A Simple Introduction to Bitcoin

What is Bitcoin?

  • Bitcoin is a digital currency, a decentralized system that records transactions in a distributed ledger called a blockchain
  • Bitcoin was created as an alternative to national currencies and thus aspires to be a medium of exchange and a store of value
  • Bitcoin miners run complex computer rigs to solve complicated puzzles in an effort to confirm groups of transactions called blocks; upon success, these blocks are added to the blockchain record and the miners are rewarded with a small number of bitcoins
  • Bitcoin for verifying blocks of transactions. This reward is cut in half every 210,000 blocks mined, or, about every four years.
  • This process is designed so that rewards for Bitcoin mining will continue until about 2140. When all Bitcoin is mined from the code and all halvings are finished, the miners will remain incentivized by fees that they will charge network users

Value of Bitcoin

  • Bitcoin offers an efficient means of transferring money over the Internet
  • Currencies have value because they can function as a store of value and a unit of exchange.
  • Successful currencies have six key attributes—scarcity, divisibility, utility, transportability, durability, and counterfeitability.

Bitcoin Challenges

  • The challenge for Bitcoin to become a widely accepted currency is the price volatility
  • Cypto paradox: People buy cryptocoins, but they don’t use them because they want their value to grow. However, unless crypto is used to serve its purpose as a means of exchange, its value will eventually fall, and investors will offload it.
  • This cycle is why some economists predict that cryptocurrencies will, sooner or later, return to a value of zero
  • Stability is an issue: Bitcoin, has the slowest average processing time of the bunch. This is because bitcoin has an average block time of 10 minutes
  • Lightning Network is expected to dramatically improve processing speeds for Bitcoin
Market Cap RankCryptocurrency Average Transaction Speed 
1Bitcoin 78 minutes
2Ethereum6 minutes
3Ripple4 seconds
4Bitcoin Cash60 minutes
5EOS1.5 seconds

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Ricky Young

My belief is that financial freedom cannot be obtained by just a 9-to-5, but a combination of smart investing and passive income. This is my journey to achieve financial freedom.

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