Bitcoin and Cryptocurrency for Beginners

Bitcoin and Cryptocurrency for Beginners

What is Cryptocurrency?

Cryptocurrency, in its simplest form, is an internet-based medium of exchange that uses blockchain technology to function.  Blockchain enables cryptocurrencies to be decentralized, transparent, and immutable.

What is Bitcoin?

Bitcoin is the first-ever cryptocurrency and by far the biggest by market capitalization – meaning that the total dollar market value of Bitcoin is more than any other cryptocurrency.  Bitcoin refers to two things at the same time.

  1. The Bitcoin digital asset (BTC): These are the actual digital coins. There will only ever be a total of 21 million Bitcoin in existence.
  2. The Bitcoin network: This is the blockchain that powers Bitcoin and is what gives the digital asset its value and practical applications.

Click on the video link below to get a good foundational knowledge of what Bitcoin is and how it works:

Bitcoin For Beginners

How many Bitcoin exist?

The supply of Bitcoin is limited to 21 million.  This means that there can never be more than 21 million mined.  Over 18.5 million Bitcoin have been mined to date, and there are approximately 900 Bitcoin mined per day.  Satoshi Nakamoto’s Bitcoin account has been locked with over 1 million Bitcoin that will never be circulated, and another 5 million have been lost.  Another 5 million are held in cold storage that will likely not see circulation for a long time.  This means that there are currently 8 million Bitcoin for available circulation . . . in a world with 7.8 billion people and 47 million existing millionaires, and less than 3,000 billionaires.

Who invented Bitcoin?

Bitcoin was invented by a person or group of people using the pseudonym of Satoshi Nakamoto, who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation as a potential solution to problems with our economic systems as a response to the stockmarket crash in 2008. As part of the implementation, Nakamoto also devised the first blockchain database.

What is Blockchain?

Blockchain is a ledger.  Some of the most popular blockchains allow individuals to make instantaneous transactions on a decentralized network.  By design, there are records kept on all blockchain transactions, and strong encryption algorithms ensure that no transaction can be altered once complete.  Each “block” in the chain contains information on a transaction, and the chain linking the blocks together can be thought of as a ledger, listing the order in which the transactions occurred.

What is Bitcoin Used For?

Bitcoin is used as a means of payment and a store of value. It provides a hassle-free, disintermediated payment system for everyone across the globe. Today, Bitcoin is accepted across a wide range of online and brick and mortar stores, travel websites, gaming platforms, and many other places.  When it is traded to buy goods or services on the open market, that is called an open-loop system.

You can buy and sell any cryptocurrency on an exchange that only allows for digital currency exchange.  This is called a closed-loop system.

How does Bitcoin work?

The Bitcoin network is decentralized, meaning no central entity (like a government or bank) operates it. Instead, the network relies on thousands of blockchain nodes spread throughout the globe. These nodes store the transaction records, approve new transactions, add new blocks, and maintain the network’s integrity.

The network’s collective reliance on so many nodes distributed throughout the world makes the process decentralized and free of any manual errors or manipulation.

What problems does Bitcoin solve?

Bitcoin solves the problem on inflation which ultimately lessens the amount of money people save over extended periods of time.  With its limited supply and decentralized nature, Bitcoin makes for one of the best store-of-value assets.

Inflation and geopolitical instability are big drivers in the recent trend of companies adding Bitcoin to their balance sheet.  In 2020, the US companies Microstrategy and Square have invested $425 Million and $50 million respectively in Bitcoin.  See Michael Saylor, the CEO of Microstrategy, provide his explanation for storing shareholder wealth in Bitcoin in the video below:

Michael Saylor Interview

The current pandemic that began in 2020 strengthens the case for Bitcoin even further because central banks all over the world are printing and pushing more and more money into the economy to keep businesses running and people employed.  Some estimates suggest that the US printed approximately $9 Trillion from September 2019 to December 2020, accounting for 22% of the existing currency in circulation.  (source)

How to buy Bitcoin in Canada:

There are multiple Canadian exchanges available that you can use to buy Bitcoin, and we are happy to help you every step of the way, but before making a choice, consider the following:

  1. How secure is the platform?
  2. Do you want to store your assets in a hard wallet, soft wallet, or with a custodian?
  3. Deposit fees

Call us at 647-361-3691 to ask questions and safely invest your assets.

How can Canadians start trading Bitcoin or other cryptocurrencies?

We are here to help you – no fees or extra costs charged to you at all!  Call us at:

647-361-3691

We will try to better understand your currently income, investments, and investing style to help you find the best exchange for you to trade on with the best methodologies that work for you.  You will be in control of this entire process.  There are no minimums on most platforms, so you can start with as little as you like.

