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Snippets
Sometimes all you need is straight-to-the-point, snappy information so that you can learn without feeling too pressed for time.
The Snippets page has got you covered.
We like to bring up 6 interesting topics/misconceptions surrounding Bitcoin, crypto and technology in general.
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Some explanations are longer than others, and we intend to change the topics regularly, but one thing that will remain is its simplicity.
Check out our 123 to-the-point explanation!
Bitcoin is too expensive
At first glance, it's true. Not everyone has extra savings in the five digits to purchase a Bitcoin. Bitcoin will only ever have a total of 21 million coins in existence, which is one of the reasons why a single Bitcoin has a big value. However, it doesn't mean you have to buy one whole Bitcoin to own some. Bitcoin was designed so that each coin can be divided into many pieces (0.00000001 BTC). In other words, you can buy as little as 1p worth of Bitcoin. Bitcoin wasn't too expensive a decade ago, and neither is it today.
Bitcoin is too volatile
Bitcoin's volatility is one of things that make it unique. Bitcoin is trustless and transparent. In other words, it lays its cards on the table for everyone to see. Unfortunately, not many other assets in the world can say the same. One of the main reasons for Bitcoin's volatility is down to its short history and market size. It's much easier to move a market that is smaller in size than one that is larger. Just like the Bitcoin network, you too can know what to expect. For this reason, Bitcoin has always been considered a long-term purchase. Follow this approach and you may welcome short-term volatilty. After all, volatility goes in both directions.
Decentralisation, DeFi, Blockchain
They are buzzwords you may have come across before but have no idea what they mean. Here is a short & sharp explanation: Decentralisation replaces the need to use centralised banks and institutions such as PayPal and HSBC. DeFi is short for Decentralised Finance. It is a new form of finance that avoids the traditional methods e.g. you can take a loan without the decision of an HSBC. It's easy to view all of Crypto as decentralised, but we think Bitcoin is the only fully decentralised one. The Blockchain is a shared and distributed database/ledger that stores information and records transactions. This is stored on different networks e.g. the Bitcoin Network.
Bitcoin uses a lot of energy
Bitcoin's energy consumption is controversial to say the least. But a lot of that controversy is driven by either hysteria or inaccuracies. Why is energy used in the first place? As a way of proof and validation in the Bitcoin network, computer power is used, therefore expending electricity. If energy wasn't used, there would be no incentive for proofing and validating the network. In our daily lives, we all consume lots of electricity whether it be washing machines, TVs, dishwashers etc. We are happy to use electricity if it provides us with value. In that case, Bitcoin is no different from the examples above. Bitcoin's energy consumption is special because of how renewable it is becoming. Not only is it already over 50% renewable, but it also anticipates using excess energy that would otherwise be wasted e.g. Methane from a landfill or hydro energy. Bitcoin is not the problem. In contrast, it is providing solutions to global energy consumption and wastage.
How can something NOT physical hold value?
As humans, we like to make sense of all things. Physical things are more easily understood because it can be seen and felt. This isn't always possible in the digital world, which makes it hard for some people to wrap their heads around. The value of anything can vary from person to person. In the course, we discuss why gold has held its value for over a thousand years. But consider how people may view gold if it wasn't a shiny & alluring colour, but instead a boring grey. Or if you couldn't feel its heavy weight, would it seem cheaper and no longer indestructable? In reality, something's value shouldn't matter whether it's physical or not, but instead how good it is at its job. Bitcoin isn't physical, but for the role it plays, it's perfect. As a form of money, we need something weightless that can be travelled instantly and efficiently across the world. In summary, it's a psychological barrier to overcome and requires the ability to adapt one's thinking.
Is crypto a scam?
Crypto is unregulated in most parts of the world, which means there is little support when it comes to fraud and scams. However, that doesn't necessarily make everything in crypto a scam. In our course, we explain why Bitcoin is not a scam and go through specific examples of crypto-related scams. It's worth reading!
Glossary
Accumulation
A period of time in the market where prices have bottomed but remain stagnant.
All-Time High (ATH)
When the price of a cryptocurrency in market capitalisation is at its highest.
All-Time Low (ATL)
When the price of a cryptocurrency in market capitalisation is at its lowest.
Altcoin
Alt is short for alternative. An altcoin is any alternative cryptocurrency to Bitcoin.
Bear Market
When cryptocurrencies fall dramatically in price, usually > 50%, for a sustained period of time.
Bitcoin
The first cryptocurrency, was created in 2008 by a pseudonymous person/group called Satoshi Nakamoto. A decentralised, peer-to-peer network and payment system.
Blockchain
A publicly distributed ledger system. Contains blocks, units of digital information. The underpinning for all cryptocurrencies.
Bull Market
When cryptocurrencies rise dramatically in price, usually > 50%, for a sustained period of time.
Censorship-resistant
A key principle of Bitcoin. Bitcoin’s decentralised nature makes its core network resistant to attacks, modifications, or threats.
Central Bank Digital Currency (CBDC)
A government controlled and issued digital currency system
Cold Storage
Holding your Cryptocurrency offline. A method of keeping your coins safe, usually done through non-custodial wallets, USBs.
Decentralisation
The opposite of centralisation. No single government/entity control, rule or ownership.
Deflation
A decline in prices of goods and services in an economy.
Difficulty Adjustment
A key principle of Bitcoin. Every two weeks, the difficulty of creating new blocks on the Bitcoin network is automatically adjusted. Blocks are created either faster or slower than normal due to fluctuations in demand. The adjustment is made so that blocks continue to be created roughly every 10 minutes as designed.
