I am constantly running into people in person and on social media that have no concept of Bitcoin. They don’t understand how it works so they think it is some kind of scam or Ponzi scheme. Many of these people probably have never read The Creature From Jekyll Island or Secrets of the Federal Reserve. It really takes a good understanding of what fiat currency is, and how it comes into existence before an alternative to fiat makes any sense. Before anyone can understand the advantage of Bitcoin, an education is required on the fiat currency system to fully understand the risks fiat poses to their livelihood.
The two books I mentioned above provide a good basis of understanding of fiat currency and its risks. I also recommend The Hidden Secrets of Money by Mike Maloney. Having this background information makes it much easier to understand how Bitcoin is different, and why you should consider owning some.
I have been involved with Bitcoin since 2016. Bitcoin is data-mined into existence. The mining algorithm has been verified by numerous top notch software developers. It is rock solid. My career was in the software industry so I knew intuitively that the idea of mining and verifying Bitcoin transactions in a distributed ledger system is a winner. All the miners have to agree on the transactions to validate them. This is what I call decentralized value.
The number of miners out there is huge, think decentralization. Compare that to the centralized Federal Reserve Bank corporation fiat; based on faith in the government's ability to pay its debt. As you probably know, that faith is waning. Governments around the world are dumping US treasuries for gold. But some see the value in Bitcoin for government to government transactions.
It costs something like $45,000 to mine one Bitcoin today, less if your cost of electricity is lower. And the number of Bitcoins is capped in supply to 21 million. Currently 19.77 million Bitcoins have been mined. And some have already been lost. Only 1.23 million Bitcoins are left to be mined. The algorithm is programmed to cut the mining reward in half every few years. As the supply diminishes the cost to mine one BTC increases. As supply goes down, based on the history of Bitcoin, the price goes up in response. The current mining reward for validating a block on the Bitcoin network is 3.125 BTC. This means to mine one block costs as much as $140,000. This reward to the miners will be cut in half again in March 2028. Cutting the reward in half doubles the cost to mine a Bitcoin. Please reread this paragraph if you still think Bitcoin is backed by nothing.
Miners get fees for mining activities, and they must all agree that a given transaction on the network is valid. This costs them money for electricity, which is the biggest expense in mining. The miners with the lowest cost of electricity have the lowest cost structure. The other cost is cooling the mining farm. So mining is generally cheaper in cold climates. The geothermal electricity generated in cold climate Iceland seems ideally suited to the task.
Bitcoin is the big daddy and gets all the attention.
Litecoin is like Bitcoin, but cheaper and faster.
DigiByte is cheaper still, and has the fastest transactions, suitable for use in retail environments.
These three cryptos compliment each other. All three are decentralized like Bitcoin, and exchange easily with each other.
Crypto.com has an app for cryptos. Connect it to a bank account to buy crypto, sell crypto back for dollars deposited into the bank account. I have the Crypto.com app and I have their debit card. I sell cryptos to fund my Crypto.com debit card for spending.
The reason for cryptos is everyone knows the banks are going to fail. If you don’t know it by now, you will certainly find out when it happens. Then the idea of Bitcoin will be unmistakeable. Silver and gold are good, but imagine carrying it around for transactions. If we are still in a digital age when the banks fail, cryptos are much easier to use for transactions. Decentralized personal currency.
Now imagine you bought Bitcoin in 2016. Now imagine that Bitcoin is going much higher in terms of fiat today because of decentralization and dedollarization? Would you believe that Bitcoin could go higher?
If you want a current take on what is going on with fiat currencies, I suggest you watch Mario. Mario is more a fan of precious metals, which I believe is another good alternative to fiat currencies. Everyone should have both precious metals and cryptos in their portfolios in my humble opinion.
Definitely appreciate you explaining this all to us. I will definitely look into it.
Hi Karen, it is not a good idea to keep your cryptos on exchanges. I use the Trezor.io wallet and Crypto.com app for spending.
Cryptos will soar. But right now the focus is on Precious Metals.