This is usually the part where the drier than the Sahara Desert explanation of "you are going to learn blah blah..." sends you straight to sleep.

Instead, I thought I'd try something new and give you a quick rundown of my own Bitcoin experience.

I first heard of Bitcoin in 2011, during the very first bubble, when I read a news report about this “internet money” thing that was worth $30 a piece.

Did I then invest?

I wish—I wasn’t nearly informed enough.

I had no idea how the technology worked or if Bitcoin was even worth anything. After all, how can a currency be worth anything if it is not backed by a government? Oh, to be that naive once again.

When I finally understood Bitcoin well enough to be confident in purchasing some, the price had risen significantly.

But now I see it as more than just a commodity to be traded or invested in.

I believe in the technology at its core, as well as the potentially game-changing implications for society as a whole.

That is the true value of Bitcoin.

I wish I had a resource like this when I first started out, something that explained the fundamental concepts of Bitcoin and blockchain technology without sounding like an astrophysics PhD thesis.

That’s precisely why I wrote this book.

Happy reading, and I hope you not only make a lot of money with Bitcoin, but that it has a truly profound and positive impact on your life.

Bitcoin was the first cryptocurrency to survive for more than seven years and gain widespread acceptance, but it took some time to get there. Before Bitcoin, there were a number of cryptocurrencies that gained traction. It all began in 1980, when cryptographer David Chaum proposed a currency backed by a proof-of-work computer algorithm rather than a central bank. Chaum went on to found DigiCash, which had a brief but ultimately unsuccessful run at becoming the world's first widely used cryptocurrency. Although technologically different from Bitcoin due to a centralized owner and non-fixed supply, US-based e-gold was possibly the most notable of the Pre-Bitcoin cryptocurrencies.

Neal Kin, Vladimir Oksman, and Charles Bry filed a patent application for encryption technology in August 2008.

In the same month, the domain name Bitcoin.org was registered using anonymousspeech.com, which allowed for anonymous domain name registrations.

The big day came on October 31st 2008, Satoshi Nakamoto (a pseudonym with the true identity still unconfirmed) published a white paper named "Bitcoin: A Peer-to-Peer Electronic Cash System".

The paper outlined various uses for the coin as well as information about blockchain technology and how the coin would be mined using computer algorithms.

The original white paper used Bitcoin as an example of a deflationary currency, one that governments or other central lenders could not artificially increase the money supply of, thus devaluing a currency.

The whitepaper also discussed issues with banks as trusted lenders, as well as how the blockchain's irreversible transaction design could reduce the risk of fraud for merchants.

From January 2009 onwards, activists began mining the coin and the first Bitcoin blocks were created. Nakamoto and other cryptography enthusiasts began exchanging the coin for services with one another, and in October 2009, the coin's first official exchange rate of US$1 = 1,309.03 BTC was established. The original exchange rate was determined by the amount of electricity required to mine one Bitcoin.

The first real-world transaction occurred in May 2010, when enthusiast Laszlo Hanyecz paid 10,000 BTC for two pizzas in Jacksonville, Florida.

Today 10,000BTC is worth over $40 million.

A few months later, in August, the first major Bitcoin hacking incident occurred, in which a hacker exploited a vulnerability in the Bitcoin verification system to generate 184 billion Bitcoins.

This resulted in the first significant drop in the value of Bitcoin as a currency.

This prompted government investigations into potential money laundering using Bitcoin.

The early scares didn’t last long though and

Bitcoin's market capitalization reached $1 million for the first time in November 2010.

In January 2011, Bitcoin received a reasonable amount of mainstream coverage for the first time.

Silk Road, an underground dark net website that deals in illicit goods such as illegal drugs and stolen credit cards, was founded on the ability to send and receive Bitcoin payments.

At its peak, it was estimated that up to 50% of Bitcoin transactions took place on Silk Road.

The perceived anonymity of Bitcoin \smade it a favorite among Silk Road users.

Bitcoin reaches a market price of $1 for the first time in February, and by July, the coin has risen to a value of $31.

