Bitcoin 101 For Morons

If you’re an idiot and you want to know what Bitcoin is, you’re in the right place. Some time ago, I became more engaged with the libertarian community and kept hearing about Bitcoin; so, I decided to investigate. The only problem is that I’m an idiot and had no idea what they were talking about when they tried to explain it.

They would say things like, “Bitcoin is digital cryptocurrency on the blockchain supported by a peer-to-peer network,” completely oblivious to the fact that “cryptocurrency” and “blockchain” aren’t part of a normal dialogue, relegating their explanations to worthlessness.

The appeal of Bitcoin to libertarians is enormous.

Money is involved in roughly 50% of all transactions. Having a regulated currency (currency issued by our government’s central bank) entails the government regulates at least 50% of our transactions.

Most of us will work eight hours a day for something which the government decides the value of. Our purchasing power, our ability to obtain goods and services, is controlled by the government. An individual can work for a full eight hours, but what that individual can purchase with that labor is entirely decided by the government; so, in steps an unregulated currency – Bitcoin.

Bitcoin is the confession that money is no longer real combined with the recognition that our governments aren’t eager to relinquish their control and go back to the gold standard. It’s a digital currency, so we can electronically set up an account to hold our money. Each of us can have a unique identifying address, or label, which is the Bitcoin wallet – which tells you how many Bitcoins you have.

The Bitcoin community has recorded each of the wallets and transactions on a basic accounting ledger.

Now suppose you want to pay someone for work they’ve done for you, and you transfer one Bitcoin to their account; the Bitcoin community keeps a ledger of this and adjusts the balances of the appropriate wallets. In time, the list of transactions will grow, and those will be ordered into blocks of ledgers. The blocks are timestamped and form a chain of transaction history – hence the term blockchain.

The blockchain data – the list of transactions and accounts – is stored on multiple computers all across the world. This way, if one computer is hacked and the information altered to artificially inflate the balance of the hacker’s account, the account will be checked against the network of computers and will be immediately recognized as a fraud.

The advantage of participating in the blockchain is that, when new Bitcoins are distributed they are distributed to the network, so those who lend their computers to the network receive Bitcoins for doing so.

This network is usurping the power of central banks, who control our currency. With Bitcoin, they no longer have the power to erode our purchasing power.

Take the issue of U.S. currency. In 1971, the U.S. currency wasn’t set at the rate the central bank desired to obtain, it was set according to the price of gold ($35/ounce). $35 U.S. dollars in 1971 had the purchasing power of $212.31 in 2017. Meanwhile, one gold ounce today is worth $1280. People who possess U.S. dollars are having their purchasing power eroded because the central bank in the U.S. is permitted to dictate the purchasing power of the currency.

The difference in purchasing price enables banks to earn record profits. By increasing the money supply – the number of dollars in an economy – they devalue the existing dollars making us poorer.

However, banks can lend out the additional money for loans, mortgages, or lines of credit and profit from it.

This impoverishment of the average individual to profit banks is facilitated by the government. I have advocated elsewhere in owning stocks in banks for this very reason, those of us opposed to the system can at least profit from it if society won’t recognize our preachments on it.

Individuals who worked their entire lives, find their retirement income in their senior years within striking distance of the poverty line, because the 2017 dollar purchases far less than the dollars that went into their retirement savings and investments.

Take the example of a Venezuelan who invested in Bitcoin – currency their government couldn’t control – this person now finds that the liberated currency is literally the difference between life and death in their ability to purchase food; compared to their neighbor, who cannot, due to their sole reliance on the government-controlled currency.

Though still in its infancy, and highly speculative, liberated currency offers intrigue, and the hope of emancipating ourselves from central banking in a very real way.

This post was written by Brandon Kirby.

The views expressed here belong to the author and do not necessarily reflect our views and opinions.

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Brandon Kirby

Brandon Kirby is a philosopher, financial adviser, a founder of a local investment club, and he hosts regular symposiums in philosophy. He is also a member of Canada’s Libertarian Party.
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  • Neal Palmquist

    Bitcoin is not a ponzi scheme like SPAM is not a mystery meat.

