by Chris Guld
There’s news every day about the related topics of Bitcoin, Cryptocurrency, Blockchain and Web3. We think it is a technology worth following. We’ve even presented a few short zoom-based classes on it.
What do you think? People generally fall into one of 3 groups:
- I think it’s a scam, a ponzi scheme. It’s magic internet money only used by criminals.
- I don’t know what to think. How do I get educated?
- I think it is the future of money and the beginning of a new era in human history.
I’ve been fascinated with Bitcoin for a year or so now. There is a lot to learn. Here are the high points of what I’ve learned so far and why I think it is important.
What is Bitcoin?
Bitcoin is digital money. But, why do we need it? Don’t we already have digital money? I never get cash out of my wallet anymore. I just get a credit card and tap it to the store’s terminal. Isn’t that digital money? Yes, but you can only use that digital money if you have a credit card, backed by a bank account with a country’s currency – like US Dollars. There are lots of middle-men involved.
Bitcoin is not controlled by any company or country, it is simply software that lives on the Internet. To use Bitcoin, all you need is a smartphone and an internet connection and the money can move directly from sender to receiver with no entity in between. It’s like cash. As long as you have it, you can give it to someone else in exchange for something without involving a bank, or exchanging any personal information. This allows the millions of “unbanked” people in the world to participate in the global economy. No monetary system in history has been open to everyone … until Bitcoin.
Imagine Maria in Peru who wants to sell her embroidered blouses to tourists. All she has to do is install a bitcoin wallet on her phone. (yes, she has a smartphone and Internet access – more people have that than bank accounts!) When a tourist with some bitcoin in a wallet on their phone, wants to buy a blouse, Maria taps a button on her wallet app that displays a QR code with the cost of the blouse embedded. The tourist opens their bitcoin wallet, scans the QR code, and the money (Bitcoin) is transferred from their wallet to Maria’s. No banks involved. Now imagine that the tourist is in Denmark. No problem, the same transaction can be accomplished remotely. Maria can participate in global commerce without a bank account. Of course, she will still need to mail the blouse! By using something called a “smart contract” it could even be specified that the money doesn’t transfer until the blouse is received.
How did Bitcoin get started?
Digital cash was tried before Bitcoin, but they couldn’t make it work. If you sent digital cash to someone over the internet, there was no way to prevent you from sending the same cash to another person. This is known as the “double-spend” problem. Think about it, the Internet and the web was designed to make it easy to send information all over the world. It didn’t matter how many copies were sent, in fact, that was often the point – send the same email to hundreds of people – great! But that’s not so great when it comes to money. Someone named Satoshi Nakamoto came up with a methodology that tracked every transaction of digital cash and could therefore prevent double-spend. It used an Internet based system called blockchain. Blockchain is a ledger overlayed on the World-Wide-Web that will track every time digital currency changes hands. Each transaction, when completed, is written to the blockchain ledger and, once written, it cannot be changed. This way it keeps track of all the bitcoin and who owns it at any given point in time. It’s an accounting system. There’s a lot more to it, but right now just think of a “Ledger Layer” to the World Wide Web. The Internet has revolutionized the sharing of data around the world, with the addition of a “Ledger Layer” it can revolutionize accounting for things of value.
Blockchain was invented to enable Bitcoin, a global, peer to peer digital cash system. This happened in 2009. Does that date ring a bell? Our financial system in the US and around the world came close to collapse with the irresponsible behavior of the big banks. Our financial system, our global well-being is controlled by the profit motive of big banks and governments. If there was a de-centralized, self-validating system for managing money that existed outside of any bank or government we could avoid the disasters like 2008-9. That’s where Satoshi Nakamoto came in. He developed this system in 2009 and it has proven itself over the last 13 years. It works. The value of bitcoin goes up and down – wildly – and that can be a problem, but the process of the blockchain works.
The blockchain technology is about a lot more than Bitcoin
I became aware of Blockchain a year or so ago by following Peter Diamandis. He is a technology optimist. He’s authored several books and he runs the X-Prize that awards millions of dollars to technology teams that solve the worlds most important issues. He says the time is now to learn about this new technology. I took that to heart and signed up for an account with Coinbase, a cryptocurrency exchange, where I could buy a minimal amount of Bitcoin just to learn how it works.
Since then I’ve been studying and I’m fascinated with the possibilities that this new technology offers. Blockchain is more than money. It is accounting for any item of value and tracking it thru various transactions. Think of property deeds. They can be recorded on a blockchain and be immutable, anywhere in the world. Think of people’s identification and health histories – blockchain could give every individual an unhackable record of their identity. With the Ethereum blockchain, and the smart contracts that it creates, a musician can put their music on the blockchain and programmatically require anyone listening to it to pay a certain amount. Payment is guaranteed because, in order to use the music system, a listener had to link to their wallet, so the smart contract automatically executes the transaction. Each time the song is played a small amount of money is transferred. The smart contract can autonomously charge a different amount if you want to use the music as a soundtrack, and yet another amount to license it for your brand advertising. With blockchain the musician is guaranteed fair payment for their work.
Learn more
Regardless of what you think about Bitcoin, it’s time to learn more about it.
- If you ticked #1 above – Bitcoin is only used by criminals, I urge you to watch this TED talk by Katie Haun. She was a federal prosecutor who was involved in taking down the dark web operation called “The Silk Road.” She explains how this drug-trafficking website was financed by Bitcoin and how the blockchain that drives Bitcoin made it possible to track them down. For the entertaining movie of the whole story, see The Silk Road.
- If you ticked #2 – learn more, I encourage you to find more on GeeksOnTour – just use the search box at the top of our website and search for Bitcoin.
Other sources that I have learned from include Coinbase Learning, the YouTube channel for 99Bitcoins, the books Blockchain Revolution and Bitcoin Evangelist, and, probably my number one recommendation, is the excellent documentary called Cryptopia. - If you ticked #3 – it is the future, I’m with you! No one has a crystal ball. Bitcoin and blockchain could take us to a utopian future, or it could crash and burn. Personally, I like to dream about how Blockchain could level the financial playing field and help create global prosperity.
What have you learned about Bitcoin and Blockchain? Leave us a comment below.
About the author: Chris Guld has been teaching technology since 1983. She owned and operated a computer training center, Computer Savvy, from 1983-1996. She started with Visicalc and AppleWriter on the Apple IIe computer which was even before mice and the graphical user interface! With the advent of the Web, she recognized the world (literally) of opportunities that had opened up. She sold the computer training business and, along with her husband Jim (who was the network administrator for Computer Savvy) started living in an RV with a Datastorm Internet Satellite dish on the roof! Then came smartphones in 2007. Now, in 2022, 83% of the world use smartphones. The world of technology changes fast. Chris is passionate about learning and teaching technology and she sees Blockchain and Web3 as the next big technology. Bitcoin is just the tip of the iceberg.