That is to say that this list contains words that this list contains words that:
- Usually aren't instantly guess-able (like star, apple, or Nike).
- Can be played with a group of acquaintances (I play with a group of interns at work to blow off time)
- It contains some proper nouns which I believe to be well-known enough (like Simpsons or Spiderman).
Created this list by modifying an existing difficult word list we found online and adding a bunch of new words. If you see a stupid difficult word, it was probably a word from the existing difficult word list that I forgot to remove. (amicable and reimbursement were the type of bs I removed lol).
abraham lincoln, accordion, accounting, acre, actor, adidas, advertisement, air conditioner, aircraft carrier, airport security, alarm clock, alcohol, alert, alice in wonderland, alphabet, altitude, amusement park, angel, angle, angry, ankle, apathetic, apathy, apparatus, applause, application, apron, archaeologist, archer, armada, arrows, art gallery, ashamed, asteroid, athlete, atlantis, atlas, atmosphere, attack, attic, audi, aunt, austin powers, australia, author, avalanche, avocado, award, baby, baby-sitter, back flip, back seat, baggage, baguette, baker, balance beam, bald, balloon, bamboo, banister, barbershop, barney, baseboards, bat, beans, beanstalk, beard, bed and breakfast, bedbug, beer pong, belt, beluga whale, berlin wall, bible, biceps, bikini, binder, biohazard, biology, birthday, biscuit, bisexual, bitcoin, black hole, blacksmith, bleach, blizzard, blueprint, bluetooth, blunt, blush, boa constrictor, bobsled, bonnet, book, bookend, bookstore, border, boromir, bottle cap, boulevard, boundary, bow tie, bowling, boxing, braces, brain, brainstorm, brand, bride, bride wig, bruise, brunette, bubble, bubble bath, bucket, buckle, buffalo, bugs bunny, bulldog, bumble bee, bunny, burrito, bus, bushel, butterfly, buzz lightyear, cabin, cable car, cadaver, cake, calculator, calendar, calf, calm, camera, cannon, cape, captain, captain america, car, car accident, carat, cardboard, carnival, carpenter, carpet, cartography, cartoon, cartoonist, castaway, castle, cat, catalog, cattle, cd, ceiling, cell, cellar, centimetre, centipede, century, chain mail, chain saw, chair, champion, chandelier, channel, chaos, charger, chariot, chariot racing, check, cheerleader, cheerleader dust, chef, chemical, cherub, chess, chevrolet, chick-fil-a, chicken coop, chicken legs, chicken nugget, chime, chimney, china, chisel, chord, church, circus tent, clamp, classroom, cleaning spray, cliff, cliff diving, climate, clique, cloak, clog, clown, clue, coach, coast, cockpit, coconut, coffee, coil, comedian, comfy, commercial, community, companion, company, compare, comparison, compromise, computer, computer monitor, con, confidant, confide, consent, constrictor, convenience store, conversation, convertible, conveyor belt, copyright, cord, corduroy, coronavirus, correct, cot, country, county fair, courthouse, cousin, cowboy, coworker, cramp, crane, cranium, crate, crayon, cream, creator, credit, crew, crib, crime, crisp, criticize, crop duster, crow's nest, cruise, cruise ship, crumbs, crust, cubicle, cubit, cupcake, curtain, cushion, customer, cutlass, czar, dab, daffy duck, dance, danger, darth vader, darts, dashboard, daughter, dead end, deadpool, deceive, decipher, deep, default, defect, degree, deliver, demanding, demon, dent, dentist, deodorant, depth, descendant, destruction, detail, detective, diagonal, dice, dictate, disco, disc jockey, discovery, disgust, dismantle, distraction, ditch, diver, diversify, diversity, diving, divorce, dizzy, dodge ball, dog, dolphin, donald trump, doorbell, doppelganger, dorsal, double, doubloon, doubt, doubtful, download, downpour, dragon, drain, dream, dream works, dress shirt, drift, drip, dripping, drive-through, drought, drowning, drugstore, dryer, dryer sheet, dryer sheets, dugout, dumbbell, dumbo, dust, dust bunny, duvet, earache, earmuffs, earthquake, economics, edge, edit, education, eel, effect, egg, eiffel tower, eighteen-wheeler, electrical outlet, elf, elope, emigrate, emotions, emperor, employee, enemy, engaged, equation, error, eureka, everglades, evolution, exam, exercise, exhibition, expired, explore, exponential, extension, extension cord, eyeball, fabric, factory, fad, fade, fake flowers, family tree, fan, fast food, faucet, feather, feeder road, feeling, ferris wheel, fiddle, figment, finding nemo, firefighter, firefox, fireman, fireman pole, fireplace, fireside, fireworks, first class, first mate, fish bone, fishing, fizz, flag, flat, flavor, flight, flip flops, flock, florist, flotsam, flowchart, flower, flu, flute, flutter, flying saucer, fog, foil, food court, football player, forklift, form, forrest gump, fossil, fowl, fragment, frame, fresh water, freshwater, friction, fries, front, frost, fuel, full, full moon, fun, fun house, funnel, fur, galaxy, gallon, gallop, game, gamer, garden, garden hose, gas station, gasoline, gavel, gentleman, geologist, germ, germany, geyser, giant, ginger, giraffe, gladiator, glasses, glitter, glue, glue stick, goalkeeper, goatee, goblin, gold, gold medal, golden retriever, gondola, good-bye, government, gown, graduation, grain, grandpa, gratitude, graveyard, gravity, great-grandfather, grenade, grill, grim reaper, groom, groot, group, guess, guillotine, gumball, guru, gymnast, hail, hair dryer, haircut, half, hand soap, handful, handle, hang, hang glider, hang ten, harry potter, hawaii, hay