Bitcoin for Newborn Dummies
Why a stolen bicycle padlock taught me to be prudent
Geeky 80s style will never not be cool.
The retro power still makes me goosebumps. I remember every little detail of my wardrobe in the 80s.
The intense smell of my first leather jacket, the texture of the bombazine pants, or the first All-Star Converse still cause me nostalgia.
I still remember the first bicycle my parents offered me. The seat was long, which made it possible to take someone else — a luxury at that time. The bench was all white with a blue longitudinal strip, which delighted all my neighborhood friends.
Everyone wanted to have a few seconds of privilege, to sit on that Harley Davidson without an engine. My father ordered that bicycle from Spain, which at the time was a rare event. The wheel bearings were the best brand in the world. There were bicycle parts that none of us had ever seen before.
An extra accessory also stood out in the middle of that shiny rolling piece. A padlock with eight numbers. A real Fort Knox, wrapped around the top of the seat gave a more sophisticated look to that piece of art.
For weeks I felt like the king of my neighborhood. Even those kids who didn’t like me so much wanted to be my friends too. All they wanted was to sit on the most beautiful bicycle of our small universe.
My padlock was my safe-haven. I knew I was protected from the most envious. I could put my bicycle wherever I wanted. My 8 number code was easy to remember. 19760312, because of the year, month, and day of my birthday. In my ingenuity, that powerful image right in front of my eyes of an insurmountable padlock made me believe in an entirely happy life.
Until one day, it didn’t. It was the always desired summer vacation, and I, a skinny young kid, run downstairs after lunch. I was about to continue another incredible day of adventures with my friends.
I needed my bicycle to go into a small forest where we were building huts made of boards and nails stolen from the nearest construction works.
Yet, unfortunately, my bicycle wasn’t there. I looked in a panic at my friend. His face was white as snow. I run with all my strengths around the block, searching everywhere, but somebody had stolen my bicycle.
I spent the rest of the vacation depressed. Despite the summer holidays’ frantic excitement, a profound blow to my heart was left unhealed until many years later.
So, that was my first lesson about security.
Now, 35 years after the first time someone stole me, many new doubts arise.
Not about an eight-number padlock, but about a public and a private key. These keys represent an encrypted solution of a digital product by the name Bitcoin.
For those who have always dreamed of having a gold mine.
In the 80s, our most digital extravaganza was spending endless hours playing Chuckie Egg on our Spectrum 128k.
It was the beginning of the World Wide Web. It was invented by British scientist Tim Berners-Lee in 1989 while working at CERN (Conseil Européen pour la Recherche Nucléaire) .
The web was originally conceived and developed to meet the demand for automated information-sharing between scientists in universities and institutes around the world.- homecern.com
Thirty and some years after creating the digital web, an anonymous person who called himself Satoshi Nakamoto created a nine-page white paper: “Bitcoin: A Peer-to-Peer Electronic Cash System.” Nakamoto described a protocol for the creation of a digital currency.
He wrote it as a consequence of the Great Depression of 2008.
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.- Satoshi Nakamoto
With a very clean mind, Nakamoto identified structural problems in the transaction world, as is explained:
The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services.- Satoshi Nakamoto
For the majority of the underdeveloped countries, this solution would be a sign of freedom. Only 20% of Africans have access to bank accounts, but two-thirds have access to a mobile phone. What does this mean?
In this case, with a mobile phone, you can trade with another person without the need for intermediaries. You can also access the blockchain to register property, insurance, and other tools. Services that only the western world could access through smart contracts.
A fair system allows entire populations to have a chance to fight for their rights. Thus, without the need for intermediation, approximately 3 billion people who don’t have a bank account would no longer need it. Only a cell phone and internet access would be required.
A stolen bicycle padlock taught me to be prudent.
You can’t go to a commercial bank and buy Bitcoin. Banks are not the place you want to trust your BTCs.
Remember what Satoshi Nakamoto wrote in his white paper. Bitcoin is a necessity for those who believe in a free intermediation market.
So, where can I buy Bitcoin?
There are several trading platforms where you can buy Bitcoin. The most famous are Coinbase, Kraken, Gemini, or companies like Paypal and Square.
But who keeps my Bitcoins?
When it comes to cryptocurrencies, two keys are needed to transfer and receive money.
These keys are called public and private keys.
Your Bitcoins are protected by these two keys for security matters. If someone tries to still your cryptos, they have to get access to your private keys.