A common misconception is that you have to buy a whole Bitcoin.  This is very difficult to do as the time of this writing, Bitcoin sits at approximately $45,000 CAD.  One Bitcoin is divisible into one hundred million units called “Satoshis,” named after Bitcoin’s founder Satoshi Nakamoto.  This means that one Bitcoin can be divided into 100,000,000 Satoshis.

There are many great exchanges within Canada to buy and trade cryptocurrencies.  We recommend the following as these are all platforms that we use.  By using these links to sign up, we do collect an affiliate fee from the exchanges themselves but at no cost to you whatsoever.

Coinsquare

Ledn.io

Binance

Crypto.com – Sign up with this link and get $25 deposited into your account!

What is Ethereum?

Like Bitcoin, Ethereum refers to two things at the same time. 

  1. Ethereum is a blockchain-based platform that allows developers to create any decentralized applications on one platform.
  2. Ether (ETH) is a digital currency that powers the Ethereum network by paying for transaction fees and other services.

History of Ethereum

Ethereum was developed as a potential solution to the shortcomings of the Bitcoin network and was proposed in 2013 by Vitalik Buterin. After initial feedback on the concept, Buterin and the founding team publicly announced its development in 2014. Soon after the announcement, Ethereum conducted a crowd sale of ETH and raised US$18.4 million for network developments and operations.

The founders launched the test version of the network, or test-net, in 2015. Almost a month after the launch of the test-net, they launched the first main-net version of Ethereum on June 30, 2015. The fully functional Ethereum network was later launched in March 2016.

Click on the link below to hear from Vitalik Buterin why he created Ethereum and what its functions are:

Vitalik Buterin Interview

What is Ethereum used for?

Ether (ETH) is a global digital currency that has the same value all over the world. Unlike banks, ETH transactions do not involve intermediaries, making the transactions faster, more secure, and cost-effective. Anyone can use ETH to make payments anywhere in the world. Many online and brick and mortar stores accept ETH as a means of payment.

ETH is also the native currency of the Ethereum ecosystem. Network users can use ETH to use DApps on Ethereum or pay for services of any kind within the ecosystem. It is also one of the most common cryptocurrencies used in the decentralized finance (DeFi) sphere — a new financial system built on the blockchain.

What is the difference between Ethereum 1.0 and 2.0?

Ethereum 1.0 launched in 2015 and has since used the proof-of-work consensus protocol for network operation. Since its launch, its founders aimed to eventually transition the Ethereum network from proof-of-work (PoW) to proof-of-stake (PoS) protocol.

The major difference between Ethereum 1.0 and Ethereum 2.0 is that the former uses the PoW protocol while the latter uses the PoS protocol. While Ethereum 1.0 can only process up to 15 transactions per second, Ethereum 2.0 may be able to process almost 100,000 transactions every second if there’s ever a need for it. As Ethereum 2.0 will use PoS instead of PoW, it will also consume significantly lower electricity for operation.

How to avoid Crypto scams!

The scammers take most of the money for themselves and give a low percentage to their accomplices (affiliates). Such platforms are easy to spot, they hunt naive people, offering them a quick return on their investment.  Anyone who says “invest $100 with us today and get $1,000 weekly,” is a scammer – don’t do it.  Crypto currencies don’t work like that.  An example below shows an image of wealth and a promise of infinite return.  Accounts like this are all scams.

Send us a screen shot ANYTIME to let you know if something is a scam that you came across on social media or email. 

Ready to go a little deeper?

The best advice or insight you can get are from people who have been invested in Bitcoin for a long time and are familiar with how different cryptocurrencies work and can realistically predict upcoming trends.

The Winklevoss Twins have invested into Bitcoin since 2013, and own one of the largest crypto exchanges in the world.  They are each worth over $1 billion.  This is a recent interview where they share their current ideas on the direction of Bitcoin.

Winklevoss Twins Interview

Russell Korus, co-founder of EZ Exchange, has been investing in Bitcoin and crypto currencies since 2013.  His knowledge and understanding are second to none in the industry and he makes the complex ideas of cryptocurrencies easy to understand.  Watch his Ted Talk in the link below:

Russell Korus Ted Talk

Chamath Palihapitiya has been invested in Bitcoin since 2012.  He is a recent billionaire who is currently regarded as the next Warren Buffet.  While Buffet himself does not like Bitcoin, he has never really been a big technology investor, refusing to invest in Google because he didn’t understand that either.  This interview with Palihapitiya was conducted in 2018 where he explains his position on Bitcoin despite the difference of opinion with investors like Warren Buffet, Charlie Munger, and Bill Gates.  At the time of this interview, Bitcoin was between $6,000-$7,000.  At the time of this writing in January 2021, it is $37,000.

Chamath Palihapitiya Interview