𝐀 𝐩𝐫𝐢𝐦𝐞𝐫 𝐨𝐧 𝐁𝐥𝐨𝐜𝐤𝐜𝐡𝐚𝐢𝐧 & 𝐂𝐫𝐲𝐩𝐭𝐨𝐬 🧵

I still everyday meet investors who think Bitcoin & Blockchain are the same & this thread is specifically for them

Do re-tweet & help us educate more invetsors ☺

#Investing #Cryptos #Bitcoin (1/n)

(Q1) Lets start with what was historically used as a method of payment?

- Barter system, you give me a cow and I give you 100 kgs of rice (2/n)
(Q2) So why dint we continue with the barter system?

- It was difficult to transact in fractions
- What if I want only 50 kgs of rice? I cant give you half a cow right?
- This is the prime reason for the introduction of smaller units of payment method we now call as coins (3/n)
(Q3) How did Gold coins get shortlisted for the job?
- It was malleable & portable
- It was non corrosive, could be stored for a long time
- It was a perfect combination of abundance & rare
- Plus it was eye catching & visually appealing (4/n)
(Q4) What about paper currencies?
a) When paper currencies were introduced, it was decided that a country could only print as much currency as the gold reserves they have but this was withdrawn in 1971 bcoz of which the central banks could then print as much money as they wanted
(b) Infusing so much liquidity leads to ‘higher inflation’ & it is completely ‘controlled by the central banks’ (This is the problem, remember this through out the thread)
(c) To solve the above problem, Bitcoin was invented. (6/n)
(Q5) What is a Bitcoin?

(a) It claims to be a Store of value (like Gold is) & a payment method (Like $ is) (7/n)
(b) Because only a limited supply of Bitcoin is available, it is expected to be deflationary (problem 1 addressed) as per modern economics & because it uses blockchain, it is more transparent & no 1 single entity controls it (Problem 2 addressed). (8/n)
(Q6) Before we understand Bitcoin, lets understand Blockchain

(a) Assume split wise. Friends go out, sometimes someone pays and sometime someone else. At the end of the year, there is a ledger mentioning how much does who owes whom. (9/n)
(b) The challenge with this ledger is what if I add any entry in it during the year, who verifies if it’s correct?
(c) Currently, banks do this verification when you transact through the bank. Banks maintain transaction record of credits & debits (10/n)
(d) NSE/BSE /NSDL/CDSL does the same thing in the stock markets
(e) But what can you do to decentralize? No banks, no NSE/BSE/CDSL/NSDL? To verify the transactions, you use computational work (replacing intermediaries (Banks) with computational work), let me explain (11/n)
(Q7) How does the blockchain work?

(a) There are multiple computers also called as miners or NODEs are connected to each other on open source software (12/n)
(b) For bitcoin, you can download the software Bitcoin client, have the hardware in place and you become the part of the mining community who would verify & maintain all transaction records (13/n)
(c) Lets say someone buys & sells the bitcoin and that transaction needs to be verified. What happens is, multiple transactions (maximum of 2400) are bundled into a block (14/n)
(d) 2 authorize if the transactions r correct, u have 2 sign it with a unique valid transaction key (HASH or Proof of work), which is generated after solving some very complicated algorithmic problems 2 arrive at the HASH which other computers in the network also validate (15/n)
(e) Whichever computer in the open network is able 2 solve it 1st, announces it in the network 2 every1 where every1 saves the transaction in their ledger automatically as a part of the network (decentralized) 4 which the miner who solved the problem receives bitcoin as a reward
(f) Like in the ledger, these blocks keep forming a chain one after the other and hence it’s called the Blockchain (17/n)
(Q8) How many Bitcoin’s do I get for the mining activity?
(a) It is called Bitcoin Halving
(b) It reduces the bitcoin reward for the miners by half every time 2,10,000 blocks are verified (18/n)
(c) A new block is created every 10 min, it roughly takes 4 years 4 the bitcoin halving (its an automated process of reducing the reward at every 2,10,000 blocks verified)
(d) This is the bitcoin reward 4 solving the block & no new bitcoins after 2,10,00,000 bitcoin are released
(Q9) What are Altcoins, Stable coins & Meme Coins?