wagon, hearse, heater, heaven, helmet, hermit crab, high heel, high tops, highchair, hitler, hockey, homework, honk, hoodies, hoop, hopscotch, hot, hot dog, hot fuzz, hot tub, hotel, houseboat, human, humidity, hunter, hurdle, husband, hut, hydrant, hydrogen, hypothermia, ice, ice cream cone, ice fishing, icicle, idea, igloo, illuminati, implode, important, improve, in-law, incisor, income, income tax, index, inertia, infect, inglorious bastards, inside out, insurance, interception, interference, interject, internet, invent, invisible, invitation, iron man, ironic, irrational, irrigation, isaac newton, island, ivy, ivy full, jackhammer, japan, jaw, jazz, jedi, jellyfish, jet lag, jig, jigsaw, joke, joker, journal, juggle, jump rope, jungle, junk, junk drawer, junk mail, justice, kangaroo, ketchup, kill bill, killer, kilogram, kim possible, kiss, kitten, kiwi, kit-kat, kneel, knight, koala, lace, lady bug, ladybug, lamp, lance, landfill, landlord, lap, laptop, last, laundry detergent, layover, leak, leap year, learn, leather, lebron james, lecture, legolas, leprechaun, letter, letter opener, lettuce, level, lice, lichen, lie, lifeguard, lifejacket, lifestyle, light, lightning, lightning mcqueen, lightsaber, limit, lion, lipstick, living room, lobster, logo, loiterer, lollipop, loonie, lord of the rings, lottery, love, loveseat, loyalty, lullaby, lumberjack, lumberyard, lunar eclipse, lunar rover, lung, lyrics, macaroni, machete, machine, macho, magnet, mailbox, makeup, mammoth, manatee, mark zuckerberg, martian, mascot, mascot fireman, mask, mast, mastercard, mat, mayhem, mechanic, megaphone, member, memory, mercedes benz, mermaid, meteor, michael scott, michelangelo, microscope, microsoft, microsoft word, microwave, midnight, migrate, millionaire, mime, mine, mine car, miner, minivan, mirror, missile, mitten, mohawk, moisturizer, molar, mold, mom, monsoon, monster, monsters inc, mooch, moonwalk, moth, mount rushmore, mozart, mr potato head, mulan, mummy, music, mysterious, myth, name, nanny, naruto, navigate, negotiate, neighborhood, nemo, nepal, nest, netflix, neutron, newsletter, night, nightmare, nike, north pole, nose, nostril, nurse, nutmeg, oar, obey, observatory, office, offstage, olive oil, olympics, one-way street, opaque, optometrist, orange juice, orbit, organ, organize, ornament, ornithologist, ounce, oven, owl, oyster, pacific ocean, pacifier, page, pail, pain, palace, pancakes, panda, panic, pantyhose, paper plate, paperclip, parade, paranoid, parent, parking garage, parley, parody, partner, password, pastry, patrick starr, pawnshop, peace, peacock, peanut, peasant, pelt, pen pal, pendulum, pepsi, periwinkle, personal, pest, pet store, petroleum, pharaoh, pharmacist, philosopher, phineas and ferb, phone, photo, piano, pickup truck, picnic, pigpen, pigtails, pile, pilgrim, pilot, pinboard, pineapple express, ping pong, pink panther, pipe, pirate, pizza, pizza sauce, plan, plank, plantation, plastic, playground, pleasure, plow, plumber, pocket, pocket watch, point, pokeball, pokemon, pole, police, pomp, pompous, pong, popeye, population, portfolio, positive, positive champion, post, post office, practice, president, preteen, prey, prime meridian, printer ink, prize, produce, professor, profit, promise, propose, protestant, psychologist, publisher, pumpkin, pumpkin pie, punching bag, punishment, punk, puppet, putty, quadrant, quarantine, quartz, queue, quicksand, quit, quiver, raccoon, race, raft, rage, rainbow, raindrop, rainwater, random, raphael, ratatouille, ratchet, ray, reaction, realm, ream, receipt, recess, record, recorder, recycle, referee, refund, regret, religion, remain, resourceful, rest stop, retail, retire, reveal, revenge, reward, rhyme, rhythm, rib, rick and morty, riddle, right, rim, rind, ringleader, risk, rival, robe, robot, rock band, rocket, rodeo, roller coaster, roommate, roundabout, rowboat, rubber, ruby, rudder, runt, rv, s'mores, safe, salmon, salt, sand castle, sandbox, sandbox bruise, sandpaper, santa claus, sap, sapphire, sash, sasquatch, satellite, saturn, sausage, saxophone, scarf, scatter, schedule, school, school bus, science, scissors, scooby doo, scrambled eggs, scream, screwdriver, script, scuba diving, scythe, seahorse, season, seat, seat belt, seed, serial killer, servant, sewer, shaft, shakespeare, shame, shampoo, sheep, sheets, shelter, sherlock holmes, shipwreck, shoelace, shopping cart, shotgun wedding, shower, shower curtain, shrew, shrink, shrink ray, sickle, sidekick, siesta, signal, silhouette, silt, simba, simpsons, skateboard, skating rink, ski goggles, ski lift, skip, skipping rope, skydiving, slack, sleep, sleet, slim shady, slipper, slump, snag, snapchat, sneeze, snooze, snore, snow globe, snowball, snowflake, soak, social distancing, socks, softball, solar eclipse, somersault, song, sophomore, soul, soulmate, soviet russia, space, space-time, spaceship, spaghetti, spare, speakers, spiderman, spirited away, sponge, spoon, spotify, spring, sprinkler, squat, stage, stage fright, stagecoach, stairs, staple, starbucks, starfish, startup, star trek, statement, stationery, statue of liberty, stay, steamboat, steel drum, stethoscope, stew, stewie griffin, sticky note, stingray, stockings, stork, storm trooper, story, stout, stowaway, stranger, strawberry, streamline, student, stuff, stun, submarine, sugar, suit, sun, sunburn, sunlight, sunscreen, superbad, superman, surfing, sushi, swamp, swarm, sweater, swim shorts, swing dancing, switzerland, swimming, syringe, system, tachometer, taco