Bitcoin’s Store of Value

To any intelligent observer, it has been apparent that bitcoin’s primary use has emerged to be store of value/investment.

Yes, bitcoin’s decentralized/permissionless solution to creating an immutable cryptographically secured database brings a vast array of different potential revolutionary applications not seen since the advent of the internet but again, the primary use has emerged to be store of value/investment.

bitcoin has been so good at this store of value thing that it has become detrimentally  successful – enter the (well-funded) hacks and puppets…attacks from the outside and from within – some of which via spread of (FUD) tangent ideas with coders, media, investors, and within bitcoin community to maybe start an idea of even ‘slight’ change.

First, please realize no other tool in modern-day finance has been so successful at being an effective savings mechanism which unlike traditional ‘savings accounts’ this bitcoin actually keeps up in value for you to be able to afford higher cost of rent, education, healthcare, vacations, etc. (due to its beautiful combination of scarcity, a ceiling of 21mill coins, immutable, permissionless->not controlled/influenced, secure, and being established/developed).

This effective savings tool of bitcoin is made accessible to the 99% of us and cuts to the core of exposing the flaw of the central bank fiat system with its funny-money creation out of thin air paper/credit-currencies benefiting the privileged institutions and then last to benefit would be the rest of us.

It can also expose flaws of fraudulent funneling of extra paper-currencies created by central banks…now think, even those privy to any fraudulent funneling of funny-money will see what’s going on and understand something like bitcoin as an alternative being effectively immune to these games that even these bad-actors themselves would buy bitcoin! Bitcoin changes the paradigm of central-bank funny-money (Bitcoin is the anti-funny-money warrior: open & mechanism)….and it has taken off….and will catch the attention of the central banks who by definition, have nearly unlimited systemic resources and influence (think governments, telecoms ISP providers, hardware/chip manufacturers, software developers, search engines, exchange conartists).

Even if a hard-fork doesn’t happen anytime in the next couple of years, it’s the threat that an attack on this pure beautiful store of value system to something even slightly different that can actually gain a noticeable percentage raises the question…is it possible that someday that the groups influencing bitcoin (those controlling mining or those involved with coding development, or the rest buy/transacting in bitcoin) would (either out of ignorance/misunderstanding or out of vested-interest to undermine bitcoin) start demanding (even slight) changes that may contradict the store-of-value that bitcoin is???

That is the big question that if the answer starts looking like yes…then value would plummet as bitcoin no longer be seen as a store of value but would eventually turn into another app coin (i.e. Ethereum) that can do many amazing things but not the one store-value amazing thing that it has done these past few years. the price would be zero-bound (compared to what we’ve been accustomed to with bitcoin today).

If the answer to that question is no (that you reading this, this community, software coders, mining operators, investors, everyday folk, work to stay educated on the above and act to keep the integrity of this bitcoin system)…then even a $50 billion market cap would still be seen as trivial in the financial assets arena where one bitcoin can easily go above $5,000 USD. But really, as the years pack on and integrity remains intact, the price would be infinity-bound. 





Beware of Scams !!!

Beware !!!

Just as the crypto industry is expanding and getting local adoption from individuals, co-operations, organisations and few countries  the same rate at which we have crypto enthusiast increasing in number which i see so worrisome and also a call for major concern.

Reason been that as more people get involved in the crypto business the more scammers are likely to increase their technique and the more scammers get recruited.

To avoid walking on scammers path, requires to be well informed of every new technique they can ever deploy against their potential victim.

To stay off scammers path users must:

  • Avoid phishing links.
  • Make sure to pay attention to the spelling of the website, as well as their URL as this can reveal whether it is a phishing site or not.
  • Never invest in a project without a well structured community
  • Pay close attention to the engagement within the community for suspicious activities
  • Ensure you assets are off CEX
  • Be more smart and less greedy
  • Don’t jump into a project/coin only based on the hype from advertisers (especially twitter)
  • Avoid any “too good to be true” investment
  • Avoid send me 1$ and I’ll send back 2$ scams, no matter how reputable is the account calling for that
  • Protect your coins (keep your coins on your wallet, use hardware wallet where possible, never give out wallet’s seed, keep backup seed offline)
  • Don’t be greedy and/or illiterate.
  • Be sure to feed yourself with necessary knowledge, if you want to invest.
  • Knowledge from experience is good but you can also take legitimate one from other people.
  • Not everything that is being offered to you is true. Do not be deceived.
  • Be careful who you are trusting.
  • Always be skeptical !!!
  • Enable Two-factor authentication for all your accounts.
  • Using of firewalls.
  • Installing an up to date anti virus software.
  • Use strong passwords and yet easily accessible ones for your convenience.
  • Stay away from malicious links or attachments you come across on the web.
  • Make sure your private keys are well stored and in hard wallet
  • Make sure your passwords are not vulnerable online to attacks i.e don’t store passwords online or any website
  • Whenever a stranger message you first for a business or an investment, it is a Red flag.
  • Someone who doesn’t know you would want you to make big money, another Red flag.
  • Whenever they introduce a” business opportunity” to you and then hasten you in order make you take a hasty decision it’s not  genuine, they are trying their best to make you take a fast decision without telling your loved ones and friends who will discourage you.
  • It is safer to  assume anyone you don’t know, communicating with you is a scammer until it is proven otherwise.
  • Read the whitepaper and research well of the company where you are going to invest because many scams are done by this method.
  • Check whether it is genuine or fake.
  • Scammers are constantly upgrading their scam methods and anyone can be the next target.
  • Loss doesn’t just happen due to an internal or intentional mistake, and when it does happen everyone has a similar sense of remorse and risks that are absolute consequences.
  • You’ll be fooled many times by those scammers that have maintained a well structured fake community.
  • They can hire those PRs and people talking inside their community to make it look like they’re a legit community.
  • As for their workers, they’ll just tell that they need engagement but the purpose of it, they’re not talking about it because that’s what the main purpose it.
  • And that’s to make it look genuine that they have real people inside the community. But in reality, it’s all fake people that they’ve hired just to make discussions all over their place.
  • It’s safe to say as well that it’s not just the crypto industry that is not safe for newbies, everything that talks about money is not safe for everyone.
  • Crypto is the latest thing and in the last 5 years it become so successful that scammers make this as their paradise as there are a lot of naive investors in the market.
  • Do your investigations, and don’t listen to influencers and believe them.
  • Think that this is your hard earn money so you need to be careful where you are going to invest it.
  • Don’t be Greedy.
  • Don’t jump on it like a hungry cow.
  • Don’t trust the sweet words they offer you. Most of them are too good to be true but they will always sound inviting to invest with.
  • Make a wall to not fully support them unless they have proven themselves worthy of that kind of respect.
  • Always be in doubt. That will be the shield that will protect you from being scammed.
  • Must simply assume that our coins are never really safe despite our best efforts, so it is important to always be on alert and protect our coins to the best of our ability.
  • Improve the security of your coins by an important margin by buying a hardware wallet, since they are very secure devices and they are relatively cheap, instead of risking storing our coins in our computers or at an exchange.
  • Always good to know how to make technical and fundamental analysis so that you can get specific information what is the situation of the projects you want to invest
  • Many projects are delivering a good testament, but they always ended into a scam , so we need to be smart enough and have a lot of preparation before investing or trading





Controlled Supply

Bitcoin

“A fixed money supply, or a supply altered only in accord with objective and calculable criteria, is a necessary condition to a meaningful just price of money.”

Fr. Bernard W. Dempsey, S.J. (1903-1960)

In a centralized economy, currency is issued by a central bank at a rate that is supposed to match the growth of the amount of goods that are exchanged so that these goods can be traded with stable prices. The monetary base is controlled by a central bank. In the United States, the Fed increases the monetary base by issuing currency, increasing the amount banks have on reserve or by a process called Quantitative Easing.

In a fully decentralized monetary system, there is no central authority that regulates the monetary base. Instead, currency is created by the nodes of a peer-to-peer network.

The Bitcoin generation algorithm defines, in advance, how currency will be created and at what rate. Any currency that is generated by a malicious user that does not follow the rules will be rejected by the network and thus is worthless.


Currency with Finite Supply


Block reward halving
Controlled supply

Bitcoins are created each time a user discovers a new block. The rate of block creation is adjusted every 2016 blocks to aim for a constant two week adjustment period (equivalent to 6 per hour.)

The number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, or approximately four years. The result is that the number of bitcoins in existence will not exceed slightly less than 21 million.

Speculated justifications for the unintuitive value “21 million” are that it matches a 4-year reward halving schedule; or the ultimate total number of Satoshis that will be mined is close to the maximum capacity of a 64-bit floating point number. Satoshi has never really justified or explained many of these constants.

Cumulated bitcoin supply

This decreasing-supply algorithm was chosen because it approximates the rate at which commodities like gold are mined. Users who use their computers to perform calculations to try and discover a block are thus called Miners.





First Time/Small Miner

First time/Small miner reference
for getting started.

If you want to start mining here is what you need… and what you need to know.

This is written for home miners/small farms, but can be used as a guideline for most operations. Use this as a reference for what you need to research, or what questions you need to ask before jumping in.

What you need to mine can be broken down into the following categories:

  • Hardware
  • Electricity
  • Location
  • Internet connection
  • Information

Mining BITCOIN is done exclusively with dedicated BITCOIN mining hardware based on ASICs: https://en.wikipedia.org/wiki/Application-specific_integrated_circuit .

You CAN NOT meaningfully mine bitcoin today with CPU, GPU or even FPGAs. Bitcoin difficulty adapts to match the amount of mining done on the network and has reached levels trillions of times too high to mine meaningfully with PCs, laptops, tablets, phones, webpages, javascript, GPUs, and even generalised SHA hardware.

