A new intro to Bitcoin: The 9-minute read that could change your life – Cointelegraph Magazine

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A new intro to Bitcoin: The 9-minute read that could change your life

“The most compelling evidence that Bitcoin works as advertised is the history of its operation so far. The longer Bitcoin continues to exist, the more seriously you should take it.”

by Knifefight 15 min December 28, 2021

New Intro to Bitcoin 9 minutes 2022

By now, you’ve probably heard of Bitcoin. You may have heard that it has made some people rich. You may also have heard that it’s a new form of digital money and that it’s the future of commerce, or that it’s a criminal enterprise and that it’s bad for the planet.

The messaging is confused and confusing, which is partly because no one person controls it — just like Bitcoin, which belongs to… well, all of us.

In this short essay, I want to help the Bitcoin-curious understand a few facts about the world’s top cryptocurrency. It’s not technical, and it’s not hard to follow. It’s not comprehensive, either, which is why this article is peppered with links so that you can find out more.

I’m not advocating for Bitcoin as an investment, although I do think it’s worth owning a little. I’m just trying to set the record straight on a few misconceptions and help newcomers to the Bitcoin community get up to speed quickly with a few key concepts. Hopefully, if you’re reading this with an open mind, you’ll realize quickly that there’s much more to Bitcoin than its price.

There are babies in the bathwater

Let’s start by getting a few things out of the way: Cryptocurrency is a dangerous, often ugly place. There are countless scams, hacks and exploits. It appeals to degenerate gamblers, criminals and fools. Motivated reasoning and sunk-cost fallacy prop up bad ideas long after they should have collapsed. Con artists thrive in the open, and ordinary people often lose their money. The crypto space is 95% bullshit by volume, so it’s understandable that some people conclude it must be entirely bullshit.

But mostly bullshit is not the same thing as entirely bullshit. Dismissing crypto because it is full of scams is like dismissing Twitter because the average tweet is terrible. The problem is not that Twitter (or crypto) has nothing to offer; the problem is that it takes time and energy to learn how to dig through the bullshit and find the genuinely interesting ideas.

Rejecting cryptocurrency entirely is much easier and seems to offer a lot of moral clarity — but it leaves behind a nagging question: If cryptocurrency is so obviously awful, why doesn’t it just die?

Bitcoin vs Dot Com assets and other bubbles

Bitcoin is not going away

An interesting thing about Bitcoin is that almost no one believes in it right away. Bitcoin’s design is so ugly and counterintuitive that almost everyone rejects it as impossible at first. There were around three years between when I first heard about Bitcoin and when I finally started to seriously investigate it. I studied game theory and mechanism design in grad school, so I knew exactly why Bitcoin couldn’t work. I just couldn’t figure out why it was still around.

In theory, I was confident that Bitcoin could not exist… but in practice, it did. And when theory conflicts with observed reality, it is theory that must change. I became skeptical of my skepticism. I read the white paper . I changed my mind.

More than anything I can write or say, the most compelling evidence that Bitcoin works as advertised is the history of its operation so far. The longer Bitcoin continues to exist, the more seriously you should take it.

The academic term for this is the Lindy effect — the idea that the longer something has survived, the longer you should expect it to continue. We could all collectively decide tomorrow that gold is no longer valuable, and we could decide to keep listening to today’s hit singles forever. But we probably won’t.

Gold has been valuable for a long time, so it will probably still be valuable a long time from now. Today’s top songs are mostly new, which suggests that tomorrow’s top songs will probably mostly be new as well. The continued existence of something is evidence it will continue existing. That’s the Lindy effect.

That’s why governments around the world have stopped ignoring Bitcoin and started to develop formal policies to outlaw , regulate or adopt it . A policy of ignoring Bitcoin and assuming it will go away on its own is no longer realistic. If Bitcoin was going to go away on its own, it already would have.

Ponzi will not reveal secret

Bitcoin has value because it is useful

A common objection to Bitcoin is that since it isn’t backed by anything, it must not be worth anything. Since it doesn’t have any intrinsic utility, it must be a greater fools’ game , where the only goal is to sell your worthless bags at a higher price to an even greater fool than you. It is true that the only use for Bitcoin is to transfer your Bitcoin to someone else — but that doesn’t mean Bitcoin is useless. Transferring value is a valuable service. That’s why banking is so lucrative.

“As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: – boring grey in colour – not a good conductor of electricity – not particularly strong, but not ductile or easily malleable either – not useful for any practical or ornamental purpose and one special, magical property: – can be transported over a communications channel. If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.” — Satoshi Nakamoto

Money is a technology for transporting value through space and time . Bitcoin is a vehicle for value that eliminates physical distance and cannot be diluted, seized or censored. It is the value of that service that “backs” the value of Bitcoin.

