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by
Yan Pritzker
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January 22 - January 23, 2023
I would highly recommend The Bitcoin Standard by Saifedean Ammous as an immediate follow-up to this book if you haven’t read it already.
If you want to look at Bitcoin through that lens, I recommend the seminal Mastering Bitcoin by Andreas Antonopoulos, and the newly released Programming Bitcoin by Jimmy Song.
taste of the computer science, economics, and game theory that make Bitcoin one of the most interesting and profound inventions of our time.
Fiat, which is Latin for “let it be done,” refers to government and central-bank issued currency which is decreed as legal tender by the government.
We slowly shifted from a world economy that used gold as money to one where paper certificates were issued as a claim on that gold. Eventually, the paper was entirely separated from any physical backing by Nixon, who ended the international convertibility of the US dollar to gold in 1971.
The end of the gold standard allowed governments and central banks full permission to increase the money supply at will, diluting the value of each note in circulation, known as debasement.
The Venezuelan Bolivar went from 2 Bolivar to the U.S. dollar in 2009 to 250,000 Bolivar to the U.S. dollar in 2019. As I write this book, Venezuela is in the process of collapse due to the terrible mismanagement of its economy by its government.
In order to prevent debasement, Satoshi designed a system of money where the supply was fixed and issued at a predictable and unchangeable rate.
The Bitcoin Standard by Saifedean Ammous as a starting point.
A network refers to the idea that a bunch of computers are connected and can send messages to each other. The word distributed means that there is not a central party in control, but rather that all the participants coordinate to make the network successful.
In a system without central control, it’s important to know that nobody is cheating.
For a great overview of monetary history, I recommend the essay Shelling Out by Nick Szabo: https://nakamotoinstitute.org/shelling-out/
Since the ledger is no longer in one place, we call it distributed, and because no central party is in charge, we call it decentralized.
Now we get to solve one of the hardest problems in computer science: distributed consensus between parties where some are dishonest or unreliable. This problem is known as the Byzantine Generals Problem and is the key that Satoshi Nakamoto used to unlock the invention of Bitcoin.
Whenever we assume trust based on identity, we open ourselves up to something called a Sybil Attack. This is basically a fancy name for impersonation; it’s named after a woman with multiple personality disorder.
the first law of thermodynamics says that energy can neither be created nor destroyed. In other words, there’s no such thing as a free lunch when it comes to energy. Electricity
The particular hash function I used to hash "Hello world” is called sha256 and happens to be the one Bitcoin uses.
There’s no way for anyone, not even a computer, to look at the resulting random looking number and figure out the string that created it. If you want to play with sha256, you can try it out at https://passwordsgenerator.net/sha256-hash-generator.
The process of playing the Proof of Work lottery to win access to write to the Bitcoin ledger is known popularly as mining.
You may have read the often repeated statement in the media that Bitcoin mining involves solving complex equations. You now understand that this is completely false. Rather than solving equations, the Bitcoin mining lottery is all about repeatedly rolling a giant virtual die to produce a hash within a certain target interval.
You can monitor the Block Reward Halving progress at bitcoinblockhalf.com.
A CoinShares report2 from 2019 has estimated that approximately 75% of bitcoin mining is powered using renewable energy.
Read more about the current state of mining at https://coinshares.co.uk/bitcoin-mining-cost-june-2019/
it would still take you more than a year to rewrite the entire history of the chain. You can explore this data at http://bitcoin.sipa.be.
This excellent essay dives deep into how bitcoin deals with invalid blocks: https://hackernoon.com/bitcoin-miners-beware-invalid-blocks-need-not-apply-51c293ee278b
You can explore the cost to attack Bitcoin and other cryptocurrencies at https://www.crypto51.app.
But what if you had a super powerful computer to do the guessing? I can’t do this subject justice more than the Reddit post at https://bit.ly/2Dbw9Qd, which I recommend reading in its entirety. While it gets technical, the final paragraph gives you a good idea of what it would take to list all possible 256-bit keys: “So, if you could use the entire planet as a hard drive, storing 1 byte per atom, using stars as fuel, and cycling through 1 trillion keys per second, you'd need 37 octillion Earths to store it, and 237 billion suns to power the device capable of doing it, all of which would take
...more
Read more on how Bitcoin Core’s development process is managed in Who Controls Bitcoin Core? by Jameson Lopp: https://medium.com/@lopp/who-controls-bitcoin-core-c55c0af91b8a
A full history of Bitcoin rule changing forks is analyzed here https://blog.bitmex.com/bitcoins-consensus-forks/
The Lightning Network is in early stages but already shows promise. You can check out a site that uses Lightning-based micropayments for articles at https://yalls.org/.
To learn more about the economics behind Bitcoin: The Bitcoin Standard by Saifedean Ammous Bitcoin Investment Theses by Pierre Rochard https://medium.com/@pierre_rochard/bitcoin-investment-theses-part-1-e97670b5389b The Bullish Case for Bitcoin by Vijay Boyapati https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1 For kids: Bitcoin Money by Michael Caras
To get deeper on the computer science: The Bitcoin Whitepaper by Satoshi https://bitcoin.org/bitcoin.pdf Mastering Bitcoin by Andreas Antonopoulos Programming Bitcoin by Jimmy Song Jimmy Song’s seminar at https://programmingblockchain.com
To get deeper on the history and philosophy of Bitcoin: Planting Bitcoin by Dan Held https://medium.com/@danhedl/planting-bitcoin-sound-money-72e80e40ff62, Bitcoin Governance by Pierre Rochard https://medium.com/@pierre_rochard/bitcoin-governance-37e86299470f Bitcoin Past and Future by Murad Mahmudov https://blog.usejournal.com/bitcoin-past-and-future-45d92b3180f1 Every video made by Andreas Antonopo...
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A huge part of the Bitcoin ecosystem lives on Twitter. Here’s a handful of folks in no particular order that are good to follow. Start here, and branch out: @lopp @pwuille @adam3us @danheld @TraceMayer @pierre_rochard @bitstein @theonevortex @AlenaSatoshi @WhatBitcoinDid @stephanlivera @TheBlock__ @TheLTBNetwork @real_vijay @jimmysong @Excellion @starkness @dickerson_des @roasbeef @saifedean @Melt_Dem...
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