Even if you combined all the computers in the world, including all known supercomputer, you would not even approach 0.1% of the bitcoin hashrate today.

There isn’t any point attempting to mine bitcoin with CPU or GPU even in the interests of learning as it shares almost nothing with how bitcoin is mined with ASICs and will not teach you anything.

Hardware

Asic Miner:

Here is a list of the companies currently manufacturing Miners for public purchase.

Each one has their Pro’s and Con’s it is up to you to do your research and decide what is best for you.

A few points to consider while researching are :

  • efficiency
  • reliability
  • warranty period/policy
  • power draw

Each company has a different way of handling warranty repairs, depending on your situation and the policy repairs can become cost prohibitive. I will touch more on efficiency and power draw in the electricity section.

• Current list of competitive hardware

Power supply: You will need to purchase a power supply to run your miners. You will find ATX and Server grade PSU’s, the latter being preferred for mining BTC. 

When it comes to selecting a PSU purchase something with a capacity 25% higher than your miner is rated to draw. This will have you operating within the 80% rule.(explained further in the electricity section)

EX. Miner draws 1000 PSU should be able to provide 1250W.

** Many current generation miners are now being manufactured with Integrated PSU. Again do your research to see if your unit comes with or without. Generally you will still need to source a power cable.**

Auxilliaries – Avalon miners require an external controller, 1 per 20 miners. You may have to run additional fans for intake and exhaust depending on your location.

PSU’s can be purchased large enough to run 2 Miners; or the opposite 1 Miner fed by 2 PSU’s. Ensure the PSU you have selected will have the correct amount of PCI-E connectors required to operate your miner(s)

You can also find a large supply of used miners and PSU’s. Again it’s up to you to do your research as these often are a no return transaction.

Electricity

Follow all local codes and regulations

This is the number 1 factor in whether mining is right for you. As discussed with Miners being a 24/7 machine drawing power those costs will make it cost prohibitive for some people to mine. You need to be aware of what your costs/kWh are and run the numbers.

This will be done in a profitability calculator. This is just an example of 1 there are many out there.

( Miner usage in kW ) * ( Hours run per day ) 24 * ( Cost/kWh ) = Cost per Day to Operate

( Ideally less than the FIAT value of BTC mined )

The second part to the electrical requirements of mining is the available service; written for North America.

You will need to figure out the amperage you can spare, what circuits and receptacles you have in place, are you setting up on 220V or 110V. You will need to make sure that you have the right cord end for your PSU to match the receptacle, picking the wrong one can cost you a few days of mining if it has to be shipped.

If you can try and set up on a 220V circuit for 2 reasons :

– You will pull half the amps, and it is more efficient.

– Doing so requires 2 breaker spaces in your panel. Breaker sizing will depend on how many miners you plan to run. Here is the formula for calculating amps.

Watts / Voltage = Amps

Here is where you will bring the 80% rule back into play by sizing the continuous miner load to 80% of the breaker rating. 12 Amps on a 15 Amp breaker, 16 Amps max on a 20 Amp breaker, 24 Amps on a 30 amp breaker.

If/when you increase the amount of miners you are running you may want to look into PDU’s, as opposed to more receptacles. 

Location

This is something that is often overlooked to the headache and frustration of many would be miners. These machines are loud and hot .
You essentially have an electric heater that also uses an industrial fan to keep it from melting itself. This space will need to have the electrical requirements as discussed previously.

So make sure you have a space that is well ventilated with a plan to exhaust heat, and bring in fresh dust free air. I say this as using AC to cool the room will eat into your profits and may even make mining unprofitable.

The noise issue is a consideration you can sort out depending on whats available. (garage, basement, remote building)

Both of these issues can be handled with hosting, which is further explained in the information section.

Internet connection

Some miner setups have the option to use wifi. It is advisable to use a wired connection where available. This will provide a more stable connection and ensure you are submitting the expected amount of shares which is directly related to your payouts.

Please note that mining uses a negligible amount of bandwidth, and will not affect your other internet usage.

Information

You can use this information in this post as a good baseline to get you going. In addition to this you will want to research network difficulty; this readjusts every 2016 blocks to maintain a 10 minute block time on average. While this can go down it generally increases.

Solo or Pool?

You can solo mine but this is essentially a lottery even as a large scale miner. Should you chose this you can check this out as a starting point.

solo.ckpool.org 1% fee solo mining USA/DE 250 blocks solved!

Odds are most of you will join a pool. I will only say that it is in your best interest to mine at a pool that pays transaction fees (miner rewards). Then you will want to consider the fees associated with the pool.

When it comes to these pools you want them to be large enough that they are getting at least 1 block every Difficulty adjustment period. Larger pools will offer smaller rewards paid out more frequently, and vice versa.