Bitcoin Presentation. Definitions, History of Exchange, Inception, Mining, Problems Solved, Use Cases, Proponents, Criticisms, Regulation, Blockchain Technology, Adoption, On Chain Analysis, and What's Next?

4. a digital database containing information (such as records of financial transactions) that can
be simultaneously used and shared within a large decentralized, publicly accessible network.
a national bank that operates to establish monetary and fiscal policy and to control the
money supply and interest rate.
an economic good: such as a product of agriculture or mining. Example: Gold, Oil, and Potash.
a party to a financial transaction. Example: Visa, Mastercard, and PayPal.
The computerized encoding and decoding of information.
the dispersion or distribution of functions and powers.
Intermediary – a person who acts as a link between people in order to try to bring about an agreement
or reconciliation; a mediator. “Intermediaries between lenders and borrowers”.
belonging to the essential nature or constitution of a thing. Example: Assets – Liabilities.
a book containing accounts to which debits and credits are posted from books of original entry.
the total amount of money available in an economy for spending.
Open Source – having the source code freely available for possible modification and redistribution.
Transmittal of money (as to a distant place).
an instrument of investment in the form of a document (such as a stock certificate or bond)
providing evidence of its ownership.

5. ₿ Before money existed people bartered over the value of different goods and services.
₿ People traded produce, livestock, lumber, labour, spices, and weapons in exchange for one another.
₿ Historical estimates place the usage of metal coins around ~1,000 B.C.
₿ Coins were a milestone event as it allowed trade by count (number of coins) rather than weight.
₿ The Roman Empire developed the first banks as well as fractional reserve banking (loaning more
money than they had due to not all people withdrawing their money simultaneously).
₿ In 1816 England moved to The Gold Standard. Bank notes were used as receipts for gold stored by banks.
₿ This led to Central Banks, which converted currencies into gold, and determined exchange rates.
₿ During to the depression, nations started to abandon the Gold Standard in the 1930’s.
₿ Fiat currencies replaced The Gold Standard and were not backed by a commodity such as gold.
₿ Credit and debit cards with magnetic strips were first introduced in the 1960’s.
₿ Online payments via the internet started to become used in the 1990’s.
₿ The internet spawned several digital cash technologies (no intermediaries).
However, they were flawed in numerous different ways and prone to network attacks.
₿ On Halloween 2008 a link was sent by a pseudonymous coder(s) named Satoshi Nakamoto to a
cryptography mailing list with a white paper attached titled: “Bitcoin: A Peer-to-Peer Electronic Cash System”.

6. ₿ Satoshi Nakamoto allowed some time for the code to be reviewed by the cryptography mail list recipients.
₿ On January 3rd, 2009 Satoshi mined the genesis bitcoin block and was rewarded 50 Bitcoin.
₿ Embedded in the block was text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
₿ The text mentioned on the genesis block was intended to:
- Bring attention to issues with fractional reserve banking.
- Highlight poor credit lending that led to the 2008 Financial Crisis.
- Serve as a timestamp for the Bitcoin protocol being deployed.
₿ Early adopters of Bitcoin included previous creators of digital cash
technologies such as Hal Finney, Wei Dai, and Nick Szabo.
₿ Satoshi Nakamoto ceased mining Bitcoin and interacting with the
Bitcoin community in 2010. To date, Nakamoto’s identity is unknown.

8. @DocumentingB
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9. ₿ Bitcoin uses Proof of Work to verify transactions on it’s network.
₿ Proof of Work is an algorithm that uses computer code to determine the validity of transactions. Miners
use hash rate or computational power to verify transactions and govern the network. Miners must come to
agreement or consensus that a transaction is valid for it to be processed and a block added to the chain of ledgers.
₿ The ledger is an immutable (unable to be changed) record of transactions. Once a transaction is verified
it is time stamped and forged onto the blockchain for eternity. Record of any transaction is publicly available.

10. ₿ Miners use energy and computational power to compete for minting
a new block reward. In the case of Bitcoin a pre-determined
programmable reward is minted upon the block reward.
₿ Mining difficulty is adjusted every 2,016 blocks to ensure network
security and a consistent time between a blocks added to the network.
The adjustments keep a constant and predictable issuance of Bitcoin
₿ Bitcoin initiated with a block reward of 50 Bitcoin for minting new
blocks to the ledger. The reward for miners has a scheduled “halving”
that takes place approximately every four years (210,000 blocks).
₿ Current block subsidy for validating a block to the network is 6.25 BTC.
₿ Miner profitability is a function of the price of Bitcoin, equipment costs,
total network hash rate, block subsidy, network fees, and energy costs.
@drew_macmarti
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11. ₿ The largest variable costs involved in miner profitability (price, equipment, hash rate, block subsidy,
network fees, and energy costs) are the price of Bitcoin and the energy costs.
₿ Competition for mining Bitcoin or total hash rate generally increases for any extended period of time.
₿ High Bitcoin prices see a large majority of miners in profit. Low prices incentivize lower production costs.
₿ This inherently leads to miners seeking cheap and renewable energy sources.
₿ Flare stacks at oil production sites (otherwise waste energy) are some of the most profitable miners.
Natural gas generators are used to produce electricity and mine Bitcoin providing additional revenue for sites.
₿ Hydroelectric dams have also benefited in a similar manner as production is weather dependent.
Dams that were previously shut down during low production times of the year remain operational using
previous down times to mine bitcoin and remain profitable.
₿ In July 2021, Forbes calculated Bitcoin mining producers to have 56% sustainable energy (no impact on
climate – wind, solar, and hydro) – more sustainable than any country or industry in the world.*
*https://www.forbes.com/sites/greatspeculations/2021/07/06/bitcoin-mining-uses-a-higher-mix-of-sustainable-energy-than-any-major-country-or-industry/?sh=34c057944cc9

