Aug 3rd, 2019 - Category: Miscellaneous
It’s hard to believe that it has been almost two years since I wrote the post, “A Tiny Bit of Bitcoin.” It was in response to the bubble that saw Bitcoin reach a peak of $20,000 US dollars per Bitcoin. Today, it’s hovering around $10K with a low of $3K in early 2019. Maybe Bitcoin is not the most stable investment but the rewards outweigh the risks for people who love being outside the system. For example people using “alternative currencies,” are “Crypto-anarchists,” or live in countries where 70% fluctuation in value is stable compared to their own currencies. One of the biggest issues with Bitcoin, in my opinion, is that it is appears to be very complicated: complicated to buy, complicated to store, complicated to use, and very complicated to understand. But at its core the calculations are simple enough that they can be done by a non-technical person with only a pencil and a piece of paper. In the spirit of this basic simplicity, here are eight common questions with answers that I hope will provide a way to get one’s “head around” Bitcoin.
- I’m a Luddite, can you explain Bitcoin in simple terms? - Sure, take a look at my post “A Tiny Bit of Bitcoin“ and there’s also a good Wikipedia article.
- If it’s so difficult to create, buy, store, and spend, why do people seem to love it? -
Why do people earn and use any currency? Because it’s a compact, efficient, widely agreed upon way to trade something we have (effort, products, etc.) for something we want (food, housing, goods, services, etc.). Also some people use Bitcoin as an investment vehicle but that’s a whole other world. For most Bitcoin users, it’s one of the only ways to remove their money from social and governmental control while maintaining the ability to purchase the things they find valuable. - Amazon and Walmart don’t accept it, how can the average person spend Bitcoin? Here are 13 major retailers that accept Bitcoin. Believe it or not Microsoft, Dish Network, and Overstock.com are on the list. This world map of Bitcoin acceptance is also interesting from a geographic basis.
- I heard in the news that Facebook is coming out with their own version of Bitcoin, what’s up with that? - It’s weirdly called “Libra” and you can safely ignore it. Facebook was having a delusional moment and now even they don’t think it will ever be available to the public.
- I can’t ignore Libra, I love Facebook and want you to explain it. - Shush, if somebody hears you, you’re going to get your Luddite Society membership revoked. Fine, read this article in the Economist. They clearly explain the bizarre details of Libra.
- Are there any other alternatives to Bitcoin? - If you thought Bitcoin was risky, welcome to a whole new world of risk where even the names sound sketchy. Litecoin, Ethereum, Zcash, Dash, Ripple, Bitcoin Cash (not related to Bitcoin), Dogecoin (which featuring a likeness of the Shiba Inu dog), and others exist, but Bitcoin is the virtual gold standard (for what that’s worth).
-
You promised I could mine Bitcoin with a pencil and paper… - The Gizmodo website recently posted an article “Mining Bitcoin With Pencil and Paper” that even has a video of somebody doing one round Bitcoin calculation manually in less than 20 minutes. Ignoring all the fancy words like “SHA-256 algorithm,” “Hashing,” and “Boolean operations,” the calculation boils down to starting with a number from 0 to 4.3 billion (2^32 to be exact), shuffling the digits around in predefined ways, doing some simple addition, changing a couple digits based on the values of other digits, and eventually coming up with another number from 0 to 4.3 billion. It was hard to create originally, but it is easy to calculate.
- So if you can mine Bitcoin with a pencil and paper, how much computing power are Bitcoin miners using? - In 2015, CNN reported that Google’s entire global computing power was less than 1% of that used for Bitcoin mining which has increased exponentially since then. If you’re going to make any money mining Bitcoin by hand, it’s time to sharpen that pencil. A human can do roughly one full calculation per day while professional miners can do 500,000 trillion (500 quadrillion) per day, that’s a lot of paper and pencils!