Bitcoin will not be stopped

Bitcoin does not have a central point of control, so the only way to “stop” Bitcoin is to stop every person on the Bitcoin network individually. Even shutting down the entire internet wouldn’t work because you can connect with the Bitcoin network over radio or by satellite . By any realistic measure, the network itself cannot be stopped.

Governments can, of course, outlaw cryptocurrency (several have), but making Bitcoin transactions illegal is like making drug use illegal — it doesn’t eliminate it so much as drive it underground. China is a powerful authoritarian state that has repeatedly banned Bitcoin , but you can’t actually ban Bitcoin from China because Bitcoin has no concept of China. China can only choose to isolate itself from the network.

But what if governments go further and actually attack the network? They could secretly acquire or seize mining rigs and set them to mining empty blocks, slowing down the network and reducing revenue for honest miners. They could market-sell the rewards they earn mining and open short positions to drive down the price of Bitcoin, further damaging miner revenue and market confidence. As miners quit defending the network, attackers would control more of it, causing a feedback loop and death spiral.

Attacks like this are easiest to picture with an abstract, monolithic world government. It is less clear how they would work in the context of actual world governments today. The two most obvious governments in practice that might launch such an attack are the United States and China. China has been systematically working to expel all the mining rigs from its borders, so it isn’t exactly gearing up to launch a mining-based attack on the network.

America also seems like an unlikely candidate to launch an attack on the network. Seizing private property like mining rigs outside the context of a conventional war would be an unusual, politically explosive precedent. More pragmatically, cryptocurrency has matured into an effective lobbying group . Sitting congressional representatives in both parties own Bitcoin and have made support for cryptocurrency part of their platform. Some have even made it their signature issue .

A sufficiently powerful, ideologically motivated attack could suppress the Bitcoin network, but it would be expensive to maintain and wouldn’t prevent the network from resuming normal operation after the attack stopped. The game theory of what happens when motivated attackers and defenders clash over a blockchain is complicated, and reasonable people can disagree about what it might mean. But the two most powerful governments in the world today are either embracing Bitcoin or systematically disarming themselves.

Bitcoin will not be replaced

Bitcoin is (by design) a very limited system. You can pretty much only use it to send and receive Bitcoin. It is very difficult to change (also by design), so it adopts new technology very slowly, if at all. That can seem primitive and sluggish to outsiders, but being resistant to change is the central value proposition of Bitcoin. You can’t make a better Bitcoin by making a Bitcoin that is easier to change.

Bitcoin is better understood as a social revolution than a technological one. No new cryptocurrency can achieve the same results as Bitcoin because the social context in which it was created is gone now. For the first year and a half of its existence, Bitcoin was essentially free — there was a website called Bitcoin Faucet that gave users 5 BTC just for solving a CAPTCHA . Satoshi disappeared before the project hit major prominence and never collected any kind of special founder’s rewards for their efforts. Even if a new project could somehow recreate these conditions, it still couldn’t recreate the history of proven operation since.

Other cryptocurrency projects may still prove useful and valuable — but not by outcompeting Bitcoin to be the best money. If they are successful, it will be because they are optimized to serve a different use case.

They won’t replace Bitcoin, they will exist alongside it.

In short, Bitcoin works as advertised.

Bitcoin has operated continuously outside of anyone’s control for more than 12 years now — that fact alone should merit serious attention even from skeptics. It has not been hacked, censored, halted or controlled. It has survived bubbles and crashes and attempts to commandeer it, outlaw it or make it obsolete. That history of operation is a growing body of circumstantial evidence that Bitcoin really is what it claims to be: a perfectly scarce, sovereign asset.

The growing body of evidence that Bitcoin is real means that responsible people need to start planning for that possibility. What does the existence of a universally available, perfectly scarce asset mean for the world?

Countries with double digit inflation

Bitcoin is good for people

Bitcoin is often accused of being principally useful for criminals, but that isn’t really true. Criminal activity on the Bitcoin network peaked at around 2% in 2019 and fell to 0.34% in 2020. Bitcoin transactions create permanent public records . Most criminals would rather do business in U.S. dollars. Bitcoin is actually mostly used for saving .

Bitcoin is good for the poor because inflation weighs most heavily on the poor . If your net worth is mostly cash and future cash-denominated wages, inflation is a drain on your wealth. If your net worth is mostly investments and property, inflation just changes the numbers next to your accounts — it doesn’t cost you anything. In countries with runaway inflation, Bitcoin is a safe haven for the poor.