bell, tadpole, tag, tank, tattle, taxes, taxi, teabag, team, tearful, teenage mutant ninja turtle, teenager, teepee, telepathy, telephone booth, telescope, temper, ten, tesla, testify, tetris, thanos, the beatles, the dark knight, the prestige, theory, think, thread, thrift store, throne, ticket, tide, time, timeline, time machine, time zone, tin, tinting, tiptoe, tire, tissue box, toast, today, toddler, toilet paper, toll road, tomato sauce, tombstone, toothbrush, toothpaste, top hat, torch, tornado, toronto maple leafs, tourist, tournament, tow, tow truck, toy store, toy story, trademark, traffic jam, trail, trailer, train, train tracks, transformers, translate, transpose, trapped, trash bag, trash can, trawler, treatment, trench coat, tricycle, trip, trombone, truck, truck stop, tsunami, tub, tuba, tug, tugboat, turret, tutor, tutu, twang, twitter, umbrella, unemployed, united states, university, upgrade, vacation, vampire, van, vanilla, vanquish, vegan, vegetarian, vehicle, vein, venn diagram, vest, villain, violent, vision, vitamin, voice, voicemail, volleyball, wag, wall-e, wallet, wallow, wasabi, washing machine, water, water buffalo, water cycle, water vapor, wax, wealth, weather, wedding, wedding cake, weed, welder, werewolf, wet, wetlands, whale, whatsapp, whey, whip, whiplash, whisk, wifi, wig, wikipedia, win, wind, winnie the pooh, wish, witch, wizard, wolverine, woody, workout, world, wormhole, writhe, yacht, yak, yard, yardstick, yawn, yeti, yin yang, yoda, yodel, yolk, youtube, zamboni, zen, zero, zeus, zip code, zipper, zombie, zombieland, zoo
Preamble submitted by
The purpose of this post is not to discourage enthusiasm over the recent appreciation of Bitcoin. Everyone here is excited, and rightly so. I’ve put this together because I think people are getting a bit caught up in price mania and losing sight of the bigger picture.
The ideas I’ve pulled together here are pretty condensed as it is, so unfortunately I have no TLDR. I don't claim to have a prophecy to share, or concrete answers to questions about where Bitcoin will go in the future -- nobody does. But that doesn't mean there's nothing to talk about.
I would suggest reading slowly and giving your imagination time to picture or "render" things. There is no other way to grasp Bitcoin.
Final preamble: I know there are people in this sub who are here just for the gains -- they freely admit it, and they laugh at how "true believers" will be left holding the bag when they sell. My hope is that those of you who feel this way will have an open mind. You might see things in a new light, who knows?
Here we go… The Medium is the Message
In the 1960s, a Canadian professor named Marshall McLuhan became widely known for his thorough analysis of the evolution of communication technologies. His central precept was that communication technologies have dramatic effects on populations regardless of the content they carry at any particular moment. The radio, for example, allowed private microphones to broadcast to widely distributed speakers, which enabled the amplification of private viewpoints on a public scale. This had profound effects on society that played out regardless of what particular messages were carried over particular radio frequencies at particular times.
McLuhan’s famous aphorism, “The Medium is the Message,” is a distillation of this precept. In point form: 1) each new communication technology changes the environment into which it is introduced; and 2) the net effect of a technology over time is both far more interesting and harder to discern than the effect of any particular use of that technology or phase of its development. In other words, it is harder to see the forest for the trees, but seeing the forest is everything.
So: what effect will Bitcoin have on the world over the long run? What is the meaning
of Bitcoin? The Roman Model
To understand where we might be going, we have to first understand how we got to where we are. In the West, our societies are founded on the Classical traditions which were seeded in Ancient Greece and “scaled” so to speak in Ancient Rome. McLuhan had a lot to say about this from a technological point of view:
The development of writing on lightweight media such as papyrus and parchment enabled the externalization of knowledge. Thus, the oral traditions of Ancient Greece were subsumed and replaced by written traditions which were far less lossy and could be refined over time. Writing on lightweight media also enabled the centralized control of vast resources over large distances, which would have been impossible using engraved stone or oral communication. This was perfected by the Romans and thrown into overdrive by Johannes Gutenberg's invention of the printing press around 1450.
In its abstract form, the Roman model takes the form of bureaucracy
– hierarchical organization -- and this model has underpinned the structuring of society in the West for the past two thousand years. Look up "org chart" on Google Images if you can't picture one. Our societies are comprised of org charts within org charts within org charts -- try the following searches on Google Images: military org chart, bank org chart, government org chart, university org chart. Everything in our society is centralized, bureaucratized, and nested within the context of the nation state which is run by a central bureaucracy called the government, itself divided into departments within departments, orgs within orgs.