2012 was a relatively quiet year, though real-world adoption continued, with hosting platform Wordpress accepting the coin in November of that year.

By March 2013, the market capitalization had reached $1 billion, and the Bitcoin exchange Coinbase reported more than $1 million in Bitcoin transactions in a single month.

The DEA reported 11.02 Bitcoins as an asset during a drug seizure in June, marking the first time a government agency recognized Bitcoin as having inherent value.

As Silk Road owner Ross William Albricht was arrested in October, the FBI seized 26,000 Bitcoins from Silk Road servers during the arrest.

The world's first Bitcoin ATM opened in Vancouver the following month, and China arrived on the scene when Chinese market activity surpassed that of the US for the first time. By November of 2013, the price of 1 Bitcoin reached $1,000 for the first time.

China's central bank ruled in December 2013 that Bitcoin was not a currency and barred financial institutions from accepting Bitcoins as payment.

Mt. Gox, a Japanese-based exchange, suspended Bitcoin withdrawals in February 2014, citing technical difficulties.

Within a few weeks, the exchange declared bankruptcy, citing poor management and a lack of security protocols. Roughly $740 million worth of Bitcoin, or 7% of the overall amount in circulation was lost in the incident. This issue led to the value of Bitcoin dropping 36% over the course of the month.

In June, TeraExchange LLC received approval from the U.S.Commodity Futures Trading Commission. This marked the first time that a U.S. agency approved a Bitcoin exchange. Dell, the largest computer manufacturer at the time, began accepting Bitcoin as a form of payment at this time. AirBaltic also became the world’s first airline to accept Bitcoin payments. Microsoft started accepting Bitcoin payments in December.

Coinbase, now one of the largest cryptocurrency exchange platforms, received $75 million in a funding round, with the New York Stock Exchange playing a minor role.

Further real-world scaling occurred, and by August 2015, over 160,000 businesses accepted Bitcoin as payment.

The potential identity of the infamous Satoshi Nakamoto figure was revealed in December.

The Australian Craig Wright, according to Wired magazine, was indeed Nakamoto.

This triggered a chain of events that led to the confirmation that Wright was NOT Nakamoto.

The second "halving day" in Bitcoin history occurred in July 2016, when the reward for mining one block was halved to 12.5 Bitcoins per block.

This was part of Bitcoin's original design to gradually reduce the supply of new coins available.

The next halving is scheduled for 2020, with the total supply available to the market around the year 2140.

At the time of writing, Bitcoin trades for around $4,000 per coin on exchanges.

While we could write an entire book about blockchain and the technology behind it, it is critical to understand the fundamentals if you plan to invest in Bitcoin or any other cryptocurrency.

Blockchain is a decentralized ledger, which means it is a public record that can be verified by anyone.

This is important for any non-tangible good because, unlike tangible goods like socks or candy, we need a record of a transaction taking place in case something goes wrong.

For example, we require proof that Steve paid John for the pair of socks that John sold him.

The blockchain will only have a record of a transaction from Steve's account to John's account.

Previously, we would have the use a third party, like a bank, to verify the transaction did indeed take place. The bank would then take their % of the total transaction. Because bank information is not publicly available, we must also trust that the bank did their job. We have a 100% infallible record of the transaction taking place thanks to blockchain technology, and anyone can see it. There is also no need to pay a significant additional fee to a middleman. The only fee involved is the cost of running the blockchain itself.

If we only use blockchain for financial purposes, it will be extremely useful in countries without a reliable banking sector.

Each transaction is recorded as a block, with a date and timestamp.

These blocks cannot be changed without everyone's knowledge.

This solves the "double-spending problem," which occurs when digital assets (such as cryptocurrency) can be spent more than once. The blockchain allows us to see that Steve has already used his money to pay John, so he cannot use that same money to try to pay us. Sally. The blockchain fosters trust among all parties, which is critical when dealing with monetary transactions.

Blockchain’s uses are not strictly financial.

We can also use the technology to store other types of information in a publicly accessible, transparent format.

This can range from voting records in an election to a self-executing contract between two parties that fulfills when both parties have completed their obligations.

