INTRODUCTION

Let’s begin where cryptocurrency began. In 2009 Bitcoin, the very first decentralized cryptocurrency was created and released by Satoshi Nakamoto. No one knows who Satoshi Nakamoto was. He chose to remain completely anonymous. Satoshi knew that his persona didn’t matter. What mattered the most was the programming code that Bitcoin runs by. The code is what governs the Bitcoin network.

Bitcoin source code determines how the Bitcoin network functions:

Transfering bitcoins on the Bitcoin network is controlled by digital private keys that only the owner of the bitcoins knows. I can’t spend anyone’s bitcoins without access to their private keys. If those keys are lost, there’s no way to access the associated bitcoins.

When someone transfers cryptocurrency, what they’re really doing is using their private keys to create a transaction on the network. That transaction is then broadcasted to the whole network. Once you transfer the coins to someone else, the network knows those coins are no longer associated with your keys.

Keys are a long string of alphanumeric digits that look like this:

ef235aacf90d9f4aadd8c92e4b2562e1d9eb97f0df9ba3b508258739cb013db2

Digital “wallets” keep track of all the keys.

A wallets is a software that helps manage keys and create transactions on a cryptocurrency network. The software can be on a mobile phone, a hardware wallet, or the keys simply written down on a piece of paper. Each one has their flaws and strenghts. A mobile, desktop, or web wallet are much easier to use than a hardware or paper wallet, but they also tend to be less secure because they’re constantly connected to the Internet.

Some software wallets support multiple cryptocurrencies, while others only function with a single cryptocurrency. A Bitcoin wallet cannot receive Ethereum, and an Ethereum wallet cannot receive Bitcoin. (More on wallets later).

No one can alter the transactions on the Bitcoin network because it would require to change the code of every single participant on the Bitcoin network all at once. It would require: 1) To change the blockchain – a global ledger of all transactions that have ever occurred that every miner keeps a track of. 2) A computational power so immense — one that rivals the Bitcoin network of miners. 3) A lot of money to run the attack. At that point the attacker would have nothing to gain from the change to the blockchain. The attacker would actually extract more value if they pointed those resources towards securing the network instead.

What Satoshi created was a new type of currency unlike anything the world has seen before. It would be similar like going from transacting in shells or salt for goods and services to transacting in gold and silver coins. However to say these things is an understatement of how big of a change cryptocurrencies are. Bitcoin and cryptocurrency in general is so advanced at a philosophical, technological, and societal level, it will forever change what we see as money.

The First Secret of Crypto

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. ” –Satoshi Nakamoto, creator of Bitcoin

To understand the first secret of crypto is to understand the intent of creating Bitcoin in the first place.

Part of the problem is that society as a whole doesn’t understand what value and money truly is. Governments, banks, and mega corporations rely on this lack of comprehension to exploit people. For example, a government expanding the currency supply by 50% more than there has been in a century seems outrages, yet countries like the USA, China, Russia, and many European countries have done so. It hurts the people of the country. This type of behaviour punishes the people who save in their government currencies. It’s literally stealing value from savers, and giving it to corporations and banks. Government officials who are in control of the money supply end up giving it to their crony friends to bail out their corporations or banks. This happened in the USA and the UK during the 2008 financial crisis. Wage workers suffer because they no longer get paid their fair amount of value. Sure they get paid the same number or even higher, but the value of the currency they get paid in is worth less. There has been no single government currency that keeps its value. All government currencies that have ever existed have gone to zero. This is because there’s a tendency by politicians to dilute the money supply in their favour. Same as the Roman empire fell when the gold and silver coins they used were diluted with metals like copper. When the currency supply is expanded, the people who hold that currency suffer. It is a fact that private banks and government currencies will always devalue the currency.

More printed currency does not solve problems, it only steals value from savers and gives it to central planners to do as they please. Central planners like government officials or central banks who “bail out” corporations and banks). The true purpose of Bitcoin was to create a new type of currency that could not be manipulated, free of central planning. We can verify this by looking at the Bitcoin blockchain itself. On the very first block of the blockchain we can see a message that Satoshi left:

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

We can see the motivation behind the creation of Bitcoin, was to be a better form of currency and transacting. Satoshi knew that Bitcoin solved many problems. Let’s go over some of those problems that current government currencies present.

Where Does Value Come From?

Originally currencies like the USD were backed by gold. You could go to a bank, give them your paper currency, and receive gold money in return. That was in the 1920’s. These days what we think of money is nothing more than a piece of paper backed by nothing than the people’s faith in it. There are no gold reserves. The scarcity behind government currencies is gone. Scarcity is an important property of sound money.

Bitcoin reintroduces scarcity. Only 21 000 000. bitcoins will ever be in existence. We don’t know how many US dollars or British pounds, or Hong Kong dollars there will be in existence. We do know that these government currencies keep exponentially losing value every day.

Some cryptocurrencies like Bitcoin solve this by limiting the amount of coins in circulation. By introducing scarcity, it allows for value to grow within that monetary system instead of being siphoned out. Gold for example retains its value because it is scarce and has a limit.

Have a look at the following screenshot from the video “Hidden Secrets of Money” by Mike Maloney. There he differentiates between a ‘CURRENCY’ and ‘MONEY’. I highly recommend everyone to watch the full series to understand why Bitcoin came to be in the first place.

You can watch all 10 short episodes here: https://www.youtube.com/watch?v=DyV0OfU3-FU

It’s interesting to note that even though the series is nearly 10 years old, it’s all playing out exactly as was said in the videos.

That is your homework. Watch the first four episodes of The Hidden Secrets of Money. This website was inspired by videos like these that help people understand what money and value truly are. On the next section we will explore more on the topic of value. We will also explore why there is a problem for most cryptocurrencies in general and how you can take advantage of that information to make a huge profit.

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