Transcription
An Introduction toBitcoin and BlockchainTechnologySamuel Stinson
Table Of Contents1Bene ts and Weaknesses of Bitcoin and t.2About Bitcoin in general3Bitcoin Money Supply4Regulation of Bitcoin5Forex Foreign Exchange Market
HeaderBene ts and Weaknesses of Bitcoin andthe BlockchainSix myths aboutblockchain andBitcoin: Debunkingthe effectiveness ofthe technologyThis article will discuss theversion of blockchaintechnology that is used forBitcoin cryptocurrency. Thereare other implementations,and they may haveeliminated some of thedisadvantages of the “classicblockchain,” but usuallyeverything is built around thesame principles.Everyone talks about the advantages of Bitcoinand blockchain, but we never seem to hearabout their disadvantages. Perhaps now is theBlockchain: so cool, what abreakthrough — soon almosteverything will be based onblockchain technology. If youbought all of that, then Imight just disappoint you.# 1
About Bitcoin in generalI consider the Bitcoin technology itself revolutionary.Unfortunately, Bitcoin has been used for criminalactivities far too often, and as an information securityspecialist, I strongly dislike that practice. Yet,technologically speaking, Bitcoin is an obviousbreakthrough.The Bitcoin protocol components and built-in ideasaren’t new; generally, they were all known before2009, but only the authors of Bitcoin managed to piecethem together to make it work back in 2009. Sincethen, for almost nine years, only one criticalvulnerability has been found in its implementation,when one malefactor snagged 92 billion bitcoins. Fixingthat required rolling back the entire financial record by24 hours. Nevertheless, just one vulnerability in nineyears is praiseworthy. Hats off to the creators.The authors of Bitcoin faced the challenge of making itall work with no central system and no one trustinganyone else. The creators rose to the challenge andmade electronic money an operational currency.Nevertheless, some of their decisions were devastatingin their ineffectiveness.I am not here to discredit blockchain, a usefultechnology that has shown many remarkable uses.Despite its disadvantages, it has unique advantages aswell. However, in the pursuit of the sensational andrevolutionary, many people concentrate on the upsidesof the technology, often forgetting to take a sober viewof things, thus disregarding all of its downsides. It is forthis reason, for the sake of diversity, that I deem ituseful to focus on the disadvantages of the technology.Page 2
About Bitcoin in generalBitcoin Money SupplyYou’ve probably heard the word by now but you might still be wondering —what is Bitcoin? Well, there are no stupid questions here, so let’s start atthe very beginning. What is Bitcoin? Who created it and what goes on underthe hood?Simply put, Bitcoin is a distributed peer-to-peer digital currency. It can be transferredinstantly and securely between any two people in the world who accept Bitcoin. It’slike digital cash in that you can send Bitcoin to any other Bitcoin user in the world. It’sa transfer of value just like traditional currencies. Unlike traditional currencies,however, Bitcoin only exists in digital form.The world’s first cryptocurrency was released in 2009 as an open-source software,which means that anyone can examine the code and add to the Bitcoin network.Unlike traditional currencies again, Bitcoin is decentralized. You’ve probably heardthat word a lot too, and it basically means that no central authorities (such as banksor political institutions) control the amount of Bitcoin in circulation.# 3
HOW DOES BITCOIN WORK?If that leaves you wondering how Bitcoin works with no one controlling it, we’rejust getting started. The system at its purest level is simple and organized.Bitcoin uses public-key cryptography and proof-of-work to process and verifypayments. Bitcoins are sent (or signed over) from one Bitcoin address to anotherwith each user potentially having many, many addresses.Each payment transaction is broadcast to the network and included in the Bitcoinblockchain so that the included bitcoins cannot be spent twice. After an hour ortwo, each transaction is locked in time (i.e. in a block that is mined roughly every10 minutes) by the massive amount of processing power that continues to extendthe blockchain.Unlike fiat currencies, with no government to print new currency, the Bitcoinblockchain controls how many Bitcoin are produced. The total supply of Bitcointo ever be created is capped at 21 million with about 17.3 million in circulationtoday.With a hard cap set for the number of bitcoins ever to be mined, many peopleargue over how Bitcoin can scale for massive use.However, what makes Bitcoin unique as a cryptocurrency unlike traditionalcurrencies is that it is infinitesimally divisible. If you wanted to transfer just0.00000001 bitcoins, you could, which makes the number of 21 million Bitcoinspretty much arbitrary.Since Bitcoin is digital, it would be fairly easy to spend the same bitcoin twiceright? Wrong. Bitcoin’s elements including blockchain, mining, proof of work,complexity, etc., exist to ensure that the transaction ledger is computationallyimpractical to modify. This is also known as “solving the double-spendingproblem.”Page 4
