werner hattingh

What is Bitcoin

First understand what money is...

The following video clips might come as a surprise to you. Some might even call them conspiracy theories...It is not our place to give comment; other than to point out that perhaps your perception of money, should be re-evaluated. Bitcoin is peoples money. NOT bankers money. Please watch and use your own judgement.

The Federal Reserve Explained In 7 Minutes

The power lies with the banks -and in the case of the American Federal Reserve, in other words the most powerfull ci=urrency in the world; the US $ -even more so.

Expert Interview with Erik Voorhees, CEO Shapeshift.io

Understanding money and bitcoin and the difference is explained wonderfully here by the CEO of Shapeshift.io by Erik Voorhees in this video clip published by Genesis Mining. A brief introduction to Altcoins, Ethereum, Zcash and other cryptocurrencies are also part of the discussion. Did you know that bitcoin is ‘anti-fragile’? Have a look -it might boggle your mind.

$9 000 000 000 000 MISSING From The Federal Reserve

Astounding that the Trillions of Dollars that the Federal Reserve borrow or lend to ‘people’ can not be accounted for.

Glenn Beck Exposes the Private Fed; Gets Fired by Fox

Wait! What!? Did the author of “The Creature from Jekyll Island” G. Edward Griffin, call the money system a Ponzi scheme….? Watch this for more. A link to book in PDF format can be found here: https://goo.gl/XoA125

Now that we understand what and how ‘money’ works, let’s look at some common misconceptions around what bitcoin is, and what it is NOT.

Casascius coins

Each Casascius Bitcoin is a collectible coin backed by real Bitcoins embedded inside. Each piece has its own Bitcoin address and a redeemable "private key" on the inside, underneath the hologram. (In this instance where the creator refers to the ‘private key’, he is referring to the 'electronic code’ that refers to a bitcoin on the blockchain. Please read further for an explanation.)

"A Bitcoin Looks Like This”

These golden tokens are basically symbolic and pretty worthless. Think of them as souvenirs or memorabilia - that's why they take on so many forms, including plastic. On this particular coinage, note that the inscription has the block number and difficulty level. The difficulty level refers to the degree of work and technological savoir-faire required of the miner to reach that level. But don't let anyone try to buy something from you using this token.

You have to buy a whole bitcoin

Bitcoins are divisible to eight decimal places, or 1/100 millionth of a bitcoin. The limiting factor is the indivisibility of cents (or the smallest denomination of any fiat currency). Since the value of Bitcoin has historically reached a high of about $1000, buying an entire Bitcoin would be so prohibitive that it would not be practical for use as a currency.  (Fiat currency is any currency that exists in a physical form. Fiat currency mostly refers to the currencies that we use every day libe US$, ZAR, Yen, Euro etc.)

Coins are kept in a leather wallet

The term ‘wallet’ as used when referring to bitcoin wallets, and refer to the electronic, hardware or paper-wallets where the private keys to your bitcoin are held. read more in the wallets section of this website.

They are mined from the ground

Mining of bitcoin refers to the process by witch bitcoin gets created. To explain it in laymen term, bitcoin is created thru a complex computational process that rewards the owner of that specific computer with bitcoin for checking transactions or solving a mathematical riddle. you can read more under the mining section of this website.

It’s money for criminals

The fact of the matter is that the most commonly used currency for criminal transactions remain the US$. By stating that bitcoin is money for the criminals is tantamount to saying that everybody is bad. In it’s most basic form, humanity is good. Not everybody is a criminal. Ironically -if you start understanding how the modern monetary system works, you might consider the banking system to be criminal.

There is a risk that the other party won’t pay

There is a perception that using Bitcoin is not safe and you could lose your money or not receive what was sent. It is worth remembering that a Bitcoin network is not based on a system of debt like traditional banking. In a Bitcoin network the transactions are automatically validated and there is no need to reconcile. Bitcoin works on the concept of “available spend,” effectively a net Bitcoin balance. A transaction cannot be validated unless there is a positive unspent balance. The network knows where the address the Bitcoin transaction is coming from, and knows the amount and the destination address.

Bitcoin transactions are free

There’s a small transaction fee every time bitcoin is sent from one wallet to another. In relation to what one would have to spend on normal banking fees or even remittance fees; these transaction fees that get paid to the network as a reward for checking these transactions -are almost negligible.

Bitcoin is controlled by MIT -or someone

Bitcoins are controlled by a decentralized network of computers. There is no central point of authority or failure and no one can hack or ‘break’ the network because that would in essence only happen if the entire internet was taken offline. A considerable and unimaginable feat to say the least.

Bitcoins have no value

Bitcoins have value because millions of people believe that Bitcoin offers a safer, faster, cheaper transaction network. Because the bitcoin money supply is finite, and because people must own units if the currency in order to use the valuable transaction network, it has value. As a start -even google lists bitcoin as a currency. 

