Week 7
I worked for three hours on Sunday November30, reading and summarizing Chapter 8. See Chapter 8 notes for content
My focus was to complete this chapter.
I struggled because I was given medication that made me feel sick.
My win was getting my reading done
Chapter 8 DIGITAL MONEY
Bitcoin represents the first truly digital solution to the problem of mind and in it we find a potential solution to the problems of salability -soundness- and sovereignty.
Bitcoin as Digital Cash
1. Cash -Person-to-Person payments are in person
2. Third Party Payment -such as cheques/credit cards/ debit cards/wire transfer/PayPal
-a third party handles the money tansfers
-requires trust
-needs time to clear payment
Bitcoin is the first solution for digital payments that doesn’t rely on a third party intermediary. It is the first digital cash.
Satoshi Nadamoto’s (pseudoname) motivation for bitcoin was to create purely “peer-to-peer” form of digital cash that would not require trust in a third party.
He wanted to give people sovereignty (control) over their wealth.
Satashi achieved this by using
* distributed peer-to-peer network
*hashing
*digital signatures
*proof of work
Nakamoto removed the need for trust by building a proof and verification foundation. Every transaction is recorded by every member of the network so they all share a common ledger of balances and transactions.
All members verify sufficient balances.
Nodes compete to be the first to update the ledger with a new block of transactions every 10 minutes.
Nodes solve complicated mathematical problems/ crypographic puzzles, that are hard to solve but the solutions are easy to verify.
This process is called PROOF OF WORK (PoW).
The node that commits valid and verified block of transactions receives a “block reward” consisting of brand new bitcoins. This process is called “mining”.
Nodes that solve Proof of Work are called miners.
The block reward they receive pays the miners for the power and resources they committed to Proof of Work to update the ledger.
Nakamoto programmed bitcoin to produce a new block every ten minutes and gives a reward of approximately 50 coins in the first 4 years of bitcoins operation.
Bitcoin nodes distribution chart across the world
It is estimated that there are over 1,000,000 individual miners across the world.
EVERY FOUR YEARS BITCOIN UNDERGOES A “HALVING” (or after approximately 210,000 blocks)
After four years, approximately 25 coins are rewarded per block (every 10 minutes) and then halved again every four years.
FIRST HALVING – NOVEMBER 28, 2012 (dropped to 25 bitcoins per block)
SECOND HALVING-JULY 9, 2016 (dropped to 12.5 bitcoins per block)
THIRD HALVING- 2020- (6 bitcoins per block)
FOURTH HALVING -2024 (3 BITCOINS PER BLOCK)
2140-the last bitcoin will be issued
Presently over 95 percent of all bitcoin has already been mined!
The last 5 percent of supply will happen between now and 2140.
Currently, as of 2025 20 million coins have been mined
The last one million coins will be mined over one more century.
DIFFICULTY ADJUSTMENT
As bitcoin has more and more usage the value of bitcoin goes up and drives more and more miners to solve Proof of Work problems in search of bitcoin rewards.
The more miners there are the more secure the network becomes.
As the miners increase the processing power to solve the mathematical problems increases so bitcoin is programmed to raise the difficulty of the problems so that each block will always take approximately 10 minutes.
This difficulty adjustment ensures that more miners will not mean more bitcoin being mined and thus the “stock to flow” (available supply to existing supply) stays intact.
Hardness: Bitcoin is the hardest money ever invented because growth in its value cannot increase supply.
For every other money, as its value rises, those who produce it will start producing more. Bitcoin difficulty adjustment makes it hard to produce.
Bitcoin is 100% verification and 0% trust.
21,000,000 million supply:
Bitcoin has a supply of a maximum of 21,000,000 million coins EVER.
Each Bitcoin is divisible into 100,000,000 SATOSHIS. This division makes Bitcoin highly saleable and scaleable across space because the digital ledger is available to anyone in the world instantly with an internet connection.
Ownership of the coins is assigned through PUBLIC ADDRESSES (not by a name) and access is secured by a PRIVATE KEY which is a string of 12 words like a password.
No single entity can maintain the ledger and no single entity can alter the record without the consent of the majority of the nodes. There is no centralized management or control authority. Any changes to the code have to be voted on.
There is no management or corporate structure-all decisions are automated and preprogrammed.
The bitcoin network began operation in January 2009.
The first real world purchase took place on May 2010 when someone paid 10,000 bitcoins for two pizza pies worth $25 ($.0025 per bitcoin)
Note: 10,000 bitcoin would be worth approximately 100,000,000 million dollars today (2025).
DEFINITIONS:
HASHING: is a process that can take any stream of data as an input and transform it into a dataset of fixed size (known as a hash) using a non-reversible mathematical formula. Hashing in essence, allows identifying a piece of data in public without revealing anything about that data, which can be used to securely and tastelessly see if multiple parties have the same date.