HOW IS BITCOIN DECENTRALIZED?As previously mentioned, Bitcoin uses a decentralized system, where aconsensus among network nodes following the same protocol and Proof-of-Workis substituted for a central authority. This means that Bitcoin has specialproperties not shared by centralized systems.For example, if you keep the private key of a bitcoin secret and the transactionhas enough confirmations, then nobody can take the bitcoin from. Possession ofbitcoin is not enforced by business rules and policy, but by cryptography andgame theory.Because bitcoin transactions can be final, merchants do not need to hasslecustomers for extra information like billing address, name, etc. This means thatBitcoin can be used without registering a real name or excluding users based onage, nationality or residency.This anonymity has lead many naysayers to accuse bitcoin of being the paymentmethod of choice of criminals, as it is impossible to trace the origins of thepayment and there is no limit to the amount that can be sent, unlike a bankaccount which requires a justification of funds.However, these accusations stand on thin ground based on the fact that alltransactions are public on the blockchain and tracing people back through theirBitcoin address has been proven possible by federal agents.Moreover, there are many more reports to suggest that the US dollar bill is by farthe criminal’s currency of choice when it comes to money laundering and othernefarious deeds. Sign up for the first Bitcoin rewards card and get 20,000 sats forusing my referral link to sign up for Fold! https://use.foldapp.com/r/PMLJJRWX Usemy referral link https://crypto.com/app/zz5dm26hcz to sign upfor Crypto.com and we both get 50 USD :)Page 5
WHAT IS BITCOIN?Bitcoin is a cryptocurrency created in 2009. Marketplaces called “bitcoinexchanges” allow people to buy or sell bitcoins using different currencies.Bitcoin is a new currency that was created in 2009 by an unknown personusing the alias Satoshi Nakamoto. Transactions are made with no middlemen – meaning, no banks! Bitcoin can be used to book hotels on Expedia,shop for furniture on Overstock and buy Xbox games. But much of thehype is about getting rich by trading it. The price of bitcoin skyrocketedinto the thousands in 2017.Since Bitcoin is digital, it would be fairly easy to spend the same bitcoin twiceright? Wrong. Bitcoin’s elements including blockchain, mining, proof of work,complexity, etc., exist to ensure that the transaction ledger is computationallyimpractical to modify. This is also known as “solving the double-spendingproblem.”Bitcoin users protect themselves from double spending fraud by waiting forconfirmations when receiving payments on the blockchain, the transactionsbecome more irreversible as the number of confirmations rises.Sign up for the rst Bitcoin rewards card and get 20,000 sats for using my referral linkto sign up for Fold! Use my referral link to sign up for Crypto.com and we both get 50 USD:)d we both get 50 USD# 6
Regulation of BitcoinSign up for the first Bitcoin rewards card and get 20,000 sats for using my referral link to sign upfor Fold! https://use.foldapp.com/r/PMLJJRWXUse my referral link https://crypto.com/app/zz5dm26hcz to sign up for Crypto.com and weboth get 50 USD :)Lorem Ipsum is simply dummy text of theprinting and typesetting industry. Lorem Ipsumhas been the industry's standard dummy textever since the 1500s, Lorem Ipsum is simplydummy text of the printing and typesettingindustry. Lorem Ipsum is simply dummy text ofthe printing and typesetting industry. LoremIpsum has been the industry's standard dummytext ever since the 1500sLorem Ipsum is simply dummy text of theprinting and typesetting industry. Lorem Ipsumhas been the industry's standard dummy textever since the 1500s, Lorem Ipsum is simplydummy text of the printing and typesettingindustry. Lorem Ipsum is simply dummy text ofthe printing and typesetting industry. LoremIpsum has been the industry's standard dummytext ever since the 1500s# 7
HeaderForex Foreign Exchange MarketThe foreign exchange market is also known as FX or it is also found to be referred to asthe FOREX. All three of these have the same meaning, which is the trade of tradingbetween di erent companies, banks, businesses, and governments that are located indi erent countries. The nancial market is one that is always changing leavingtransactions required to be completed through brokers, and banks. Many scams havebeen emerging in the FOREX business, as foreign companies and people are setting uponline to take advantage of people who don’t realize that foreign trade must take placethrough a broker or a company with direct participation involved in foreign exchanges.Cash, stocks, and currency is traded through the foreign exchange markets. The FOREXmarket will be present and exist when one currency is traded for another. Think about atrip you may take to a foreign country. Where are you going to be able to ‘trade yourmoney’ for the value of the money that is in that other country? This is FOREX tradingbasis, and it is not available in all banks, and it is not available in all nancial centers.FOREX is a specialized trading circumstance.Small business and individuals often times looking to make big money, are the victims ofscams when it comes to learning about FOREX and the foreign trade markets. As FOREX isseen as how to make a quick buck or two, people don’t question their participation insuch an event, but if you are not investing money through a broker in the FOREX market,you could easily end up losing everything that you have invested in the transaction.Scams to be wary ofA FOREX scam is one that involves trading but will turn out to be a fraud; you have nochance of getting your money back once you have invested it. If you were to invest moneywith a company stating they are involved in FOREX trading you want read closely to learnif they are permitted to do business in your country. Many companies are not permittedin the FOREX market, as they have defrauded investors before.In the last ve years, with the help of the Internet, FOREX trading and the awareness ofFOREX trading has become all the rage. Banks are the number one source for FOREXtrading to take place, where a trained and licensed broker is going to completetransactions and requirements you set forth. Commissions are paid on the transactionand this is the usual. Another type of scam that is prevalent in the FOREX markets issoftware that will aid you in making trades, in learning about the foreign markets and inpracticing so you can prepare yourself for following and making trades. You want to beable to rely on a program or software that is really going to make a di erence. Consultwith your nancial broker or your bank to learn more about FOREX trading, the FXmarkets and how you can avoid being the victim while investing in these markets.Page 8
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