(a) Altcoins - Anything other than a Bitcoin is called the Altcoin. Example – Ethereum, Cardano, Polkadot (20/n)
(b) Token or Stable coin - It is pegged against $ majorly & tries to mirror its movement. Price of the coin moves up & down with the movement in $. Example – Tether, USDC

(c) Meme-Coins - Made for fun, have no logic. Example – Doge, Shiba (21/n)
(Q10) What are my views on the same?
(a) Blockchain is a brilliant technology & has multiple use cases in various industries
(b) But on Bitcoin, I am not sure if it will be able to replace paper currencies as a medium of transaction or gold as a store of value. (22/n)
(c) It 'may' evolve into use cases in the future that I cant visualise right now.
(d) Altcoins with use cases like De-fi will evolve over time & we will talk about it in the next thread. Will also talk about the fancy around NFT's & Metaverse going forward (23/24)
This is my 49th thread, 'do re-tweet’ & follow me
@KirtanShahCFP

Have earlier written on,
-Sector Analysis
-Macro
-Debt Markets
-Equity
-Gold
-Personal Finance etc. You can find them all in the link below https://t.co/UrRt87xIJF…………… (END)

More from Kirtan A Shah

More from Bitcoin

I will be a buyer under 13800 levels, but depending upon the reversal on smaller timeframe.
1/9 Bitcoin has performed remarkably these past few weeks despite:
-Most of DeFi falling 50-80%
-CFTC charging BitMEX
-POTUS contracting Covid
-Delayed stimulus talks
-FCA announcing a derivative ban for retail

Why? Let’s see what we can find on-chain

2/9 Bitcoin’s Realized Cap has been steadily increasing just as it did before the 2017 bull market took off. If it continues as it did in 2017, 2021 should be an interesting year.

https://t.co/nqgX7vTMDV


3/9 Bitcoin MVRV, whilst more volatile this market cycle, is also is holding the same trajectory it did during the 2016/17 bull market

https://t.co/jadbn6nCOB


4/9 Looking at the supply of Bitcoin on exchanges is a good indication as to whether or not users are increasing trading activity, or increasing hodl activity. With supply reducing it looks like the tendency recently has been driven by hodlers


5/9 Despite the recent volatility, the number of Bitcoin whales continues to increase, indicating the growing number of large holders that have positive expectations for the future of Bitcoin
Ok, so what is the significance of the @lagarde statement on bitcoin?

We were offered a very open insight (but slightly flawed analysis) into top level policy perspective behind the crack down on selfhosted wallets.

https://t.co/1LTzrxHbgs 1/32


'It is a speculative asset, by any account. If you look at the price movements... '

It starts with an economic price perspective and we can learn that ECB is closely monitoring this price movement as one of the many indicators.

So we are in the classic central bank frame 2/32

'Those who thought it would turn into a currency. Sorry, it is an asset not a currency.'

Here she summarises a classic debate on what is currency and what is needed for that. Based on the holy three: unit of account, means of payment, store of value. 3/32

The summary is classic, but too narrow and does not incorporate the wider financial history viewpoints on money, currencies and the way we pay. 4/32

ECB overlooks the de facto unit of account role of bitcoin, having been used to 200 years of having cash around whic is both the unit of account and a means of payment. 5/32

You May Also Like

This is NONSENSE. The people who take photos with their books on instagram are known to be voracious readers who graciously take time to review books and recommend them to their followers. Part of their medium is to take elaborate, beautiful photos of books. Die mad, Guardian.


THEY DO READ THEM, YOU JUDGY, RACOON-PICKED TRASH BIN


If you come for Bookstagram, i will fight you.

In appreciation, here are some of my favourite bookstagrams of my books: (photos by lit_nerd37, mybookacademy, bookswrotemystory, and scorpio_books)