PUBLIC KEY CRYPTOGRAPHY: is a method for authentication that relies on a set of mathematically related numbers: a private key, a public key and one or more signatures. The private key is kept secret can generate a public key that can be distributed freely because you cannot determine the private key from the public key. This allows for authentication using both a public and private key. Ownership of bitcoin is connected to the private key.
PEER-TO-PEER NETWORK: is a network structure in which all members have equal privileges and obligations toward one another. There are no central coordinators who can change the rules of the network.
Week 8
I worked for three hours on Saturday December 6 from 11 am until 2 pm reading and summarizing Chapter 9
My struggle was understanding the book, as there as some big concepts and summarizing them simply took concentration.
Bitcoin is a topic that brings in alot of other topics like money printing and inflation and government policy so it is complicated.
My win was getting it done despite not feeling well and have to work through it.
Chapter 9 WHAT IS BITCOIN GOOD FOR
Bitcoin’s main purpose is not to replace cash for everyday purchases but to function as sound money, a store of value and a system for global settlement. It offers an alternative to government-issued money by combining digital transfer with strict scarcity and independence from political manipulation.
Historically, gold served as sound money because it was scarce, durable and widely accepted. (Under the gold standard, humans flourished). However, gold’s physical weight made it difficult to transport, which led to it storage in banks and centralized vaults. Governments gained control over gold reserves and replace gold-backed money with fiat unbacked currencies that could be printed freely (inflation). This shift resulted in inflation and weakened the store of value of money. Bitcoin keeps gold’s scarcity while removing its physical limitations, allowing value to be stored and transferred digitally.
Bitcoin enables individuals to store and move wealth without relying on banks or governments. Ownership is controlled through private cryptographic keys, which makes confiscation and censorship much more difficult. Unlike gold, Bitcoin can be transferred instantly across borders and can even be stored without physical possession. This makes it especially valuable for people living under unstable economies (can be taken from you) or inflationary monetary systems.
Bitcoin’s fixed supply makes it attractive as a store of value. Because no authority can increase the supply, Bitcoin cannot be inflated like fiat money can be. While its price is volatile in the short term, this volitiityis expected in a developing monetary system. As adoption increases and the market grows, price movements are expected to stabilize.
Bitcoin’s real advantage lies in large-value and long-distance settlement. Tradition systems are slow to move money from country to country. They are also expensive and dependent on intermediaries. Bitcoin allows final settlement within minutes without requiring trust in banks or governments, and without exposure to counterparty risk.
International payment today rely on a small number of major currencies, especially the U.S. dollar. These transactions are costly, slow and involve multiple layers of intermediaries. Bitcoin offers a neutral settlement system that is not controlled by any single country. Because it has no issuing nation, it does not give special privilege to any government and can function as a global settlement asset similar to gold.
Bitcoin can also serve as a reserve asset for banks. Financial institutions could issue bitcoin-backed money while using Bitcoin itself for final settlement between institutions. Most transactions would occur off the blockchain, while Bitcoin would act as the base layer for settlement. This structure is similar to how gold once supported paper money.
Another key feature of Bitcoin is monetary discipline. Its rules are enforced by code and consensus rather than human decision-making. This removes the ability of governments to manipulate the money supply for political purposes and encourages long term economic planning.
Bitcoin proved a long-term alternative to inflationary government money. Its greatest strength lies in offering individuals and institutions a reliable store of value, permission-less transactions, and a neutral global settlement system. Its importance comes from these properties.
2025 UPDATE
CURRENT BITCOIN CLIMATE-BITCOIN IS GOING MAINSTREAM
*****REFERENCES OUTSIDE OF THE BOOK TO SHOW CURRENT BITCOIN AND CRYPTO CLIMATE*****
Recently, Bitcoin has moved from being a fringe experiment to becoming part of mainstream financial and political discussion. See the articles from websites cited below for current discussions.
The U.S government and lawmakers in Congress have expressed support for Bitcoin’s use as a store of value and are recognizing its value as digital money.
State-level policies have encouraged Bitcoin-friendly regulation. Various public universities and investments funds and companies have expired golding Bitcoin on their balance sheet.
For example, Harvard University holds nearly a half a billion dollars worth of Bitcoin and has more money in Bitcoin than any other single stock (yahoo finance)
Under President Trump currently, Bitcoin is receiving increased attention.
Policy discussions under Trump include:
1. U.S. Strategic Bitcoin Reserve-official policy March 6, 2025
*President Donald Trump signed an EXECUTIVE ORDER establishing a Strategic Bitcoin Reserve and a U.S. digital Asset Stockpile, treating Bitcoin as a national reserve asset.
