People generally have a negative understanding of bitcoin, mainly because news about it highlights its use for nefarious purposes. The news media in general is a mechanism to disseminate information; there is no requirement for it to be accurate and comprehensively researched on your behalf. In fact, the information conveyed is a human decision by directors, producers, and management of said media companies. Like everything in life, if you want to understand something, you must do the work yourself; research it, learn it then implement it if it’s a worthy pursuit.
Henry Ford over a hundred years ago believed energy would replace gold as the backbone of money; unfortunately, since 1971 we broke away from gold backed currency to being backed by the full faith and credit of the government. The saying “the U.S. dollar is backed by the full faith and credit of the U.S. government” simply means its ability to pay interest on its debt; not its ability to repay it completely. The U.S. Treasury issues T-bills, sells them to the banking system and uses those dollars to pay its bills. Yes, it collects taxes to pay its bills, but that amount is not sufficient which is why the U.S. is in 32 trillion dollars of debt.
You do not need a degree in finance to understand that if you are 32 trillion dollars in debt, you will never be able to repay it. Your choices are believing its ok to continue increasing debt without any consequences or realize there is a problem and take action; hence the point of this website; “research it, learn it then implement it“.
Once computer development exploded, the concept of privacy and security became the focus to secure information. This security provided the foundation for the internet and began the explosion of research which led to the development of electronic money. Below you can see a number of attempts at creating electronic money; leading to the final attempt which today is bitcoin.
Many will argue for newer versions of electronic currency citing concerns of excessive energy use and the need for faster/higher number of transactions.
The energy used today for bitcoin is actually beneficial to the electrical grid. Unused electricity is destroyed by sending it into the ground when excess electricity is generated. The generator cannot be adjusted as quickly as you can turn on and off your air conditioner or other electrical devices. Bitcoin servers can be turned on and off instantly, providing a base load of demand for energy companies. That base load can be used for planning new electricity supplies. Imagine being able to use your AC or heater without worrying about how much it will cost? Producing electricity is not immune from economies of scale, the more produced the cheaper it becomes.
The newer forms of bitcoin, disguised as “crypto”, are copies of bitcoin with updated ideas trying to fix perceived issues with bitcoin. The main point to remember is that the money we use today was not created a few years ago, rather it’s a series of improvements on a base layer of money. Think about how new it was to use a credit card, being able to get goods and services without handing over cash. 70 years later, the vast majority of consumer transactions are done with credit cards.
For bitcoin, that means new software and protocols are needed to make the transmission of bitcoin faster. A 2nd layer protocol for bitcoin was introduced in 2015 and today is the backbone protocol used by this website to make transactions. The lightning protocol describes how to build software to transmit bitcoin faster. Today there are 2 software solutions, Core Lightning and LND. This 2nd layer protocol will eventually become the backbone of the banking system with new protocols and software, not currently developed. That means, once you understand bitcoin software and its related functions, you can learn any programming language and build your own software to interact and integrate with bitcoin.
Why bitcoin and not any of the newer ones? The answer lies in the first mover advantage and that none are improvements, rather an elimination of a core bitcoin property in exchange for scalability.
https://blockchainsentry.com/blog/blockchain-trilemma-and-scalability/
Bitcoin relies on decentralization and security to protect the ledger and your ability to use it without permission. Scaling occurs on upper layers, the same way credit cards are a layer on top of banks allowing money to move fast; think of paying for groceries with a check, unless you are buying $10,000+ of groceries, you are paying with a credit card. Same with bitcoin, higher value transactions will occur on lower layers of money. As new layers are built, smaller and faster transactions can occur there leaving lower layers to handle larger and slower transactions.
Security is achieved by using cryptographic messages received by all users running the bitcoin software. Decentralization is achieved by every user running the bitcoin software which stores all transactions and the ledger. When you run the software, you decide the rules you want to follow, if you are running the same software as others are, your version is valuable to you and your peers. If a group of individuals want to change the rules on their software, your software will ignore them because the rules are different. Eventually, the new group will break away (fork) from your version of bitcoin. Those individuals will need to convince others to follow their new rules. I explore the BCH fork here if you are interested.
Every other “crypto” dumped decentralization to achieve scalability. Who wants to move to a money that is centralized when we are already using centralized money? If you are moving from one centralized money to another, you would be moving to the U.S. Dollar since it’s the best of the best in centralized money.
Poke around my website, learn how the software works and become your family’s banker