In these situations, blockchain eliminates the need for a middleman or independent auditor because the technology itself acts as both an auditor and an independent.

In theory, technology has the potential to replace accountants, lawyers, and much of the financial services industry.

But, before we get too far ahead of ourselves, many of the non-financial applications of blockchain technology are still purely theoretical.

Bitcoin functions as a digital currency by adhering to the same three rules as traditional, or fiat, currencies.

1. They must be difficult to produce (cash) or find (gold or other precious metals). 

2. They need have a limited supply 

3. They need to be recognized by other humans as having value

When we examine Bitcoin, it ticks the boxes of all three of these characteristics:

1. Bitcoin is created using complex computer algorithms that require a lot of computational power and proof-of-work, so it cannot be easily or cheaply replicated. 

2. There are a finite supply of Bitcoins - 21 Million to be exact. By 2015, roughly two-thirds of this total had been mined. 

3. There are hundreds of Bitcoin exchanges, and Bitcoin is accepted everywhere from Subway to OKCupid.

Bitcoin miners have an incentive to mine because they receive Bitcoin as a reward for their computer's efforts.

Bitcoin was designed to be a deflationary currency, which means that, unlike fiat currencies, the supply of money is fixed.

This, combined with the decentralization principle, ensures that no single person or government can simply create more coins once the supply is depleted.

Once all of the coins have been mined, the currency's value should continue to rise.

Bitcoin transactions are recorded on the blockchain, a digital ledger (or record).

Decentralization is the fundamental concept that underpins Bitcoin's utility.

The blockchain is not owned by a single person or entity due to decentralization.

In fact, everyone has access to it.

As a result, transactions are publicly broadcasted across the network, ensuring that both parties have kept their end of the bargain.

The code is open source (like Linux or Android operating systems), so anyone can view it, ensuring transparency among all parties.

Decentralization enables the blockchain to be protected by multiple points of entry and backed up by multiple points of failure.

This, in turn, prevents incidents such as hacking or theft.

For example, if someone offers you 1 Bitcoin, you can check the blockchain records to ensure that the Bitcoin is valid and hasn't already been spent.

This system eliminates the need for third-party validation of transactions.

The only transaction costs are the electricity or mining power required to run the blockchain itself.

This has enormous real-world implications, ranging from allowing cheaper international payments (because Bitcoin has no nationality) to lowering the overall price of certain goods.

Bitcoin's status as a deflationary currency makes it extremely useful in times when fiat currency is experiencing massive inflation. Bitcoin has the potential to be used in the same way that gold has traditionally been used in times of economic hardship. Bitcoin must meet a few criteria in order to be used as a store of value or wealth.

1. It has to not be perishable 

2. It has to not depreciate over time

The second criterion is somewhat debatable, as critics argue that Bitcoin may depreciate as better technology overtakes it.

However, Bitcoin has now reached a market point where the concept itself has intrinsic value, similar to email or Facebook.

Email isn't particularly useful if you're the only one with an address to send mail to, but the more people who use it, the easier and more valuable it becomes.

Venezuela is currently undergoing the worst cash crisis of the decade.

Inflation has reached a point where people's money is nearly worthless against the US dollar, and much of the country cannot afford basic necessities.

Except for those who own Bitcoin, which is increasing in value against the US dollar.

China is doing the same thing, albeit for different reasons.

Traditional investments in Chinese assets have returned less than in previous years as a result of the government's devaluation of the Yuan.

Converting money to gold and silver is heavily regulated and frequently incurs high transaction costs.

Bitcoin does not suffer from any of these issues, and it is frequently the only option for those looking to secure their wealth in both the short and long term.

Gold has long been the traditional "hedge" against volatile financial markets.

In times of war, or financial crisis, gold prices tend to rise \swhen financial markets are falling.

However, this has not been the case in recent times.

At the time of writing, gold's 12-month performance has been flat, whereas Bitcoin has increased by nearly 1000%.

Growing tensions in North Korea are just one factor limiting Bitcoin's growth in uncertain times. Tensions in the region have resulted in increased purchases from the Chinese, Japanese, and South Korean markets.