What is included in this Bitcoin Course
Why Are Bitcoins The Secret To A Better World, True Freedom And A Rich Retirement?
How To Use This Book
Fundamentals: Overview of Bitcoin
What Is A Bitcoin
Where Did Bitcoin Come From And Why Does It Matter?
Why Should I Buy Or Use Bitcoins?
What Are Bitcoins Really Worth?
History Of Digital Currencies – And How They Lead To Bitcoin
Digital Gold, Silver, False Promises And Digital Scams
Who Hates Bitcoin And Why?
Why Bitcoin Is Different And Better Than Everything – Almost.
How To Use Bitcoins
Getting Your First Bitcoin
Investing In Bitcoins, Or Not
Accepting Bitcoins In Business
Using Bitcoins Anonymously
How To Create Bitcoins Or Become A Bitcoin Miner
The Concept Of Bitcoin Mining
How To Mine Bitcoins
Problems In Mining Bitcoins
Potential Bitcoin Disasters, Problems, And Challenges
Failure Analysis Of The Bitcoin System
Main Targets For Hacks And Attacks
Prominent Attacks, Scammers, And Bottlenecks
Profiting With Bitcoins
General Trading Principles For Bitcoin
Bitcoin Application Development
Future Of Bitcoin And Alternative Currencies
Opportunities And Dangers Ahead
Agents For And Against Bitcoin; Alternative Currencies
Predicting Prices For Bitcoins
Expansion Markets For Bitcoins
One Last Thing
Appendix A – Major Bitcoin Developments & Timeline
Appendix B – List of main Bitcoin Services and Web sites
Appendix C – Bitcoin Terminology
Appendix D – Bitcoins Mathematical Basis
Why Are Bitcoins The Secret To A Better World, True Freedom And A Rich Retirement?
“All great ideas are dangerous.”
Bitcoin is the bridge to a new, vastly freer, dependable, honest, and democratic world. Of course we can simply use Bitcoins for fun, profit, and online transactions if that is all we are after.
Why stop there though? When using Bitcoins, we enter a system with massive benefits which include: almost no fees for transfers such as bank wires, the possibility of complete anonymity or privacy with all the financial privileges, and no central bankers or government stealing your Bitcoins. Bank account theft has recently occurred in the banks of Cyprus, as well as in Argentina. This, in addition to worldwide inflation, has encouraged people to look for a better banking solution.
Bitcoin takes the reins from those people, institutions, and even governments that control our currencies, and puts the control levers solely in all of our hands. Yes, we finally get to control our own currency.
Bitcoins can unlock the guarded door of prosperity by raising the wealth and prosperity of everyone. It helps accomplish this by being a deflationary currency. Bitcoins increase in value relative to dollars or euros, etc. by default because of the limited amount of Bitcoin currency entering the system. This helps make the same amount of Bitcoins buy more stuff we need year after year.
Bitcoin can free us from the prying eyes of tax codes, bank fees, or any number of confiscation games played by governments, banks, and “authorities.” While this is a controversial application of Bitcoin, this book would be incomplete without explaining the privacy opportunities Bitcoin offers.
For example, if we send money from our traditional bank account to an acquaintance of ours using another bank account in a different country, the following rules and fees may apply:
- We may not be allowed to send the money. Any country the U.S. bans from trade, including (at one time or another) Cuba, Sudan, North Korea, Iran, Belarus, Syria, Burma, Zimbabwe, etc. (And tomorrow, who knows..)
- Fees will often be $25$50+ outbound, and possibly $25+ inbound.
- Banks can block the wire, or return the money within 48 hours. Also, the receiver may even pull more money out of our account depending on the transfer rules.
- Banks often convert foreign currencies at a discount, taking additional profit off the top of our transfer.
- Both parties are now known to the bank and the government for better or for worse.
- The government can decide to tax funds being transferred outside the country. This can be as high as 30% for foreign banks that do not adhere to U.S. bank rules. That hurts!
- Not only are the banks taking huge fees for the transfer of our money, but they can take as long as 24 hours or even more in some cases. We are paying Ferrari prices, and getting moped performance.
This gives you a small sample of the financial pain involved with using standard currency, the U.S. dollar, and standard banks.
The same transaction using Bitcoins would involve the following:
- No bank fees.
- No foreign currency buy/sell fees.
- A small $0.25, (yes, you read that correctly one quarter) service fee from a site such as dwolla.com
- No one needs to know whom the buyer or seller is. Complete privacy for all parties.
- Any country, any person, and any transaction at any time is completely allowed.
- There will be tax implications depending on your reporting, not on a bank reporting on you.
- Best of all, our Bitcoin transfer will occur nearly instantly. The minute we press SEND, the recipient can access his or her new stash of Bitcoins, and continue his cigar factory tour of Cuba, with no one the wiser. Hope he brings back some Bolivars for our generosity!
- They can then transfer the Bitcoins from his Bitcoin wallet through an in/out exchange such as mtgox.com or other exchange into his foreign bank account.
Bitcoin has so many advantages, with only a few key disadvantages, that it deserves all the attention it is receiving. This guide will help any reader understand how to join the wave of those converting to Bitcoin. Offering great potential for inexpensive money transfers, convenient shopping, secure wealth preservation, and ultimately, freedom, Bitcoin may end up being the story of the century.