12. ₿ Byzantine Generals Dilemma
https://youtu.be/A-mNgqJETQg
 Satoshi Nakamoto solved this issue by developing software protocol that uses distributed Proof of Work
on a decentralized blockchain. To add any block to the chain participants or nodes must reach consensus
before a transaction is verified and added to the network.
₿ Double Spending
https://youtu.be/87bHzNsZs7M
 Other attempts at digital peer to peer currencies were vulnerable to double spending making their
currencies and transactions vulnerable to theft and fraud. Double spending is negated on the Bitcoin
network by the process of confirming transactions by reaching consensus across the blockchain through
multiple distributed nodes.

13. ₿ Censorship Resistance – Third parties can prevent spending your money on a certain good or stop you from
sending or receiving assets. Freezing or seizure of assets is not a possibility.
₿ Counter-Party Risk – Bitcoin has no CEO. Self custody removes disruption of intermediaries.
₿ Currency Issues – nations reliant on other nations currencies, currency debasement, and hyperinflation.
₿ Digital Gold – Bitcoin has a fixed supply of 21 million coins making it a scarce store of value and a hedge
against inflation. It is also deflationary with a halving issuance cycle every 210,000 blocks mined.
₿ Divisibility – Bitcoin is divisible to 8 decimal places also known as a Satoshi (0.00000001 BTC = 1 Satoshi).
₿ Fungibility – each unit of Bitcoin is identical and interchangeable.
₿ Monetary Policy – Covid as well as the 2008 Financial Crisis are examples where citizens see the purchasing
power of their currency reduced beyond their control because governments selectively provide aid.
₿ Portability – Consider transacting, transferring, and storing the same sum of gold and Bitcoin.
₿ Remittances – Borderless with minimal fees relative to legacy banking.
The cost to send money internationally averaged 6.4% in Q1 2021 and
totalled 589 Billion over the same year.*
₿ Scarcity – Gold continues to be mined, fiat is exponentially printed.
₿ 24/7 – No down time – runs on evenings, weekends, and holidays.
@DocumentingB
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* https://blogs.worldbank.org/peoplemove/global-remittance-flows-2021-year-recovery-and-surpris

14. @DocumentingB
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₿ Poor Fungibility
@B1T_DADDY
@B1T_DADDY

15. @CryptoTea
₿ Currency Issues

16. ₿ Currency Issues
₿ Annual inflation in Turkey from June 2021 to June 2022 is reported at 78.6%.*
₿ Annual inflation in Argentina was calculated at 88% in October 2022.**
*Cooban, Anna; Sariyuce, Isil (4 July 2022). "Inflation soars to nearly 80% in Turkey as food prices double“
** https://tradingeconomics.com/argentina/inflation-rate-mom#:~:text=Inflation%20Rate%20MoM%20in%20Argentina,percent%20in%20August%20of%202016.

17. ₿ Bill Miller – Fund manager, chairman, portfolio manager, and CIO of Legg Mason Capital Management.
₿ Cathie Wood – Founder, CEO, and CIO of investment management firm Ark Invest.
₿ Elon Musk – CEO of SpaceX, Tesla, and Twitter. Founder of The Boring Company and Neuralink.
₿ Jack Dorsey – Co-founder and former CEO of Twitter. Co-founder and CEO of Block payments company.
₿ Jack Mallers – CEO and founder of Zap, the parent company to Strike. Strike is a no-fee app that allows
for sending and receiving of payments over the Bitcoin Lightning Network.
₿ Michael Saylor – CEO and co-founder of MicroStrategy; a software company based in cloud services.
₿ Nayib Bukele – 43rd President of nation state El Salvador serving since June 1st, 2019.
₿ Paul Tudor Jones – founder of hedge fund and asset management firm Tudor Investment Corporation.
₿ Raoul Pal – CEO and co-founder of media and marketing research company Real Vision Group.
₿ Ray Dalio – Founder and co-CIO of the largest hedge fund in the world – Bridgewater Associates.
₿ Ron Paul – Three time member of congress representing the 14th and 22nd district of the state of Texas.
Paul ran for President of the U.S.A in 1988 (Libertarian Party) as well as 2008, and 2012 (Republican Party).
₿ Corporations/Institutions – Block (also Square), MicroStrategy, and Tesla hold Bitcoin on balance sheets.
₿ El Salvador – passed bills to recognize Bitcoin as legal tender on September 7th, 2021.
₿ There are approximately 172 million retail consumer Bitcoin wallets considered economically relevant*.
* https://blog.chainalysis.com/reports/bitcoin-addresses/