Bitcoin is also valuable for activists such as feminist protestors in Nigeria, dissident politicians like Alexei Navalny in Russia or disenfranchised groups like unbanked women in Afghanistan . Alex Gladstein of the Human Rights Foundation has called it an “essential tool for preserving freedom.”

Bitcoin is good for the planet

In spite of the reputation it sometimes has in mainstream media, Bitcoin is actually good for the environment. Bitcoin uses a lot of energy , but it is a scavenger that feeds on low-cost waste energy. Energy is much, much easier to produce than it is to store or transport, which means a lot of energy is wasted.

For example, oil mining often produces natural gas as a side effect. When it is convenient, oil companies will sell that natural gas; but often, oil is mined in remote locations, so it is not easy or cheap to bring that gas to market. Instead, in practice, oil companies simply vent that gas into the air and light it on fire, a practice called flaring. According to the estimates of the Cambridge Bitcoin Electricity Consumption Index, enough gas is flared globally to power the Bitcoin network nearly six times over . Here is how large flaring is relative to other sources of carbon dioxide emissions:

Flaring emissions - Bitcoin energy usage is good for the planet

Several companies are building portable Bitcoin mining rigs that can go to the vents and use that natural gas on-site to mine Bitcoin. That causes Bitcoin’s energy use to go up, but it actually has a positive impact on the environment because using natural gas is much better than flaring it. Both flaring and using natural gas produce carbon dioxide, but flaring — which is often inefficient and incomplete — can also release methane and NOx into the atmosphere as well. Methane damages the ozone layer, and NOx contributes to acid rain. Using the graph of Bitcoin’s energy use as a proxy for its environmental impact is misleading.

Bitcoin mining is also really useful for renewable energy because lots of renewable energy is produced at off-peak hours when it is less valuable. The Bitcoin network acts as a “buyer of last resort” for energy producers, which makes renewable power more economically viable. Bitcoin effectively subsidizes the creation of more renewable energy by creating a market for its excess power. That’s why renewable energy companies are starting to add Bitcoin mining to their operations .

A lot of anti-Bitcoin critics cite environmentalism as a concern, but not as many environmentalists cite Bitcoin as a concern because if you sincerely care about the environment, it is fairly obvious that Bitcoin is a footnote.

Bitcoin energy usage vs other countries

Energy use can be surprising. Bitcoin uses more energy than Argentina but less energy than American Christmas lights. Neither comparison is especially useful. A better comparison would be to the energy use of the entire legacy financial system or the environmental cost of the petrodollar . In proper context, Bitcoin’s energy use isn’t so much large as it is easy to measure.

Bitcoin is an alternative to war

The history of warfare is a history of the defense and acquisition of wealth. If that wealth has a physical location, it will require defending physical territory, which implicitly means violence. As wealth migrates to non-physical systems like Bitcoin, it can be defended by non-violent means — i.e., Bitcoin mining. The more wealth leaves physical goods, the less wealth requires physical defense.

Bitcoin also makes it harder for governments to prolong a losing war by spending their citizens’ wealth by hyperinflating the currency. It is much easier to fund a war with the creation of new money than through direct taxation because people understand the impact of direct taxation more clearly. That’s why most of the countries involved in World War I had to abandon the gold standard . If the people understood how much money war cost them, they would put a stop to it sooner.

None of which is meant to imply that Bitcoin is the end of war — power plants and population centers will always need to be defended.

Governments will always find reasons to quarrel with their neighbors. But to the extent that Bitcoin gains traction, it does meaningfully reduce the means and incentives for violent conflict.

Bitcoin vs Cash

You should own some Bitcoin either way

It is entirely possible that even having considered all the arguments above, you remain unconvinced about the value of Bitcoin — but you should probably still own a little Bitcoin either way . That’s because if Bitcoin succeeds in becoming the best possible way to store value, it will capture most of the value currently stored in other ways. It’s not just that the price of Bitcoin will go up — it’s also that the value of everything else will go down.

That’s why whether you like Bitcoin or not, everyone needs to think about how they will protect themselves from the possibility that Bitcoin is real. Owning a small amount of Bitcoin is one way to safeguard against that risk — and you probably need less than you think. If everyone in the world wants Bitcoin, there won’t be very much to go around — owning 0.074 BTC (around $3,400 at the time of writing) will likely be enough to put someone in the top 1% of Bitcoin wealth.

You should probably own some Bitcoin

This estimate is based on current global wealth inequality. I also made a spreadsheet where you can examine and tweak assumptions for yourself.