Exchange Traded Fund (ETF)
A security that can track a variety of stocks, funds, and cryptocurrencies. It can attract new buyers such as pension funds into new markets in a safe way.
Fiat
A latin word meaning “by decree”. A Fiat currency is backed by a central government, for example, the Federal Reserve and the Bank of England. It has its own banking system, and can either be in physical paper note form or digital credit.
FOMO
An acronym for “Fear Of Missing Out”. Usually mentioned in bull markets.
FUD
An acronym for “Fear, Uncertainty, Doubt. Usually mentioned in bear markets, but can occur any time, in particular in relation to Bitcoin.
Fungible
Something replaceable which will be exactly identical.
Genesis Block
The very first block to be created and validated on a blockchain, most famously the Bitcoin network.
Halving event
A key principle of Bitcoin. Every 210,000 blocks, or roughly every 4 years, the block subsidy reward gets cut in half. The reward has been reduced from 50 to 25, to 12.5, and now currently 6.25. The next halving is due to take place in 2024 and will reduce the block reward to 3.125.
Hardware Wallet
A wallet that stores your Cryptocurrency, usually a USB device. Ledger or Trezor are popular examples.
Hash
A unique, fixed-length code that is encrypted to secure certain data. A key function on the Bitcoin network.
HODL
A famous term within the Bitcoin community. A misspelling of ‘hold’ on a Bitcoin forum. Also considered an acronym for “Hold On for Dear Life”. The term is popular for its ‘no selling at all costs’ mentality.
Immutable
A key principle of Bitcoin. The inability for something to be changed over time.
Inflation
The general rise in prices of goods and services.
Interest Rates
A changing rate of cost or income depending on money borrowed, lent, or deposited.
Judgement Attack
An attack on a cryptocurrency network. A large number of nodes is used to reach a consensus on a false version of the blockchain, causing the network to accept invalid transactions or blocks.
Know Your Customer (KYC)
KYC is a method for security and validating the personal information/identity of the customer.
Ledger
A record of financial transactions that cannot be changed. Bitcoin has a publicly distributed ledger.
Lightning Network
A layer 2 protocol on the Bitcoin network. Lightning Network processes transactions quickly and solves the scalability problems on the base layer of Bitcoin.
Medium of Exchange
One of three aspects required to be considered a valid form of money. A medium of exchange acts as an intermediary that helps facilitate a buying or selling, or trade between parties.
Metcalfe’s Law
Metcalfe’s Law concentrates on the behaviour of network effects. As users of a network enhance and grow, the more valuable it is to all users. Often used within the Cryptocurrency industry, in particular Bitcoin.
Mining
A key principle of Bitcoin. Bitcoin mining refers to “finding” (actually creating) new Bitcoin on the blockchain. It gets its word from precious metal mining e.g. Gold and Copper. Bitcoin mining can be done at home, or in industrial buildings at the business level.
Node
A copy of the Bitcoin network that can be kept at home. It stores and verifies data for Bitcoin users.
Non-Custodial
In relation to who has custody (control and ownership) or your cryptocurrency. Non-Custodial means the user directly owns the private keys to their cryptocurrency.
Non-Fungible Token (NFT)
Usually digital art, but they are cryptocurrencies that are not fungible. Wants to possess rarity, uniqueness, and collectibles.
On-Chain
Transactions that are shared on the blockchain and distributed amongst all participants are considered to be on-chain.
Open-Source
Anything open-source is publicly available which provides the opportunity for sharing information, improving inefficiencies, and building on a network. The Bitcoin network is a perfect example of open-source.
Peer-to-Peer
Decentralised interactions and transactions between parties in a distributed ledger. This was at the heart for the formation of Bitcoin, as addressed in the whitepaper.
Permissionless
A key principle of Bitcoin. All processes and protocols made on the Bitcoin network or other blockchains don’t require permission from any central authority. Only a consensus from everyone particpating and validating the network.
Proof of Stake
A consensus mechanism on the blockchain done through staking i.e. holding a certain amount of specific crypto in the network
Proof of Work
A consensus mechanism on the blockchain done through expending electricity to solve complex puzzles to validate transactions and create new Bitcoin blocks.
Quantum Computing
Powerful computers that can harness quantum mechanics and perform huge amounts of computing far greater, faster, and more efficiently than previous computers.
Quantitative Easing
A policy decision from governments to ease money into the system. Stimulating growth by increasing the money supply.
Quantitative Tightening
A policy decision from governments to take money back out of the system. The opposite of quantitative easing.
Recovery seed
A string of random words usually 12 or 24 words long. This is what you need to remember in order to retrieve access to your cryptocurrency in the event you lose your device.
Satoshi
A satoshi, otherwise known as a Sat, is the smallest unit of Bitcoin with a value of 0.00000001
Store of Value
One of three aspects required to be considered a valid form of money. Something that can be held, stored, or traded, and still withhold its value.
Transaction fee
The cost involved in making a transaction either on an exchange or on a blockchain.
Two-Factor Authentication (2FA)
Two security steps in order to access or retrieve your cryptocurrency. It is implemented to heighten safety by using two different forms of authentication.
Unbanked
Either not having the ability to have your own bank account, or alternatively choosing not to have a bank account.
Volume
How much cryptocurrency has been traded over a certain period of time, e.g. past 24 hours.
Wallet
A digital wallet is similar to a physical wallet in the sense that you can store your money, or in this case cryptocurrency. A digital wallet can also send and receive cryptocurrency.