In an asymmetric key encryption scheme, anyone can encrypt messages using a public key, but only the holder of the paired private key can decrypt such a message. The security of the system depends on the secrecy of the private key, which must not become known to any other.- Wikipedia
Banks are not the bad guys here. But they charge fees for the security of your money.
With digital currencies, you are the keeper of your hard assets by owning a private key.
The first thing to do is to retrieve the private keys from your BTC by sending them to an address on the Bitcoin network associated with your wallet. The latter can be software or hardware. The most important thing here is that you never leave the third party in possession of the private keys of your BTC.- Sylvain Saurel.
The public key can be on your brokerage account. But your private key must be in your pocket. Meaning, you must have it in a specific place we call wallets.
A Bitcoin wallet is like a wallet with cash. If you wouldn’t keep a thousand dollars in your pocket, you might want to have the same consideration for your Bitcoin wallet. In general, it is a good practice to keep only small amounts of bitcoins on your computer, mobile, or server for everyday uses and to keep the remaining part of your funds in a safer environment.- bitcoin.org.
There are three types of wallets:
- Mobile: portable and convenient; ideal when making transactions face-to-face; designed to use QR codes to make quick and seamless transactions
- Desktop: environment enables users to have complete control over funds; difficult to use QR codes when making transactions; susceptible to bitcoin-stealing malware/spyware/viruses.
- Hardware: one of the most secure methods to store funds; ideal for storing large amounts of bitcoin.
Most recently, I bought my Ledger Nano X. A hardware wallet that permits me to buy and secure my cryptos in one single-app.
Cryptocurrencies have another completely different structure. You are responsible for your future and for protecting your safe-haven assets.
Saving Bitcoin is protecting yourself from the future inequalities. And as you’ll read more and more about cryptocurrencies, you’ll get to the same conclusion.
Patience is not the ability to wait but the ability to have a good attitude while waiting.
In underdeveloped countries, the population uses Bitcoin to make transactions. However, in the western world, BTC is mostly seen as a hard asset.
Some specialists call it the digital gold.
When I have a conversation with a group of friends, they usually ask me many questions. They know I study cryptocurrencies for some time.
Yet, most of them are not investors. So, simplistically, I don’t believe they’ll be early adopters of this new technology. In the same way, they don’t buy gold because they don’t have any portfolio.
Ordinary people spend more than they earn. Normal people don’t have a savings account. They don’t even want to know about stocks, real estate, or other investment tools. They don’t care.
So, buying Bitcoin, for now, it’s only for those who understand how the investment world works.
In the second layer of development, ordinary people will start using Bitcoin and understand how it works. And we can see it starting in companies like Paypal and Square. They already adopted Bitcoin in their day-to-day transaction routines.
If the price of Bitcoin in U.S. dollars is increasing, it is mainly due to the historical weakness of the U.S. dollar, which is weak money. Once your BTCs are safely sent to your wallet, the best thing to do is to forget about your BTC.- Sylvain Saurel in In Bitcoin We Trust.
With prices rising and money printing continuing, inequality will be the next significant threat. And the best option we have to fight inflation is to put a portion of our energy and time into this technology. Bitcoin is a scarce asset, with only 21 million of them being produced until the year 2140. The protocol was build under that premise.
Because it’s a finite protocol, you will not have a third party producing more or less Bitcoin in the future. It will be supply and demand dictating the rules.
In this sense, without central banks being able to manipulate this asset, it will not only be scarce but will have fair rules for all parties.
Final Thought
In the very complex era that we’re facing, the best weapon of all is knowledge.
To protect your future and your family’s future, the best advice I can give you is to keep learning.
Understand how the current monetary system is built. Understand its flaws, and how it continuously benefits the few. That will naturally help you see Bitcoin as a good alternative.
The decentralized finance system is changing ordinary people’s behavior. You see it in Paypal and Square, but many other Defi’s will thrive and help the entire population switch their monetary energy into better solutions.
Early adopters will be the privileged ones. As in many other events in history, early adopters are those who dare to take risks.
Many challenges are yet to be overcome. But one thing is sure- the technological revolution will engulf entire industries in the coming decades.
The world will become even more virtual. Blockchain will be seen as web 3.0, with new platforms like Etherium that will disrupt new paradigms.
Money is nothing more than our energy, time, and happiness.
It remains for us to know to what extent technology will overcome greed, selfishness, and the thirst for power.
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This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.