Given that it takes such a small amount of Bitcoin to hedge against a Bitcoin future, owning no Bitcoin at all is actually an extremely confident stance. Being doubtful about Bitcoin’s chance of success is very reasonable, but being 100% certain that it will fail is overconfident. Intelligent skeptics are skeptical of their skepticism.

Keep your mind open

Regardless of how you feel about Bitcoin, I encourage you to stay curious. I’ve been immersed in the space since 2014, and I am still learning new things and changing my mind every day .

If you want to read more, I’ve curated a reading list of pivotal essays that I think are worth your time. A version of this story first appeared in the Something Interesting newsletter — I write two to three times per week about cryptocurrency news and topics, and I try to answer all reader questions.

The Surprising Ways Cryptocurrency Has Impacted My Daily Life

The Surprising Ways Cryptocurrency Has Impacted My Daily Life

Have you ever wondered how something like cryptocurrency can sneak into your life and change it in unexpected ways? I know I have! When I first heard about Bitcoin and blockchain, I brushed it off as just another tech trend. Little did I know that cryptocurrency would soon become a big part of my daily routine, reshaping not just how I handle money, but also how I see opportunities everywhere.

Cryptocurrency is a form of digital money that’s become increasingly popular in recent years. With its rise, many of us are starting to notice how it influences our everyday choices, from the way we shop to how we budget. In my journey, I’ve been surprised by the many ways it has blended into my life, shifting my perspectives on everything from financial transactions to lifestyle changes.

In this article, I’ll share my personal experiences with cryptocurrency, from using it for regular purchases to discovering new opportunities. Trust me, the impact it has had on my life is more than just numbers and charts; it’s about real moments and decisions that have shaped my everyday living. So, grab a cup of coffee and join me as I dive into the surprising ways cryptocurrency has made its mark on my life!

Introduction to Cryptocurrency’s Influence on Everyday Living

When I first heard about cryptocurrency, I didn’t think much of it. Just another tech buzzword, I thought. But as I started digging deeper, something clicked. Cryptocurrency is basically digital money, designed to be secure and often decentralized. It has grown so much in popularity that it has changed how people view and use money.

I began to notice how cryptocurrency popped up everywhere—in news articles, social media posts, and even casual conversations. At first, it felt overwhelming, but soon, I realized it was becoming a part of my everyday life in unexpected ways. Cryptocurrency wasn’t just some abstract concept anymore; it started to impact my decisions, my spending, and even my dreams.

You see, cryptocurrencies like Bitcoin, Ethereum, and many others are not just for tech-savvy folks or millionaires. They are becoming mainstream, and I’ve integrated this new-age currency into my routine.

From paying bills to planning vacations, the influence of cryptocurrency can be seen in my daily life. It’s fascinating how this digital currency is changing the way we think about money itself.

What amazed me is how easy it has become to blend cryptocurrency with everyday activities. I mean, who would have thought that I would start paying for my morning coffee with Bitcoin? It’s like living in a sci-fi movie where money has transformed right before our eyes.

More than just making transactions, cryptocurrency has made me rethink how I budget and spend. The fact that it’s so volatile adds a layer of excitement and, yes, some stress. One moment my investments are up, and the next, they’re down. It forces me to be more mindful of how I manage my finances.

But it’s not just about the money. The rise of cryptocurrency has opened up new doors for me—be it through job opportunities in the crypto space or planning unique experiences that I wouldn’t have considered otherwise. Whether it’s attending conferences, networking events, or exploring services available only in crypto, I’ve found a whole new world that’s both thrilling and educational.

So let’s break it down a little more. I want to share how this shift in financial perspectives has altered my daily routines and decision-making. It’s a personal journey, and I think you’ll find it relatable. By embracing cryptocurrencies, I discovered new ways to earn, spend, and even dream bigger.

Overall, the influence of cryptocurrency isn’t just about having a new type of cash; it’s about the confidence to explore opportunities that come my way, all while making informed decisions. Whether you’re a newbie or a crypto pro, there’s so much to gain from understanding how it fits into the bigger picture of our everyday lives.

Personal Experiences with Cryptocurrency

Financial Transactions and Budgeting

I remember the first time I used cryptocurrency to make a purchase. It felt like stepping into a whole new world. I was at a tech conference, and there was a booth that accepted Bitcoin for merchandise. I never thought I would be buying a t-shirt using something called cryptocurrency! The whole process was quick and seamless. I scanned my wallet app, and in seconds, my purchase was complete.