Fundamentals: Overview Of Bitcoin
“So you think money is the root of all evil? Have you ever asked what is the root of all money?”
Bitcoin is simply the name given to the new digital, internet based form of currency. While going beneath the surface of the basic concept of a Bitcoin gets somewhat complicated, knowing the mathematics behind the creation of Bitcoin and it’s operations, are not necessary. We can use, profit with, and generally understand what Bitcoin is, and why Bitcoin is important in our everyday lives, while the genius behind it hums along in the background.
Best of all, our journey into the Bitcoin world brings benefits from all corners. Financially, we can spend less on transactions with Bitcoins while seeing our ability to buy products increase with the increase in Bitcoin’s value. Value increases are not guaranteed of course. And our privacy will become almost impenetrable if we choose that route.
We can create an online business accepting Bitcoins with almost no hassle (such as fees and complications we would encounter trying to accept credit cards). Even dealing with the minor annoyance of learning new terms and concepts seems like a small price to pay for the mother lode of benefits Bitcoin delivers. Far off but critically important is the future treasure Bitcoin promises to deliver. Those future benefits will be covered in the last chapter because they are potentially earth shattering in scope, and there is much ground to be covered before we get there.
Bitcoin’s story reads something like a Tom Clancy novel. There are secret agents. Trusted double agents try to sell out the cause. Murders happen, or something close to it. Prison time for innocent men. Fortunes made by criminals. Bigger fortunes lost by the risk takers. Geniuses, madmen, Libertarians, Socialists, government forces, and Anarchist hackers all working together, before fighting each other tooth and nail. (Okay, even I’ll admit this is a bit of an exaggeration, but you get the point!).
We would expect nothing less considering Bitcoin is battling the most powerful forces on earth. Based on the rapid growth from $0.06 to over $200 (and back down to around $100), Bitcoin is winning the battle.
David versus Goliath is playing before our very eyes with the same result expected. The little guys (us) are taking on the powers that control the money universe and government (PTB powers that be), and knocking them for a loop. Welcome to the new, exciting world of Bitcoin. You will be absolutely glad you came.
What Is A Bitcoin?
Bitcoin is largely an imaginary piece of code, with no intrinsic value. Gold has intrinsic value for use as jewelry, some in electronics, for making teeth, for coating mirrors, and a host of other possibilities. Silver has even more intrinsic value for medical uses, in film, in coatings for bearings, for it’s heat distribution and electrical properties, etc. Bitcoins, gold, and silver all share one crucial aspect in common. They are all relatively rare.
Bitcoins are like the rewards for a correct answer to a certain math problem. Both the problem and the answer are completely unique. There will be a limit of about 21 million (the eventual exact number is 20999999.97690000) of these special solution rewards known as the “Bitcoin.”
Those dabbling in the complicated technicalities of Bitcoin, such as programmers and promoters, call it a “cryptocurrency.” This invented term refers to the form of mathematics that generates the rarity behind the solutions that earn the Bitcoin rewards.
Nuts and bolts for Bitcoin look like this:
Bitcoin is often represented as BTC, or 1 BTC is 1 Bitcoin.
We can also deal with 0.1 BTC, 0.01 BTC as we would with say, U.S. dollars. $0.01 USD is also known as 1 cent. Similar for Bitcoins though, it has software behind it that allows for a very small denomination of a Bitcoin that looks a tad scary:
or 100 millionth of a Bitcoin
This smallest unit of BTC is known affectionately as a “Satoshi” in honor of the genius that developed the whole code framework. Not that the use is popular, but we use the same names from the metric system when describing Bitcoin denominations:
CentiBitcoin is also a bitcent and looks like .01 BTC or 1 cBTC MilliBitcoin is either a bitmil or mbit: .001 BTC or 1mBTC
That is about all we will need for the foreseeable future. For the purists though, the smallest, fashionable BTC is the microbit or ubit with .000001 BTC or 1 uBTC.
If we find ourselves trading in uBTC’s soon then let’s hope we all stocked up on BTC’s before the attack of the 5 zeros!
Bitcoins In Use
We can now buy things with Bitcoins. No cars, planes, diamonds, or furry dinosaur feet are available yet with Bitcoins because it is too new, not fully understood, and somewhat risky. However, many retailers are coming around to Bitcoin; here is what a Bitcoin shopping payment looks like from a website called BitcoinIn:
Notice how the prices already use .001 BTC format. The reason is, Bitcoins exploded in value compared to other currencies. We value Bitcoins in our national currencies. If we live in the U.S., our national currency is the U.S. dollar or USD for short. Europeans, for the most part, use euros or €.
Out of the gates, Bitcoin was a 6cent weakling with 1 BTC being priced at 0.06 USD. So the same items we now see priced at 0.294BTC would have been around .416 BTC in Bitcoin’s toddler days of 20092010. Now that Bitcoin is a fast growing online option for payments, we can expect to see it continue to go deeper into the bitcent, mbit and even ubit prices.
Keep this impressive example in mind for a later section explaining why Bitcoin is one of the secrets to personal and financial freedom.