far more hits than his segments on Covid-19 or monetary policy.
According to Yahoo - Over the summer, Fidelity Investments announced the launch of a passively managed Bitcoin fund aimed at qualified purchasers through family offices, registered investment advisers and other institutions. Public companies Square Inc. and MicroStrategy Inc. recently invested in the coin. Investment managers Paul Tudor Jones and Stan Druckenmiller have backed the digital asset as a hedge against potential inflationary pressure, though price increases remain subdued.
Is Bitcoin an investment?
Knowing all this, a common question is "is bitcoin a worthwhile investment?"
The answer is that it's a tough question to answer. According to U.S. News - "Bitcoin is following principles of economics and principles of market efficiency," says Hemang Subramanian, assistant professor in Florida International University's business information systems department. "It is an asset that is not controlled by a central entity, that is secure, international and fungible, liquid and is available in a limited supply for trade. This demand at near-constant supply has caused prices to go up disproportionately in a short period of time, attracting more investors."
If there's ever a celeb investor to follower, even the bit cat is on it - "Ray Dalio, the legendary billionaire founder and co-chairman of the world's biggest hedge fund, Bridgewater Associates, has admitted bitcoin's now established itself as a "gold-like asset alternative.""
Can it be stolen?
Hell yeah it can, and has. Some crazy shit has happened in the fuckery department of bitcoin. Most recently, the largest cryptocurrency exchange in Canada, QuadrigaCX, experienced a little problem that resulted in what appears to be a permanent loss of over $130 million for its many customers. A 20-year-old college kid was just sentenced to 10 years in prison for stealing more than $5 million by phone hacking.
Just to be clear, this entails breaking into someone's wallet, not the system itself which is apparently impossible.
The two most common ways this happens is by getting your password or sim card swapping.
- Passwords - Be careful with your passwords. To get into your wallet you'll need a password. Don't be a Joey and use the same password you use for everything else.
- SIM Card Swapping - This occurs when someone contacts your wireless carrier and is able to convince the call center employee that they are, in fact, you, using your personal data. They do this by using data that's often exposed in hacks, data breaches, or information you publicly share on social networks to trick the call center employ into switching the SIM card linked to your phone number, and replace it with a SIM card in their possession. Once your phone number is assigned to a new card, all of your incoming calls and text messages will be routed to whatever phone the new SIM card is in. At first glance, it seems somewhat harmless. But when you consider that most of us have our phone numbers linked to our bank, email and social media accounts, you quickly begin to see how easy it would be for someone with access to your phone number can take over your entire online presence. Make sure your phone is locked down and again, keep your passwords rotated.
- Yahoo - FOMO by Big Investors May Support Bitcoin’s Polarizing Rally
- Forbes - How Can Bitcoin Be Lost Or Stolen When It's In An Immutable Encrypted Distributed Ledger?
- Forbes - Another Billionaire Wall Street Legend Has Changed His Tune On Bitcoin
- WSJ - ‘Our Cash Went to Something’: Customers Hunt for Bankrupt Crypto Exchange’s Missing Millions
- Bloomberg - The Wealthy Are Jumping Into Bitcoin as Stigma Around Crypto Fades
- U.S. NEWS - The History Of Bitcoin
- Bitcoin.org - Bitcoin - How it Works
- Vice - Hacker Who Stole $5 Million By SIM Swapping Gets 10 Years in Prison
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