Using cryptocurrency for everyday transactions has become a part of my financial routine. I’ve started using it for online shopping, dining out, and even buying groceries. It’s amazing how many places now accept crypto. Many people can use apps like BitPay or Coinbase to shop with Bitcoin or Ethereum directly.

However, budgeting with cryptocurrency can be a bit tricky. The values of these coins can fluctuate wildly. Just last month, I bought some groceries for a total of $50 in Bitcoin. But when I checked my wallet a few days later, the same amount of Bitcoin was worth $40! This volatility added a new layer to my budgeting process. I’ve learned to track my crypto spending much closer and keep an eye on the market.

I can’t lie; it has made me more aware of my spending habits. I find myself asking: Is this really worth it? Cryptocurrency has encouraged me to think long-term. Instead of making impulse buys, I evaluate if I should save my crypto for something more meaningful.

Lifestyle Changes and New Opportunities

Investing in cryptocurrency has completely changed my life. What started as a curious exploration turned into something much more significant. Early on, I invested a small amount of my savings in Bitcoin and other altcoins. Little did I know that this decision would open up exciting new opportunities for me.

A few months ago, the prices of my investments rose dramatically. That unexpected gain allowed me to book a spontaneous trip to Europe. I’ve always wanted to travel but often pushed it aside for more responsible expenses. Thanks to those profits, I was able to experience the vibrant cultures of Paris, Berlin, and Rome without stressing about my budget. I even paid for part of my trip using cryptocurrency!

As icing on the cake, I learned that various travel agencies are now allowing you to book flights and hotels using digital currency. Imagine being in a café in Lisbon sipping coffee, feeling that thrill of connecting with a new world and knowing you’re using something as revolutionary as cryptocurrency.

That’s not where it ends. Investing in crypto has also changed my professional life. I started exploring freelance opportunities in the crypto space. More and more businesses are seeking individuals who understand cryptocurrencies and blockchain technology. I landed several gigs that paid in crypto, and let me tell you, working from home as a crypto freelancer is a game-changer!

I’ve connected with other like-minded individuals through online forums and social media. Joining these communities has broadened my horizons, enabling me to learn new skills and brainstorm ideas with people across the globe. There’s a unique sense of camaraderie in the crypto community, making it not just about money, but shared knowledge and experiences.

With this newfound flexibility, I’ve been able to adopt a remote work lifestyle. I can now travel to different countries while still working on my projects. Imagine sitting on a beach in Thailand with my laptop, knowing I have both crypto income and freedom at my fingertips. It feels like living life on my own terms!

In conclusion, cryptocurrency has woven itself into the fabric of my life in more ways than I could have imagined. From revamping my budgeting practices to unlocking exciting lifestyle changes and career opportunities, this digital currency has truly transformed my daily routine.

The next time you think about cryptocurrencies, remember, they can influence not just investments but lifestyle and opportunities as well. That t-shirt I bought at that conference was just the beginning, and it led me down a path of experiences I never thought possible. I encourage you to explore this world, as you never know where it might take you.

As I reflect on my journey with cryptocurrency, I realize how much it has changed not just my financial habits but also my entire lifestyle. At first, I was just a curious onlooker, intrigued by the buzz around digital currencies. Fast forward to today, and cryptocurrency isn’t just a trend; it’s a part of my daily life.

Using cryptocurrency for financial transactions was a big step for me. I started out making small purchases, and it felt like a wild ride, especially with the changes in value. It taught me to be more aware and to budget differently. I learned to plan my spending carefully, balancing the ups and downs that came with using digital currency. It shifted my perspective on money, making me more adaptable and cautious.

On the flip side, investing in cryptocurrencies opened up a world of opportunities. I ended up traveling to places I once thought were just dreams. Experiences that were once out of reach became achievable thanks to my commitment to my investments. It wasn’t just about the money, either. The skills I picked up while navigating this new financial landscape gave me a leg up in my career. I discovered new job prospects that I never knew existed and found exciting freelance opportunities in the crypto space.

In conclusion, cryptocurrency has woven itself into my daily life in surprising and impactful ways. It has influenced how I handle money, opened doors for new experiences, and even enhanced my career. I encourage others to explore this fascinating world because, who knows? You might find that it leads you to unexpected adventures and growth, just like it did for me. Embracing change can lead to incredible opportunities, and with cryptocurrency, I have found that adventure waiting at every turn.

https://cointelegraph.com/magazine/intro-bitcoin-change-your-life/

https://theroguepost.com/personal-experience-and-journeys/the-surprising-ways-cryptocurrency-has-impacted-my-daily-life