This is not to say that humans didn't organize hierarchically before ancient Rome -- of course they did, as do apes, dogs, chickens, etc. However, in a social hierarchy such as a tribe, there is a scale limit (Dunbar's number, 150) because each member must know
his place and his role as well as the places and roles of all other members. The hierarchy lives inside its members' minds and looks more like a swarm than an org chart. Bitcoin is, of course, this type of network, where each node has full knowledge of the state of the network and participates in it voluntarily.
Bureaucracy, on the other hand, is based on the writing down of roles (job descriptions)
and makes people interchangeable. There is no limit to scale as long as you map everything out carefully (management)
. The lifeblood of bureaucracy is the transmission of written forms of information (paper-pushing)
from the center to the periphery along defined, linear routes. Each node receives its orders, performs its specialized role, delegates if the role requires it, and then awaits new orders. Privilege and planning are concentrated near the center -- as is risk
These structures are inherently fragile and collapsible. If you undermine a high-value node as happened in the collapse of Lehman Brothers, the whole edifice collapses. The entire global financial system barely withstood the collapse of a single American bank - it is that
Each nation's banking system is likewise a matrix of bureaucracies operating as a single, hierarchical supply chain whose product (the national currency)
flows outward from a central node (the central bank)
through successively less privileged nodes (investment and commercial banks)
down to the level of branches and ATMs. At each level of the banking system, additional product is created and loaned out (credit/debt)
using the productfrom the level above as a stake (fractional reserve lending)
. The banking systems are insulated from competition by governments through the decree that taxes must be paid in national currencies. And to keep the currencies moving, everyone is raised from birth to want more and then given the appearance of more through the creation of more by fiat
, meaning by arbitrary decree
, without any necessary connection to the creation of new wealth. This is inflation
: the steady creation of new money to repay debt and keep the show going. It is a Ponzi scheme by design, and it relies the continued "buying-in" of young people in order to survive.
Each national currency has value and utility only by decree and only within that nation's cell in the global mosaic. To move value from one nation to the next requires snaking it through tenuous international pathways, paying entrenched gatekeepers, and exchanging one national currency for another. You have to be somebody
to access the banking system. The more somebody you are, the more access you get. It is principally through control of economic access that strong nations bully weaker ones, rich people bully poorer ones. There is tremendous pent up tension in our world as a result. This is where we are. The Center Cannot Hold
McLuhan predicted that the advent of the electronic age and the emergence of global communication networks would lead to the dissolution of these centralized, bureaucratic structures from the bottom up. He died before the spread of the Internet but described the end result with crystal clarity in his writings. His vision of an interconnected world, which he called the "Global Village," is here now
. Every person has the ability to broadcast information to others in their networks over the Internet. If a transmission is perceived as having sufficient value, the receiving people pass it on, and so on. Above a certain threshold of significance, transmissions are repeated by all people to all other people: this is virality
and there is nothing that institutions can do to harness or stop it. The Arab Spring for example brought down an array of national governments in a span of months.
Like a rising tide, global communication networks are bringing about an inevitable dissolution of the Roman model all around us: the music industry was upended by Napster; newspapers are being displaced by twitter and blogs; radio stations are being displaced by podcasts; broadcasters are being displaced by Netflix and YouTube; brick-and-mortar stores are being displaced by Amazon and eBay; AirBnb is gobbling up rental supply; traditional transportation services are being displaced by Uber; and now decentralized currencies are coming after centralized ones. Quoting W.B. Yates: “Things fall apart; the center cannot hold; Mere anarchy is loosed upon the world.”
It is important to realize that even though the post-Dot-Com networks like Facebook and eBay were more effective than their institutional predecessors, they are still quite fragile since they are centralized
. They can be hacked, compromised, back-doored, subpoenaed, or otherwise shut down. In contrast, a truly decentralized network is perfectly flat and impossible to shut down. The music industry could kill Napster by going after Sean Parker, but it cannot touch BitTorrent. True decentralization, at scale, is one of the principal reasons why Bitcoin is secure: whatever it becomes, it cannot be stopped because there is no center to hold, and nothing to attack.
At this point, I think it makes sense to explain how Bitcoin works, and why it has value. If those questions can't be answered clearly, there's no basis for thinking Bitcoin will disrupt traditional banking. I do, however, think there are very good answers to those questions which I'll try to present below. Bitcoin and Blockchain
Imagine you live in a pre-historic tribe of ten people. As a group, you need to find a way to keep track of who did what work, and in what quantity. In other words, you need an abstract “work unit” that can be traded for work and held for use in future exchanges. You could use shiny rocks or something else similarly rare, but people would still be able to cheat the system: why do actual work if you can simply go on a hunt in the forest and find new rocks?
One solution is to create a ledger or list that keeps track of how many rocks each person has. If the ledger is the authority on who has what, people would not be able to inflate their balances by introducing new rocks or other work units from outside the system. The problem is, everyone has to trust the keeper of the ledger. If only one entity maintains the ledger, they ultimately control how much money everyone has (banks)
Decentralization is the solution to this problem. You can write down ten copies of the ledger and distribute a copy to each person in the tribe. At the end of the day, everyone could cross-check the transactions that took place with everyone else and a consensus could be formed about who has what without appealing to a central authority.
