Bitcoin Cryptocurrency Checklist

Bitcoin Background

  • First successful cryptocurrency
  • Originally meant to be a peer-to-peer payment system
  • Addressed the problem of double spending
  • Founder: Satoshi Nakamoto (pseudonym)
  • Year Invented: 2008
  • Technology Used: The Blockchain
  • 1 bitcoin = 100,000,000 Satoshis
  • Only 21,000,000 bitcoins will ever be created
  • No actual intrinsic value
  • Only took 5 years to breach $1000 mark

Advantages of Bitcoin

  • Very fast payments
  • Very low transaction fees
  • Can pay or receive bitcoins anytime of day
  • Don’t need a bank account
  • Decentralized, open-source, transparent
  • No banks or government controls it
  • Not subject to politics and corruption
  • Anyone can create a bitcoin wallet
  • You have total control of your bitcoins
  • Protects users from identity theft
  • Transactions are irreversible once verified by network
  • No threat of chargebacks

Disadvantages of Bitcoin

  • Extremely risky
  • High volatility
  • Still relatively new
  • Not fully matured and developed

What You Can Buy with Bitcoins

  • Common household items
  • Gift cards
  • Video games
  • High-tech gadgets
  • Plane tickets
  • Rent vehicles
  • Pizza, burgers, sandwiches, etc.
  • Coffee, beer, etc.
  • Donate to charity
  • Reddit gold
  • Many more items!

Methods to Acquire Bitcoin

  • Buy bitcoins
  • Fastest method of getting bitcoins
  • Will need to spend fiat money
  • Top cryptocurrency exchange / brokers:
  • Coinbase/GDAX
    • Kraken
    • Gemini
    • Bitstamp
    • CEX.io
  • Cash exchanges
    • LocalBitcoins
    • Wall of Coins
  • Trade other cryptocurrencies for bitcoin
    • Great if you already have other crypto
    • Don’t need to spend fiat money
    • Crypto to crypto exchange
      • ShapeShift
  • Get paid with bitcoins
    • Work for bitcoins
    • Sell products or services
    • Receive tips from customers
    • Complete small tasks on websites, such as:
      • Complete surveys
      • Watch videos
      • Click ads
      • Answer questions
      • Sign up for trial offers
      • Download mobile apps
      • Play online games
      • Shop online
      • Join bitcoin faucets
      • Get a few Satoshis at regular intervals
  • Mine your own bitcoins

Bitcoin Mining

  • Role of miners
    • Verifies transactions
    • Create new bitcoins
    • Without miners, there will be no new bitcoins

Bitcoin Mining Terminology

  • Blocks
  • Bitcoins per block / reward
  • Bitcoin difficulty
  • Electricity rate
  • Hash
  • Hash rate
  • Pool fees
  • Power consumption
  • Time frame

Bitcoin Mining Hardware Used By Miners

  • CPU (Computer Processing Unit)
  • Used in the early days
  • GPU (Graphical Processing Unit)
    • More efficient than CPUs
    • 50-100 times more productive than CPUs
  • FPGA (Field-Programmable Gate Array)
    • More powerful than CPUs and GPUs
    • Less power hungry
  • ASIC (Application-Specific Integrated Circuit)
    • Primary hardware used today
    • Used solely for mining
    • Most efficient hardware
    • Consumes less power than FPGAs
  • Mining difficulty
    • Average mining time – 10 minutes
    • More miners, mining difficulty increases
  • Mining rewards
    • Reward is halved every 210,000 blocks
    • Initial reward was 50 bitcoins
    • November 28, 2012 – reward was halved to 25 bitcoins
    • July 9, 2016 – reward again halved to 12.5 bitcoins
    • Year 2021 – reward will drop to 6.25 bitcoins
  • Mining pools
    • Allow miners to pool resources
    • Divide bitcoin reward among themselves
  • Cloud mining
    • No need to buy own hardware
    • No need to worry about electric bills
    • Pay a subscription fee start mining
    • Very few legit cloud mining sites
    • Most are Ponzi-style scams

Bitcoin Wallets

  • Hot wallets
    • Easy and free
    • Can be hacked
    • Can be accessed anywhere with Internet
    • Private keys are stored online
  • Example hot wallets
    • Online wallets from crypto exchanges
    • Mobile app wallets
    • Desktop wallets
  • Cold wallets
    • Very difficult to hack
    • Offline storage
    • Much safer than hot wallets
    • Example cold wallets
      • Paper wallets
      • Hardware wallets

Common Bitcoin Scams

  • Fake bitcoin exchanges
    • Offers too good to be true exchange rates
    • Unknown in the industry
  • Phishing scams
    • Email phishing scams
    • Malware scams
  • Ponzi scams
    • Offers outlandish ROI
    • Usually guarantees daily profits forever
  • Cloud mining scams

Trading vs Investing

  • rading is short-term
    • Takes advantage of volatility
    • Buy low and sell high method
    • Very risky
  • Investing is long-term
    • Buy and hold method
    • Dollar cost averaging method

Future of Cryptocurrency

  • Blockchain technology will become mainstream
  • Combat crime and corruption
  • Massive adoption in developing economies
I Hope this was helpful.
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