This press release says that the House Committee on Financial Services Chairman French Hill state that they look forward to the CLARITY ACT and the Senate’s GENIUS Act as part of Congress’ effort to make America the crypto capital of the world.
Hoping to provide clear regulatory framework for digital assets
Currently in the United States you can pay your taxes in bitcoin and there are no capital gain taxes on it so it is acting as money …and the government wants your bitcoin.
2. Government Crypto reserve holdings
*The U.S government is consolidating cryptocurrency seized by federal agencies into a STRATEGIC RESERVE estimated in the tens of billions of dollars.
3.Trump administration’s pro-crypto agenda
The House of Representatives held “Crypto Week” in support of major crypto regulatory bills linked with President Trump’s digital asset agenda.
Treasury Department to directly purchase 1 million Bitcoin and to acquire an approximate 5% of the total Bitcoin supply, “mirroring the size and scope of gold reserves” held by the federal government. A reserve comprising 5% of the total Bitcoin supply would be worth approximately $88 billion as of March 15, 2025
4. New cryptocurrency Law Signed
*President Trump signed new cryptocurrency legislation seen as a significant development for the crypto industry. As part of the GENIUS ACT which establishes regulation and consumer protections for stablecoins ( a type of cryptocurrency whose value is linked to a fixed currency). The Genius Act will help make cryptocurrency more mainstream by providing regulatory clarity.
5. State-level strategic reserves inspired by federal policy.
TEXAS becomes the first state to fund a strategic Bitcoin reserve, a move linked to broader federal crypto initiatives.
6. Ongoing Policy discussions
*Debate continues about Bitcoin’s potential role in national finance and debt strategy showing how the U.S is thinking of ways Bitcoin can help solve it’s debt problem.
Purposal of purchasing 200,000 BTC annually which would give the government 1 million BTC over five years (about 5 percent of all circulating Bitcoin)
This would place the U.S ahead of every sovereign holder and most private institutions.
Article talks about how a bitcoin reserve opens doors to helping with the U.S debt problem (over 38 trillion debt load with 1 trillion in interest)
Week 9
I worked for two hours in the morning of Sunday December 14 from 10 until 12 and then from 5pm to 7 pm reading and summarizing the last chapter of the book.
My win was being done the book!
My next steps will be to polish up and simplify a big topic so that I can do a good presentation.
I also want to add some more pictures and outside content besides the book to my website.
Chapter 10 Summary: Bitcoin Questions/The Bitcoin Standard
Is Bitcoin Mining a Waste?
Bitcoin mining is often criticized as a waste of electricity, but this view misunderstands its purpose. Mining secures the bitcoin network and makes it resistant to manipulation. The energy used replaces trust in governments and banks with proof through computation. Without this energy cost, bitcoin would lose its decentralization and security. Mining is therefore the price paid for sound, independent money.
Why Nobody Can Change Bitcoin
Bitcoin cannot be easily changed because it operates on consensus rules that all users voluntarily follow. No government, developer, or company controls the network. Changes require widespread agreement, and users can reject any update they do not support. This resistance to change protects bitcoin from political interference and corruption.
Antifragility
Bitcoin is anti-fragile, meaning it grows stronger through stress and attacks. Failed hacks, regulation attempts, and criticism have improved its security and increased confidence in the network. Each challenge bitcoin survives strengthens its credibility and resilience.
Can Bitcoin Scale?
Bitcoin does not scale by centralizing control. Instead, it uses layers. The base layer prioritizes security and decentralization, while second-layer solutions like the Lightning Network handle faster, smaller transactions. This preserves bitcoin’s core principles while allowing growth. The Lightning Network allow for speed initially, while the slower settlement layer is on Bitcoin later.
Is Bitcoin for Criminals?
Bitcoin is often associated with crime, but all forms of money are used illegally. Bitcoin transactions are recorded on a public ledger, making large-scale crime easier to trace than cash. Criminal use is a small portion of overall activity and does not define bitcoin. Bitcoin’s immutable ledger makes criminal activity reversible as funds can be followed and tracked.
Altcoins and Blockchain Technology
Many alternative cryptocurrencies claim to improve bitcoin or apply blockchain elsewhere. Most rely on centralized control or trusted authorities. Blockchain without a decentralized currency lacks proper incentives and becomes inefficient. Bitcoin remains the only successful application. All other alt-coins are not as trustless and decentralized (without human control) as Bitcoin.
Conclusion
Bitcoin answers key questions about money, trust, and power. Mining secures the network, consensus prevents arbitrary changes, and challenges make bitcoin stronger. It scales through layers, is not primarily used by criminals, and stands apart from alternative blockchains.