Eventually, the people might realize that the rocks themselves are unnecessary, and that it is actually the ledger that is important. The rocks, like all currencies, are meant to track work. If a ledger is already doing that, the rocks themselves become extraneous. The actual units of currency are the work units on the ledger. And if everyone agrees to use the same ledger, its work units have value
The blockchain is that ledger and Bitcoin is its work unit. Proof of Work
In the illustration above we can see that the utility of a blockchain is that it enables distributed peers to prove
to each other that they have done work, and to trade their work units freely without appealing to a trusted intermediary. The obvious next question is: what proof
do we have that we can trust the Bitcoin blockchain?
Bitcoin mining is based on a Proof of Work consensus mechanism. To put this as simply as I can, each and every mining node on the network is competing against the rest of the network to generate a small piece of data that proves it has performed an enormous number of computer operations using a batch of new, valid
transactions as an input. The amount of work that it takes to successfully mine Bitcoin is dictated by how much computer power has voluntarily joined the mining network - and this is adjusted dynamically as miners enter and leave the network. Each operation requires a tiny bit of electricity since a computer must perform it, so as the difficulty of the Proof of Work operation scales, so too does the cost of generating it.
As of writing, the Bitcoin network is collectively performing about 8,250,000,000,000,000,000 operations per second
, and it takes an average of about ten minutes worth of this grind for a single node on the network to successfully produce an acceptable proof of work and add a block of transactions to the blockchain. The winning node is awarded new Bitcoin by including a transaction in its block that credits its own wallet -- now we understand mining
So you want to be a Bitcoin miner? Let's say you have a powerful gaming computer that can perform about 100,000 Bitcoin computer operations per second (a realistic amount by the way). It would have roughly a 1 in 82.5 quintillion chance of mining a block if you were to enter it into the mining race today. If you had a stack of 1000 of these gaming computers your odds of mining a block would improve to roughly 1 in 82.5 quadrillion. A million of them? 1 in 82.5 billion. Etc. Miners use specialize hardware to perform the computer operations, but the point still stands: it takes a staggering amount of computer power and thus a staggering amount of electricity to "get a word in" on the Bitcoin blockchain.
But let's say you get lucky and are able to generate a proof of work. That proof of work will be tied inexorably to whatever batch of transactions you are trying to add to the blockchain since those transactions were part of the input
of the computer operation. Your transactions must be valid
or else the rest of the network would reject your work. You wouldn’t be able to double-spend, create Bitcoin by fiat, or spend from balances that you don’t have the keys for. The network would reject your block.
The larger and more distributed the mining network is, the more cost-prohibitive it is to compromise it. In other words: the more people you have checking the ledger from different nations and backgrounds, the harder it is to override the distributed, international consensus. And that
is why the Bitcoin blockchain can be trusted. It is audited by the largest computer network ever assembled and requires that an attacker control at least 51% of the network on a sustained basis. The Open Blockchain
As more and more people use a blockchain, its units (e.g. Bitcoin) become more valuable. As the price of the base unit increases, it becomes more profitable to mine them at the prevailing level of difficulty, so more miners join the network. As more miners join the network, the level of difficulty increases and thus the robustness and security of the network increases. As the robustness of the network increases, it becomes more secure against attackers, so more users and investors are drawn to it. And so the price of the base unit increases. Which draws in more miners. Etc.
The adoption of a blockchain, like the adoption of any currency, is a virtuous circle -- one that Bitcoin has been nurturing successfully for nine years without any existential catastrophes. Bitcoin's heartbeat, the mining of a new block every ten minutes, has not skipped a single beat in nine years. There has not been a successful double-spend in nine years. There has not been a single accounting error in nine years. No balance has been mysteriously wiped off the blockchain in nine years. This track record has been established despite the fact that the blockchain is not protected by a firewall, or an institution, or shielded in a vault. It is not buried underground, or protected by obfuscation. It is out there in the wild of cyberspace for all to see and attack, secured purely by Proof of Work and sheer scale.
Bitcoin itself is valuable because it is the only work unit that can be included in a block of this particular, special
blockchain: the open, global, transnational, borderless, censorship-resistant, permissionless, leaderless, most well-known, longest-running, and most-well-capitalized blockchain (credit to andreasma for this and many other insights)
. Because work units on this blockchain are scarce (per the 21-million cap)
, having the ability to sign for transfers of Bitcoin on the blockchain is a form of real
control over scarce resources.
This is the pivotal point: to the degree that people around the world adopt and learn to trust the Bitcoin blockchain, its work units will have value. And it is Bitcoin's openness in particular that makes it the prime candidate for filling this role. Any computer on the planet can join the mining swarm at any time, just as anyone can join the network as a user, at any time, from any location. Even the Bitcoin development community is open-source and open to new developers provided they can prove
their merits. This
is what is meant by The Open Blockchain: the Bitcoin blockchain is accessible everywhere and is open to anyone. It is welcoming. It enables people from different cells in the global mosaic to transact point-to-point, without snaking value through complicated interbank networks, without paying entrenched gatekeepers and intermediaries, and without having to convert from one currency to the next. If a country experiences a currency crisis, Bitcoin is a very real option because it enables people to transfer value out of hot spots and convert it into other currencies. The international monetary system is no match for this technology. Private blockchains are no match either. Bitcoin’s Monetary Policy
Bitcoin is commonly referred to as "digital gold" since it is designed to function like a precious metal. The creation of new units follows something like the extraction curve of a natural resource. The issuance of new coins was steep at first but will taper off over time through successive “halvings” of the reward that miners receive for creating new blocks. Eventually, the issuance of new coins will approach an asymptotic limit of 21 million coins.