    The suicide cult flower children will sound like libertarians when it sells bitcoin to libertarians. It will sound like ninety nine percenters when it wants to sell to Obama voters. It will sound like gold bugs when it wants to sell to those who were going to buy gold instead.

    Created out of nothingness, the mathematical representation for bitcon is zero. Zero is “nothing” and nothing is what bitcons are made from. There is nothing more abundant in this universe than nothingness is abundant.

    Bitcon is infinitely divisible. It is too late to put that genie back into the bottle. It was funny to watch a few years ago when they realized the mistake. Everybody was lying saying bitcon is not infinitely divisible. What is the limit when you divide zero by infinity? Any person who took calculus would see the limit on the total supply of bitcon is only one.

    Multiplying the very first bitcon by 21 million to define the limit on total supply was the biggest scam in ponzi scheme history. It is not possible to multiply anything that is infinitely divisible. Like a zero is infinitely divisible, when you multiply it by 21 million then you still have only the exact same nothingness you had in the first place.

    • STFan

      Bitcoin is actually only divisible to 8 decimal places. It is not infinitely divisible.

      • Neal Palmquist

        The fact that bitcoin is infinitely divisible is the easiest fact that can be verified by anybody who wants to look. I’m not even going to bother posting dozens of links.

        • Kizami

          Clearly you don’t understand the word ‘divisible’. With enough time and science, a pizza is infinitely divisible but it doesn’t mean that it’s smallest particle qualifies as a meal.

          • Neal Palmquist

            A pizza is not infinitely divisible. And there is no such thing as a smallest particle of something that is infinitely divisible.

          • Kizami

            Nice cop out. Infinite or not, ‘divisible’ means breaking it down into smaller and small parts. The more division, the smaller each part. Try to use your brain a bit more. Also, if you are trying to use ‘division’ in the place of ‘duplication’ , you know what is infinitely duplicatable?…Paper money. Have fun in your dust bin old man.

          • Neal Palmquist

            I was certainly younger than you are when I took calculus. Without a calculator. I know what divisible means. And thank you for the birthday wishes!

          • Kizami

            Clearly you do not. Let’s use your brain for example. If I divide your brain into 4 equal parts, that will give me exactly 4 individual atoms. Each atom is 1/4 the value of your total brain. Your brain is equally as worthless as it was pre-division. It still only equals 4 atoms. Now, if I duplicate your brain 4 times, that gives me a total of 16 Palmquist brain atoms which does in fact devalue each particle of brain. A divisible Palmquist brain that is unduplicatable is less worthless than a divisible Palmquist brain that is duplicatable.

          • Neal Palmquist

            Awww. I think I hurt his widdle widdle feewings.

          • Neal Palmquist

            If your eyes started to move at the exact instant the very first bitcoin was to be created, then how many bitcoins were created by the time your eyes completed the act of blinking?

            I would guess maybe five or six of the very first bitcoins were created in the blink of an eye. But it could have been hundreds, for all I know.

            So what happened to all that science and what happened to all that time? The science and the time you said was needed to make your infinitely divisible pizzas of the future? How did bitcoin get to be infinitely divisible without it?

          • Neal Palmquist

            What is it with you guys and your bitcoins and your pizzas, anyway? It is all you guys ever want to talk about as if they are the two most wonderful things in the world. Get a real job. And learn how to use the stove, for crying out loud.

      • Neal Palmquist

        I can’t post links if I tried. Here is cut and paste from 99bitcoins website. “Bitcoin is infinitely divisible. Currently, 1 bitcoin can only be broken down into 100,000,000 smaller units, known as satoshis. However, that limit is not set in stone. If, at some point, more than 2,100,000,000,000,000, or 2.1 quadrillion, units of currency are needed, then it would not be difficult to allow the currency to be broken down to another decimal point or two.”

        You guys are falling for the biggest scam. The very first bitcoin was built to never ever run out. You cannot divide the very first bitcoin by infinity and then give it properties of being scarce or being rare by multiplying it twenty one million times. But you guys want to believe it so very badly, now you all are trying to roll back the infinite divisibilty and act as if that never happened. Too late. The genie is out of the bottle.

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  • Franivelius

    Bitcoin forever!

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