𝐀 𝐩𝐫𝐒𝐦𝐞𝐫 𝐨𝐧 𝐁π₯𝐨𝐜𝐀𝐜𝐑𝐚𝐒𝐧 & 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introduced, it was decided that a country could only print as much currency as the gold reserves they have but this was withdrawn in 1971 bcoz of which the central banks could then print as much money as they wanted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 β€˜higher inflation’ & it is completely β€˜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

Should you add more in Equity or redeem right now?

A thread 🧡to guide retail on why & what should they do at these historic market highs.

Do β€˜re-tweet’ and help us educate more retail investors (1/n)

#investing #StockMarket

Some investors feel that markets are trading at a PE of 27 vs 10 years historical average of 20 and a market-cap to GDP of 105 vs historical average of 79 and hence markets look expensive (2/n)


But, in such crazy liquidity driven markets, prices can move much ahead of the fundamentals & suddenly we start hearing commentaries of how the market is pricing in the earnings of FY 22 & 23 to justify the rally

If you r new to fundamentals, πŸ‘‡ can help


Results for Q4 have come out very well but that is also because of the lower base effect of the last year.

Over the last many years, markets have corrected 10-15% each calendar year. Can it happen this year as well? Can very much and that can be a great entry point. Why? (4/n)


There are a lot of over hangs in the near term,
-Crude going up
-$ index moving up
-Inflation moving up
-COVID uncertainties
All of the above are –ve for markets & liquidity on the other side driving markets up, its impossible to judge the near term movement of the markets (5/n)
Here’s a compilation of Personal Finance threads I have written so far. Thank you for motivating me to do it.

Hit the 're-tweet' and help us educated more investors

Yes Bank’s additional Tier 1 bonds, written off. Lakshmi Villas Banks Tier 2 bonds, written off. Understand what & why of ATI and Tier 2 bonds in this thread.

https://t.co/VBmV2dwpPn (1/n)


'Floating Rate Funds' - A case for debt investing in the current interest rate situation


Fixed Income investment strategies

It’s a misconception that FD, RBI Bond, PPF etc have no risk. The reason we don’t see the risk in them is because for us, risk ONLY means loss of capital.


Index Funds v/s ETFs

While index funds and ETF’s look similar, there are multiple differences you need to keep in mind before investing in either of them. Let me highlight the important ones

More from Bitcoin

The defi matrix

As each asset class goes on-chain, it can be stored in a digital wallet. And it can be traded against other such assets. Not just cryptocurrencies, but national digital currencies, personal tokens, etc.

We’re about to enter an age of global monetary competition.

The defi matrix is the table of all pair wise trades. It’s the fiat/stablecoin pairs, the fiat/crypto pairs, the crypto/crypto pairs, and much more besides.

Uniswap-style automatic market making for everything. Every possession you have, constantly marked to market by ~2040.

More liquidity, less currency?

This is an interesting point. Cash doesn’t make you money. In fact, it can lose you money in an inflating environment.

Reliable, 24/7 mark-to-market on everything is hard β€” but if achieved, means less % of assets in cash.


AMMs boost BTC. Here's why.

- All assets trade against all assets in the defi matrix
- Automated market makers give liquidity for rare pairs
- Everything is marked-to-market 24/7
- Value of cash drops, as you can liquidate instantly
- The new no-op is to keep your assets in BTC

Basically, automated market makers like @Uniswap boost BTC in the long term, because they allow *everything* to be priced in BTC terms, and *anyone* to switch out of BTC into their asset of choice.

Though in practice this may mean WBTC/RenBTC [or ETH!] rather than BTC itself.
The is no Devcoin Gold yet. But then again, we've never been one to "peg" to anything. I came across an interesting article about 'recreating' addresses with Bgold that @bitcoincoreorg cut out since 0.13.0 - perhaps one day we can do a similar thing in future Devcoin software :)


https://t.co/cv4UqsaVAK

That being said I hold some Doge @blockio in an "A-" address myself after 0. 1. "9-" versions :). Don't believe Bitcoin Core the Coin (Utility) is the only visible value on Core chain. Color me crazy. I believe in script. And FOSS that is used to exportπŸ“œ


And that's just a guy @MeniRosenfeld who put his identity and ideas out in the public to build a Web of Trust back when the web was much less of a safe place. His identity at stake and the implementation of a branch in source code by another unsung hero @killerstorm reveals value

Some of those who set up our bright future quietly implemented it in a branch on the main source code before it was officially the Bitcoin Core main repository, before a "Bitcoin Core" entity existed

Just because Bitcoin Core nodes dominate and do not read "smart" colored satoshis or display them, doesn't mean they do not exist on chain. The example of recreating P2WSH-over-P2SH address from BTC https://t.co/ZWSP2MO5bY wallets in Bitcoin Core Gold I shared proves -rescan's $

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