At each "halving", the rate of inflation is effectively cut in half, though it decreases ever so slightly with each new block. The current rate of inflation is about 4%. At the next halving in 2020, the inflation rate will be about 2%. In 2024, 1%. Etc.
The world has never before had access to a truly deflationary asset. Even currencies considered deflationary such as the Japanese Yen are not truly deflationary: the government can
print an infinite amount even though deflation in Japan has inertia. Gold is not deflationary: new gold is mined every year. Bitcoin will eventually become truly deflationary
, meaning the supply of available Bitcoins will contract year over year consistently. How is this possible, if there is no provision to destroy coins in the protocol?
There is guaranteed to be a year sometime in the future where more coins are lost due to people losing their keys than new coins are created. It will
happen. As the miner reward decreases, years like this will become more common. In the distant future, decades will go by where every year is deflationary, and eventually it will be practically impossible for the supply of Bitcoin to not
decrease in a given year.
Here is Bitcoin’s golden proposition: because it the first truly
deflationary asset, it does not require interest payments or a never-ending influx of greater fools in order to provide a “yield” over the very long run. In the distant future, Bitcoin will have a low but predictable intrinsic
expected return approximating its rate of deflation, as long as it remains secure.
When you combine Bitcoin's monetary policy with its robustness through distributed Proof of Work on a planetary scale, you end up with the basis for a global reserve asset more effective than anything else humans have ever had a chance to work with, including gold. Gold is modestly inflationary, it cannot be transmitted over a network, and it must be centrally secured and accounted for. Bitcoin has already
obsolesced gold as a reserve technology, let alone Ponzi currencies like the dollar - most just don't know it yet. As people come to really understand Bitcoin’s monetary policy, they will flock to it as a safe haven, especially in troubled economies. If we have another 2008, Bitcoin will be very much in play. Bitcoin as Money
People argue that Bitcoin's deflationary policy, high fees, and volatility make it ineffective as a medium of exchange. If you can expect a Bitcoin to be more valuable next year, why spend it this year? If it costs $20 in fees to buy a $3 coffee, who will use or accept it? If its value can double in a day, who will set prices in terms of Bitcoin exclusively? The truth is, Bitcoin is not yet ready for mass adoption as a day to day currency or unit of account. Anyone who tells you otherwise is getting ahead of the technology -- but this is temporary.
Just as the early Internet could only handle the transfer of simple text-based content but eventually scaled to allow everyone to stream 4k at the same time, so too Bitcoin will scale. The Lightning Network shows promise in this regard. It will enable and incentivize users to stake their Bitcoin on a second layer where payments are negotiated in a trustless manner between parties, instantly, and merely settled periodically on the blockchain. But even with today’s block congestion and high fees, Bitcoin is already
cheaper and more efficient for large transfers of value than the banking system, especially internationally. People transfer hundreds of millions of dollars on the blockchain, securely, today
Regarding volatility, we are still in the very early phases of adoption. Something like 10-20 million people own Bitcoin worldwide. Because the supply of Bitcoin cannot inflate to accommodate increased adoption, prices will continue to escalate in logarithmic fits and starts as adoption ramps up exponentially. Look up "adoption curve" on Google. We are still in the very early phases of the ramp-up, but eventually the curve will taper off and approach something like stability. We do not know how this will play out or how long it will take, and there will be serious volatility along the way; but if Bitcoin scales into a robust transnational currency trading on thousands or tens of thousands of exchanges worldwide, it will likely become more stable than most national currencies if not all.
Regarding deflation: over time, we will likely see new innovative uses of Bitcoin as a reserve for credit creation. People are clearly willing to operate in systems that use reserve-based lending, and they can work wonderfully: look at what humans accomplished in the 20th century! It is conceivable that Bitcoin could be used as a reserve for distributed, trustless, bank-like networks that issue their own tokens. We may end up using a modestly-inflationary cryptocurrency for day-to-day transactions and investment. There’s no way to know what people will come up with, but they will
come up with things. And that is why Bitcoin must stay laser-focused on its role as the de facto reserve currency in the crypto-economy. A Vision Statement for Bitcoin
Tying everything together: over the course of thousands of years, we have built our societies around the use of hierarchical principles of organization. These structures centralize control and privilege, but also risk. They are fragile. Too big to fail.
The invention and proliferation of the Internet paved the way for the dissolution of these structures, and over the past twenty years we have seen countless examples of entrenched institutions being wiped out by flatter, more effective networks.
Now we are seeing the early evolution of global, distributed, cryptographic
value storage and transfer networks which will slowly displace traditional banking systems by offering faster, cheaper, more reliable routes, with better systemic risk profiles, infinitely better security, no access controls, and no entrenched monopolistic privileges over money creation.
Bitcoin was the first mover in this space and remains the incumbent. It is a global, secure, consensus-based currency that was bootstrapped from the ground up by ordinary people volunteering to participate in its development, mining, and use. It has grown exponentially in size since its inception, to the point where it is now upheld by the largest dedicated computer network in the world. Because it is secured principally by its unmatched scale, it is therefore the most secure accounting system in the world, which in turn makes the entries in its ledger the most trustworthy on the planet. If you can sign for a Bitcoin in the network’s eyes, you own it -- and nobody can stop you from owning it or signing for it.
