The Bitcoin Guidebook: HOW TO OBTAIN, INVEST, AND SPEND THE WORLD’S FIRST DECENTRALIZED CRYPTOCURRENCY by Ian Demartino pdf
There are two aspects to the question “What is Bitcoin?” that are connected but distinct: first, whal Bitcoin actually is, and second, what Bitcoin can do. Additionally, what people often mean when they ask that question is “How does Bitcoin work?” I will attempt to answer all three questions in this book.
Simply put: Bitcoin is a new form of currency—like the familiar euro or dollar—and it is the digital equivalent of cash. Any person can digitally “hand” someone a bitcoin, multiple bitcoins, or a fraction of bitcoin, across the world or in the same room. Like handing someone cash, and unlike older digital financial systems, the money doesn’t have to go through an intermediary like a bank or another company. The advantages of using Bitcoin, which I will get to later, are what gives it its value.
Bitcoin is also a distributed ledger, i.e., a record of every transaction and every Bitcoin wallet’s balance (you can think of a wallet as something akin to an account for now). This ledger is also called a blockchain. Every wallet, rather than being stored in a bank’s database, exists on this ledger; each wallet has its own private key and public key. The public key is also called the Bitcoin address. It is between 25 and 36 alphanumeric characters and begins with either a 1 or 3. This address can be shown to the public and will allow anyone to send you bitcoins. Like an email address, Bitcoin wallets can be created almost instantaneously and disposed of just as quickly.
The private key will look something like 5JJqKVLu29gfafXvCjva9zBtVapjrE8qNerXWt9RTAv4ebbDX4E and needs to be protected at a costs. It is often said that possession is nine-tenths of the law. In Bitcoin, the private key is the entirety of the law. Whoever holds the private key can send the bitcoins in the corresponding wallet at will. There is no way to reverse a Bitcoin transaction, so securing the private key is the most important tenet of Bitcoin.
You might be a bit confused at this point; it might be easier to understand if you are put into a hypothetical situation in which you have to create a new currency without a physical presence.
Imagine being stuck on a deserted island with 19 other people. There is enough food and fresh water to survive, but rescue or escape is out of the question. You would all need to work together to survive; and to distribute your resources fairly, you might want to keep track of who worked for whom and for how long. If this were the case, you would need to come up with some kind of monetary system. You could use seashells or shiny rocks or something similarly rare, but undoubtedly someone would have the ability to cheat the system.
Why help your friend build his hut for two seashells when you can simply walk on the beach until you find two seashells of your own? How, in an environment where people could easily simulate work, do you create a system that allows them to honestly exchange hours of work for payment?
One solution might be to create a ledger or list. This ledger could keep track of how much work everyone has done and quantify it in “work units.” The ledger would record what each person has and allow them to deposit that into another participant’s account. If the ledger kept track of every person’s supply of units and every trade that happened, no one would be able to inflate their balance by adding shells or shiny rocks or any other “work unit” from outside the system. The problem with the ledger solution is that all the participants have to trust the person with the ledger to play fair. If only one entity or group has the ledger, they ultimately control how much money everyone has, and that is a tempting position for even the most benevolent of people.
Decentralization is the solution to this problem. You can give two copies of the ledger to two trusted people in the group. They would then be able to cross-check each ledger and make sure the records match up. Still, participants are now asked to trust two entities rather than one. Although it is better than entrusting all of the power to one ledger-holder, it still is not an ideal arrangement.
SECTION I: WHAT IS BITCOIN?
Chapter 1: Bitcoin 101: Blockchain Technology
Chapter 2: A Practical Guide on How to Buy, Save, and Spend Bitcoins
Chapter 3: Precursors, History and Creation, Satoshi’s White Paper
Chapter 4: Who Runs Bitcoin?
Chapter 5: What Gives Bitcoin Its Value?
Chapter 6: Bitcoin: Anonymous or Pseudonymous?
Chapter 7: Bitcoin and the Criminal Element Chapter 8: Mt. Gox: Bitcoin’s Defining Moment?
Chapter 9: Other Bitcoin Scams and Common Tactics
SECTION II: HOW TO INVEST IN BITCOIN
Chapter 10: How to Buy Bitcoin with a Bank Account, Cash, or PayPal
Chapter 11: Working for Bitcoin
Chapter 12: Mining
Chapter 13: HODL!
Chapter 14: Day Trading
Chapter 15: Altcoin Trading and Pump-and-Dumps Chapter 16: Peer-to-Peer Lending
Chapter 17: Investing in Other Commodities Using Bitcoin
SECTION III: WHAT CAN BITCOIN DO FOR ME?
Chapter 18: Remittance
Chapter 19: Microtransactions
Chapter 20: Start-up Funding
SECTION IV: THE FUTURE OF BITCOIN
Chapter 21: Altcoins and Bitcoin 2.0 Projects
Chapter 22: Distributed Autonomous Corporations, Governance, and Niche Economies
Size: 1. 40 Mb
eBook The Bitcoin Guidebook: HOW TO OBTAIN, INVEST, AND SPEND THE WORLD’S FIRST DECENTRALIZED CRYPTOCURRENCY by Ian Demartino pdf