Why Crypto for Beginners? - Feedback from our readers has inspired us to add this section to our newsletter. Each week, we will circle back to the basics and assist our novice readers in building a foundational understanding of cryptocurrencies. We will also have some common terminology defined below in case there was something you read above that was not quite clear.
This Week's Topic - Why was Bitcoin created and what is all the hype about? - Satoshi Nakamoto (an anonymous person(s) whose identity is still not known) created Bitcoin and wrote the Bitcoin white paper in 2008. The Bitcoin white paper introduced the concept of blockchain technology (informational video linked), which allows Bitcoin to work. Satoshi created Bitcoin as an alternative to fiat (government created currency, like the dollar) and was most likely inspired by the financial crisis happening at the time.
Bitcoin is known as a decentralized currency because there is no central authority, like a bank or government, that can control it. There are also a limited amount of Bitcoin that will ever be created; 21,000,000 to be exact. This is an exciting concept because governments, or anyone for that matter, cannot create more of it, therefore it is protected from inflation. More and more of our "money" is being printed, which is causing it to be worth less and less.
History shows that forms of money change with time and innovations in technology. Forms of money started with things like seashells, glass beads, silver and gold coins, to finally the fiat system we use today. We have outgrown our current system and need something new and innovative, and that will put financial freedom back into the hands of the people.
Bitcoin provides a way for people to take back control of their money from governments and central banks. Anyone in the world with an internet connection can use it to purchase items or send to loved ones without the need for a 3rd party bank or entity. Bitcoin takes out the middle man and gives full authority to the user on how they want to use their money. As with all forms of new technology, there is always a period of time where adoption takes forever because of skepticism (like the internet... and we all know how that turned out).
Bottom line... take time to learn! Read what you can, watch what you can and allow yourself to see the benefits of Bitcoin and blockchain technology.
Key Terms from Today's Newsletter
HODL - An accidental typo in the crypto space for the word "hold" that was given the acronym "Hold on for Dear Life". If someone is a HODLer, they do not sell their crypto easily.
Diamond Hands - People with "diamond hands" hold onto their Bitcoin and other cryptocurrencies regardless of price swings.
Volatility - Bitcoin and other cryptocurrencies are seen as volatile because the price goes up and down all the time.
Bitcoin Mining - Bitcoin mining verifies transactions and adds them to the blockchain. It is also how new Bitcoins are created, or introduced into circulation. Remember, there will only ever be 21 million Bitcoin!
Fiat - Our current, government-created money system that is not backed by anything. Our paper money used to be backed by the gold reserves in banks, but now it is just printed willy nilly and loses value every day.