Bitcoin is here, now
. It is in the air all around us, accessible over wifi and cellular networks around the globe -- anywhere the Internet touches. The next time you walk down the street, look at the people around you. As they move through the air, displacing it with their bodies, recognize that they are literally wading through the Bitcoin network -- they just don't know it yet. Suggestions for New People
1) Focus first and foremost on the vision and take an interest in the technology. I have a friend who is talking about putting $20k into Bitcoin, yet only a few nights ago he didn't know that Bitcoin isn't a company, or that a block isn't a single transaction. I have another friend who owns a whole Bitcoin but has never initiated a transaction. A co-worker of mine just bought $100 worth of Bitcoin but doesn't know that a wallet is key management software.
2) Bitcoin is an experiment with no precedent. Nobody knows if it will survive, what it will evolve into, or how it will be used. Even with its long-running track record, nobody can say with prophetic certainty that it won't suffer a catastrophic failure of some kind, so put only as much money into Bitcoin as you can afford to lose. I would offer the following as a good rule of thumb: if you have a negative net worth (meaning your debts exceed your assets) be very cautious with Bitcoin, and at the very least do not increase your debt to buy Bitcoin. If you have a positive net worth, do not go negative to buy Bitcoin. Having said all this, do keep in mind that any
currency can suffer a catastrophic failure, including the US Dollar. Remember 2008. Don’t fall for illusions of security. We are all sailing in little boats on a big sea. Diversify
3) If you believe in Bitcoin, try not to obsess over the value of Bitcoin in fiat terms, as tempting as it is. Try to conceptualize its value on the basis of its potential utility in emerging decentralized networks and look for ways to use
it in these new emerging ecosystems. Look up OpenBazaar for example - it could be the new eBay without an eBay acting as an intermediary. I strongly believe that owning Bitcoin is exciting because it sets you up to have a stake in this emerging ecosystem. If your aim is to eventually get your value out of Bitcoin in the form of fiat, you’ll be giving up that stake. If you don't care about having a stake and are here just for the gains, that's perfectly fine too.
4) Learn how to take possession of your private keys. If you don't know what that means or how to do it, learn what it means and how to do it.
Until you can say with confidence "I alone own my private keys"
, you do not actually own Bitcoin and you do not have a stake. Someone else owns it for you. It took me two years of owning Bitcoin before I actually clued in and took control of my own, and that is what forced me to take on the Bitcoin learning curve. The good news is, you can too.
This one's addressed to any social studies, mathematics, and computer technology people out there, but I'm sure there are a ton of ways to adapt this concept to be relevant in other content areas. submitted by
I recently became interested in cryptocurrencies. Anyone who even casually browses the internet or who keeps up with current events has likely heard of Bitcoin. Though I do not own any Bitcoins, when I first heard of the idea, I was intrigued. Bitcoin is a digital currency which some say exists as the internet's approximation of gold. Anyone can use their computer's processing power to "mine" Bitcoin, though as time progressed, just like real gold, Bitcoins became more and more difficult to "mine". To "mine" a Bitcoin is to have your computer solve a rather difficult math problem. Over time the math problem becomes increasingly difficult, which allows Bitcoins to become more difficult to acquire over time, increasing their value.
When I first heard of Bitcoin, I was skeptical that it could ever become something truly valuable. I thought of it much like the real estate bubble that led to the economic depression of the past several years. I thought, "People say this is worth something, but how can something that cannot be redeemed for something useful carry an intrinsic value?" At one point, when Bitcoins were valued at $200 each, I half jokingly considered investing what little savings I had in the currency because I had seen it reach much higher values, crash, and rebound in the past. I definitely regret my decision not to invest in Bitcoins as they are now valued at over $900 each.
The last weeks of December 2013 brought a new cryptocurrency. It is called Dogecoin. Apparently there is an internet meme based on a cute looking dog that some motivated people created a new form of currency themed around. Its unofficial catch phrase goes something like, "Such coin, very currency, wow!" I knew nothing of the "doge" meme, but I was intrigued by a currency that was nearly identical to Bitcoin, yet highly accessible to anyone who wanted some. Because, unlike Bitcoin, the currency was new and still relatively easy to "mine" when I became interested in it, I was able to use the CPU of my personal laptop to produce nearly 1000 DOGE over the course of several weeks. How much is 1000 DOGE worth in USD? About 33 cents (which is far less value than the energy my processor used to produce them). When Bitcoins came into existence they were nearly worthless because nobody accepted them. Now it is possible to not only exchange Dogecoins for valuable Bitcoins, but many Dogecoin supporters have began accepting the currency for goods and services.
Learning about Dogecoin has taught me not only about cryptocurrencies but also about regular fiat currencies like the USD. In my opinion, and barring any intervention from governments (like we saw when China more or less banned the use of Bitcoins, and when the US arrested the operator of the Silk Road, a website that took advantage of the anonymity of cryptocurrency transactions to facilitate worldwide trade of illicit products up to and including heroin and murder-for-hire), these types of currencies are here to stay. This is because of the fact that currencies derive their value from the people who adopt them... Despite the fact that Bitcoin has no governing body manipulating interest rates or adjusting for inflation like the Fed does with the USD, it has become clear that there is a strong demand for a decentralized currency that can be transferred quickly and anonymously between any two persons in the world with an internet connection.