Bitcoin is anonymous

Although bitcoin transactions are anonymous because there’s no personal detail attached to these transactions other than a wallet number, they can become ‘compromised’ if the wallet numbers associated with your personal detail become known. Remember that the bitcoin blockchain broadcasts every single transaction in a public ledger that can be seen by everyone, and if your wallet number is known by third parties, they would be able to know how much bitcoin you have or are sending. There’s ways and means around this tho. One such option readily available is Tails OS.

It’s a Ponzi scheme with no intrinsic value

"Bitcoin has a totally different structure and purpose. It’s intentionally decentralized, and there are no outlandish promises or guarantees made on its market value. And while we’ll definitely agree that Ponzi schemes lack intrinsic value, by contrast we see a constant flow of new headlines sharing examples of how Bitcoin (the currency), and the blockchain are providing valuable and practical solutions for everything from remittances to ways to store wealth to financial access for the unbanked." 
Quoted from Blockchain Blog

How did it start? Where did it come from?

In short, bitcoin was started by a pseudonymous person/organization by the name of Satoshi Nakamoto in October of 2008. WIth the help of a very active and talented bitcoin community, it has grown in to a fully fledged currency -where it is today. 

"In October 2008, Nakamoto published a pape on The Cryptography Mailing list at metzdowd.com describing the bitcoin digital currency. In January 2009, Nakamoto released the first bitcoin software that launched the network and the first units of the bitcoin cryptocurrency, called bitcoins. Nakamoto continued to collaborate with other developers on the bitcoin software until mid-2010. Around this time, he handed over control of the source code repository and network alert key to Gavin Andresen,  transferred several related domains to various prominent members of the bitcoin community, and stopped his involvement in the project.” 

For more you can refer to the Wikipedia page here.

If you are interested in reading the original White paper on bitcoin entitled: "Bitcoin: A Peer-to-Peer Electronic Cash System”. 
Eloquently written by Satoshi Nakamoto, you may freely open and download the PDF here.

Bitcoin is more than you might think

“Bitcoin is a platform of trust… Bitcoin is the internet of money."

Saying that “Bitcoin is just another currency.” is actually a huge understatement. 

To truly understand Bitcoin, what it is and how it works, very much depends on the level of understanding that you would like to have of it. 

Perhaps a good starting point, would be to watch this video clip of Andreas Antonopoulos explaining bitcoin at Singularity University's Innovation Partnership Program. He not only explains what bitcoin is, but also takes some relevant questions that you may have as well.

The underlying technology

In a very well written article on Blockgeeks they pose the question: 

"Is blockchain technology the new internet?" 

And continue to explain; "The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. 

By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology. 

Bitcoin has been called “digital gold”, and for good reason. To date, the total value of currency is close to $9 billion US. And blockchains can make other types of digital value. Like the internet (or your car), you don’t need to know how the blockchain works to use it. However, having a basic knowledge of this new technology shows why it’s considered revolutionary. 

'The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.' 
Don & Alex Tapscott, authors Blockchain Revolution (2016)"

Read the full article here.

But who makes or creates bitcoin?

Bitcoin is made or created thru a process known as Bitcoin Mining. 

"Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere." 

Quoted from: bitcoinmining.com 

How do I know this stuff is even legal?

In this video we return once again to Andreas Antonopoulos where he explains bitcoin to the Canadian Senate Banking and Commerce Committee. They ask some tough and relevant questions. A definite must see if you are worried about the legality of bitcoin.

So what will bitcoin be worth in the future?

If the past (and indeed continuing) performance of bitcoin value is anything to go by, bitcoin will indeed just continue to grow on it’s current trend. 

"On 22 May 2010, user "laszlo" made the first real-world transaction by buying two pizzas in Jacksonville, Florida for 10,000 BTC. User "SmokeTooMuch" auctioned 10,000 BTC for $50 (cumulatively), but no buyer was found. In five days, the price grew 1000%, rising from $0.008 to $0.08 for 1 bitcoin." 
History of bitcoin -Wikipedia- 

You may also view historical charts on the web by searching for Bitcoin charts or viewing one here.

Roger Ver believes bitcoin could be worth thousands of dollars

Published on Feb 12, 2015 Roger Ver places bitcoin and the growth in the possible future use of bitcoin in perspective.

THE FUTURE OF BITCOIN - Andreas Antonopoulos

Published on Aug 26, 2015 Andreas Antonopoulos talks about the future of bitcoin and the possible value of bitcoin. He specificly refers here to remittance fees as a springboard initially.

Xapo CEO: A Bitcoin Could Be Worth $1M in 10 Years

Published on Apr 2, 2014 Wences Casares, co-founder and CEO of Bitcoin firm Xapo, sits down with WSJ's Evelyn Rusli to talk about Bitcoin's potential for investment growth and solutions to foreign currency exchange problems.

Tim Draper On Bitcoin's Future - Bloomberg

Tim Draper predicts that bitcoin is where smart money is betting in technology.

Sir Richard Branson: I Think Bitcoin Is Working

Sept. 10 2014 (Bloomberg) -- Billionaire Sir Richard Branson, chairman and founder of Virgin Group, comments on the future of Bitcoin and space tourism. He speaks with Trish Regan on "Street Smart." (Source: Bloomberg)