18. ₿ Bitcoin has no intrinsic value.
 Fiat is not backed by anything of value since leaving The Gold Standard. Value in currencies is a belief
system where a group of people agree on worth. You can’t use currency as shelter, food, or for protection.
₿ Bitcoin is bad for the environment and uses too much energy.
 Bitcoin incentivizes renewable energy due to miner profitability being largely based on energy costs.
₿ Bitcoin is used by criminals.
 Bitcoin is an awful means of perpetrating crime as every transaction is recorded and publicly available.
https://financialoccultist.com/2021/07/25/gold-mining-vs-bitcoin-mining/

19. ₿ Bitcoin is too volatile.
 New technologies often undergo boom and bust phases with massive corrections in the early phases of
their adoption including Alphabet (Google), Amazon, Apple, Microsoft, and Tesla.
₿ Bitcoin can’t be used as a currency.
 El Salvador has adopted it as legal tender. It also serves as an alternative in nations with hyperinflation.
₿ Bitcoin and it’s exchanges are run by scammers.
 Scammers exist in any asset class and profession. The core values of Bitcoin are peer to peer transacting
and self custody of assets. If you do not expose yourself to counter-party risk via exchange there is no threat.
₿ Mt. Gox – Exchange that handled over 70% of transactions at the time was hacked in February 2014.
₿ Bitfinex – Exchange hacked August 2016 with 119,756 Bitcoin stolen.
₿ FTX – Loaned over 10 Billion in user funds to Alameda Research for investing and paying loans. Both
companies filed for bankruptcy in November of 2022.

20. ₿ Volatility

21. ₿ In 2015, Bitcoin was subject to the Howey test – 3 questions used to determine if a financial asset should
be treated as an investment contract. Bitcoin was tested against the three following questions to determine
if it was a security and how it would be regulated:
- Is there an investment of money with the expectation of future profit? (Yes)
- Is there an investment of money in a common enterprise? (No)
- Do any profits come from the efforts of a promoter or third party? (No)
₿ The Howey test determined Bitcoin to be treated as a commodity (rather than security).
₿ Commodities are regulated by the Commodity Futures Trading Commission (CFTC).
₿ Being a commodity implies Bitcoin is similar to gold (commodity) as an asset class than equities (security).
₿ Commodities are considered less stringent than securities on regulation, reporting, and price transparency.

22. ₿ Since Bitcoin inception more than 20,000 cryptocurrencies have been created using different blockchains.
₿ The different blockchain technologies can be separated by some key characteristics:
Asset Backed – linked to something carrying economic value (property, equities, and commodities).
The asset is “tokenized” and relevant information stored on the blockchain allowing for high divisibility of the
asset and investment from groups that would otherwise be excluded from such opportunities.
Decentralized Finance (DeFi) – eliminates third parties from financial transactions using smart contracts.
This allows for lending, borrowing, trading, and other contracts peer to peer.
Exchange – a currency native to a centralized exchange for increasing liquidity and incentivizing trading.
Non-Fungible Tokens (NFT) – a certificate of ownership to a unique unalterable art, media, or digital content.
Payment – a token used to transact value online for goods and services. Built on a decentralized blockchain
where a network of computers manage, verify, and record transactions to a ledger (example: Bitcoin).
Security/Equity – similar concept to owning stock of a company.
Stablecoin – are pegged to the value of a commodity or currency – for example: USD and Tether (USDT).
Utility – provides access to a service or product with set parameters within an existing blockchain platform.

23. @DocumentingBTC

24. @DocumentingBTC

27. @drew_macmartin

28. @StockmoneyL

29. ₿ Central Bank Digital Currencies (CBDC’s) – governments of several developed nations are developing or
trialing digital currencies issued by a central banks, built on blockchain, and pegged to their fiat currencies.
₿ Increasing adoption by retail consumers, institutions, and nation states with weak or non-native currencies.
₿ Layer 2 (3rd party) protocols built on the Bitcoin protocol (Layer 1) to increase scalability, efficiency, and
reduce fees. While the Bitcoin protocol is secure, transaction times and outputs are slow. The Lightning
Network (Layer 2) is being implemented resolve these issues.
₿ Continued regulatory clarity and governance.
₿ Market cap of Bitcoin is approximately $340 Billion USD.
Bitcoin market cap peaked around $1.3 Trillion USD in
November 2021. The next test of the asset class will be to
approach the market cap of gold (~12 Trillion USD) to solidify
the Digital Gold narrative.