Though there are countless types of currencies in the world, US Dollars and the Euro are two of the world's favorite ways to express value. In order for people to accept and trade in a given currency, people must not only be able to exchange goods and services for a certain amount of it, but they must also be able to exchange the currency for goods and services themselves with ease. Bitcoin became valuable not only because of its built in rarity, but also the ease of its transmission. Cryptocurrency transactions are generally much faster than standard "ACH" (Automated Clearing House) transactions that banks use to transfer funds from one account to another. Instead of a centralized institution like a bank determining an individual's rights to a certain amount of digital currency, the entire network of computers participating in this great experiment provides validation for whether or not any particular user has any claim to a valuable "solution" to the Bitcoin algorithm and verifies when Bitcoins are transferred from one user to another. Though I do not own any Bitcoins, I could easily convert my Dogecoins to Bitcoins (though I would own a very small fraction of one), and with minimal effort I could convert those Bitcoins to US Dollars.
Cryptocurrencies are decentralized, which means that I do not need to go through a bank to transfer my valuable currency to another person. I need only to know that person's "wallet address" and I can send them as many "coins" as I want. Many banks charge a fee when a merchant accepts a transaction via credit or debit card. Many merchants, most notably Overstock.com, are beginning to accept payments in cryptocurrencies like Bitcoin. Accepting cryptocurrencies not only allows transactions to be processed more rapidly, but also payments are received in a currency that has a higher level of liquidity than the USD, as transactions can be processed nearly instantaneously.
Bitcoin was introduced in 2009. It took several years for it to reach mainstream status, but in that time, many early adopters became millionaires. The value of Dogecoins is currently quite low, so it is difficult to view it as a serious investment, however one cannot predict the future. To me, Dogecoin is simultaneously a satire and something real. Accepting that a currency that was made up on a whim has real and tangible value really amounts to a huge leap of faith, but taking this leap has been strongly influential on my thoughts about US Dollars and other more widely accepted currencies. The message I got from re-examining money in this way is that currencies are only as valuable as PEOPLE determine them to be based on what they can exchange them for.
My interest in Dogecoin led me to join the online community, Reddit, which is the community where the cute picture of a Shiba Inu dog spawned a new form of currency. Complete strangers walked me through the rather complicated process of setting up my computer to "mine" a digital coin that costs more to produce, due to the cost of electricity it takes for my computer to operate, than it is currently worth. Currently, the most active sector of the Dogecoin market is "tipping" members of the community. When someone posts something particularly insightful, useful, funny, or cathartic on Reddit, some Dogecoin enthusiasts "tip" them in Dogecoin. When Bitcoin first came around, Reddit users would often "tip" one another by sending them these coins. Today, a tip of a full Bitcoin would be a truly generous act, as giving someone a BTC would be the equivalent of nearly $1000. Currently, "mining" Bitcoins requires high end computing power, particularly the power possessed by top end graphics cards produced by companies such as NVidia and ATI. Interestingly, as the value of Bitcoins rises, so do the prices of top of the line video cards - an annoyance to gamers who seek the slick, hyper-realistic look that using such hardware provides.
Litecoin, like Dogecoin, is basically a copy of Bitcoin's concept with a few tweaks. For example, if savvy miners discovered every Dogecoin possible, there would be over 100 billion in circulation. However, the mathematics that provide rarity to Dogecoin make it so that as more coins enter circulation, new coins become increasingly difficult to acquire. Though, when first conceived, Litecoin was expected to be just another fad with values similar to those currently held by Dogecoin, in the past few years its value has soared to nearly $25 per Litecoin. In fact, many mining "pools", which are groups of people who combine their processing power, have progressed from mining Bitcoins, to mining Litecoins, to finally mining Dogecoins (which are then sold for Bitcoins which can be potentially exchanged for US Dollars). Of course, most of these pools sell their Dogecoins for Bitcoins because they are the most liquid form of digital currency available, I can imagine marketplaces that deal in Dogecoins alone (as we speak, markets that exchange DOGE to USD and vice versa are developing and are having difficulty keeping up with demand) giving this currency, based on a silly picture of a cute dog, tangible value.
As far as classroom application, I don't think that it would take a computer genius to design and implement a "Classcoin" that students could "mine" or acquire using different methods, though it would certainly take a person more technologically savvy than myself. Not only could students use processing power to generate new "Classcoins", but they could do things like trade them for extra points toward a test, develop services that other students might be interested in paying for such as tutoring. Also, the teacher can "mine" "Classcoins" and distribute them to students for any number of reasons. Instead of merely a process undertaken by a computer program, the system could be enhances so that students could be rewarded with increasing numbers of "Classcoins" because their classroom performance (grades, behavior, etc.) might directly correlate with the processor speed that their particular "Classcoin" mining program is capable of utilizing. Due to the design of cryptocurrencies in general, students could develop and participate in markets that trade them, develop unique ways and fresh markets for buying and selling these currencies, and use them as a lens to examine the way that fiat currencies like the USD gain, lose, and maintain value. If students mined and traded in a currency that is currenly relatively easy to "mine" with consumer hardware, such as Litecoin (which is considered by many to be the "silver" to Bitcoin's "gold"), proceeds could be easily converted to USD and spent on rewards and supplies to benefit students (at least until school supply companies begin to accept cryptocurrencies - Overstock.com is planning to soon!). Using cryptocurrencies makes it easy for parents and other interested parties to donate funds to schools, classrooms, teachers, and specials programs that directly benefit children without the need to interface with banks, checking accounts, or credit cards.
Sorry to post two unnecessarily long posts in a row. My wife and pretty much everybody else I know are pretty sick of hearing me yammer on and on about these things so you all get to hear some of it for once.
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