Bitcoin Flashcards
What year did Bitcoin start?
2009
What world event launched bitcoin?
2008 Financial Crisis
Why was the 2008 Financial Crisis the cause for bitcoin?
US government was printing lots of money which led to inflation.
Big banks were bought out, small wage workers and business owners were not.
The big banks used bail outs to buy further toxic investments
This led to a desire for a decentralized system
When was blockchain created?
1998
What does bitcoin do differently than traditional systems?
- Sender and receiver are unknown
- Cryptohash is used to do this
- There is no single identity that controls the system; rather everyone on the system controls the system
How does bitcoin mining work?
- There is a network of computers (blockchain)
- Every computer can create bitcoin
- Mining is done by solving cryptographic problems
- 51% of other computers have to validate the work
- Then new block is validated and becomes part of the chain
Is bitcoin anonymous?
Not necessarily, BTC carries a high degree of anonymity, but transactions are stored on an open source ledger
How much bitcoin could ever exist?
21M
What is the benefit of a decentralized currency?
Government cannot enforce it, seize it, or do anything shady
How is bitcoin better than gold?
- Gold is not divisible
- Gold is not portable
- Gold can be stolen
Why is bitcoin worth so much?
It’s a wildly speculative technology that sells a vision of the world and anyone can buy into it
Bitcoin is too expensive for real world application, so why would we ever use it?
Likely we’d use it in divisible chunks such as mBTC
Can a government ban bitcoin?
Yes, however due to its digital nature, it’s impossible to enforce widespread ban
Can I mine bitcoin on my computer?
Yes, but electricity costs will cost you more than you’ll get back in bitcoin.
Where is most mining happening now and why?
In China because electricity is cheaper
Can bitcoin be traced?
Every transaction is public record, so people could find a way to link your public wallet to your transaction
Can bitcoin be hacked?
Would be a multibillion dollar project to hack bitcoin so unlikely. However bitcoin exchanges can be hacked
What is the biggest example of a bitcoin exchange being hackedk?
Mt. Gox
What is the highest bitcoin can hit?
Unsure, it could theoretically hit $1M, the M1 Monetary supply
Do I pay taxes on crypto?
Yes, capital gains taxes on any bitcoin you mine, buy, or use.
How much illegal activity is conducted with bitcoin?
Only about 1%
What gives bitcoin the intangible
- Any news of block chain benefits bitcoin
- Whenever there is government unrest, that benefits bitcoin
- Any news of crypto benefits bitcoin
What percentage of crypto is bitcoin?
68%
What major reasons indicates bitcoin is likely to stick around?
- Financial Institutions (like paypal) are starting to adopt it
- Lots of big names are in bitcoin (Musk, Robert Kiyosaki)
- Founders (Nakamoto) still are bought in
- BTC is anti-fragile
Who is the founder of bitcoin?
Satoshi Nakamoto
What makes bitcoin anti fragile?
- Inflation of local currency benefit BTC
- BTC has less regulation
- Any disturbance in the economy benefits BTC
Why is coinbase better than other platforms for purchasing bitcoin?
Coinbase lets you directly purchase bitcoin for low expense fees.
What are the three ways you should not buy bitcoin?
- Robinhood
- Grayscale Bitcoin Trust (GBTC)
- Bitwise 10 Crypto Index (BITW)
What two reasons makes robinhood not a good investment platform for crypto?
You don’t own bitcoin on robinhood, they store it in their own digital wallet. Plus bad commissions fees.
Why is it important to not have an online wallet?
Can be hacked and you don’t own it.
Why is there so much volatility in crypto?
Because it is a wildly speculative technology and no one knows how it will be used.
Is there any merit to purchasing altcoins?
No, simply because most alt coins are fraudulent or have no real applications
What is a good ETF to invest in for bitcoin?
The Siren Nasdaq NexGen Economy (BLCN)
Why is Paypal a good long term bitcoin investment?
They are investing heavily in bitcoin transactions and venmo will soon also do the same
