Bitcoin 101: Everything you need to know about investing, buying, and mining digital currency
Big Think's Bitcoin and crypto correspondent Reuben Jackson answers some of digital currency's biggest questions.
The crypto industry is booming, and it’s unlikely to slow down for a long time.
For anyone outside of the community, understanding the basics can be a challenge as cryptoinsiders tend to explain things very technically.
Here, I have tried to break down crypto concepts. So if you’d like to understand crypto basics, read on...
What is a Blockchain?
A blockchain is made up of a growing list of records, known as ‘blocks’. These blocks are linked together using cryptography.
A blockchain is a decentralized public ledger. Essentially, this means that it is a database that is continually being shared and synchronized across a network. If any changes are made to this ledger, all changes will be copied to all participants in the network almost instantly.
There are many different blockchains in existence. The most well-known blockchain is the Bitcoin blockchain, as Bitcoin was the first application of blockchain technology. However, it is important to realize that ‘Bitcoin’ and ‘blockchain’ are not the same things. Rather, Bitcoin was built on top of blockchain technology.
What is a Cryptocurrency?
A cryptocurrency is a digital currency that is designed to be used as a medium of exchange. It uses cryptography to increase its security.
Not every cryptocurrency needs to create its own blockchain. For instance, many popular cryptocurrencies are built on the Ethereum platform. These are known as ‘ERC-20 tokens’. Examples of such tokens include the likes of Aion, EOS, and TRON.
‘Altcoins’ are essentially just ‘alternatives to Bitcoin’. They can differ in a number of ways. For instance, they might have a different economic model, a different coin distribution method, a different mining protocol, or offer more privacy and scalability than Bitcoin.
What is a Smart Contract?
A smart contract is a self-executing contract made from computer code that is designed to enforce the fulfillment of an agreement.
Ethereum is currently the most dominant smart contract platform. However, it has some severe limitations that need to be addressed - the most prominent flaw being its lack of scalability. As a result, Ethereum now has several up and coming competitors, such as Qtum and NEO, who are now working to take its place.
Smart contracts currently have several limitations that are currently limiting their growth. For starters, they require a computer programmer to create them. They are also encrypted to increase their security, which can make them difficult to read.
Companies like SciDex aim to make smart contracts more readable and adaptive for the mainstream population.
Other companies, such as Etherparty, have created smart contract templates. Meaning that smart contracts can be created within minutes, and the process is simple and accessible to everyone.
What is Crypto Mining?
Crypto mining is the process by which transactions for various cryptocurrencies are verified and added to the blockchain. Anyone can mine cryptocurrencies, but being successful usually requires high upfront hardware costs.
There are several different mining protocols that cryptocurrencies can have. The main protocols are Proof of Work (PoW) and Proof of Stake (PoS). However, more and more alternative methods are beginning to pop up.
Proof of Work (PoW) - users compete to be the first to find the solution to a mathematical problem. This measure was put in place to reduce the number of denial of service attacks and spam, as it requires the user to do some work. Bitcoin uses this protocol.
Proof of Stake (PoS) - users mine or validate blocks and are rewarded according to how many coins they already hold. The more cryptocurrency they hold, the more mining power they have. This is the mining protocol for cryptocurrencies such as Qtum. In the near future, Ethereum plans to move from Proof of Work to Proof of Stake in the near future.
Proof of Burn (PoB) - users undergo a short-term loss in exchange for long-term gain by ‘burning’ a cryptocurrency. When a user burns more coins, they stand a greater chance of mining the next block. There are many reasons for this burning of coins. It encourages the long-term commitment of a project, it gets rid of unsold coins, and it pays for transaction fees. Counterparty (XCP) is one of the most well-known cryptocurrencies using this protocol.
Proof of Assignment (PoA) - this is a relatively new mining protocol. It sets itself apart from other protocols as it is able to run on Internet of Things (IoT) devices and mine cryptocurrency without any added hardware and without using a lot of the device’s power or memory. IOTW uses the Proof of Assignment protocol.
What is a Crypto Exchange?
Crypto exchanges allow users to buy and sell cryptocurrencies and digital assets. There are two main types of exchanges.
The first type of exchange is known as a fiat exchange. This allows users to directly exchange their US dollars, Euros, and other government-backed currencies into cryptocurrencies. The top fiat exchanges include the likes of Coinbase and Kraken.
The second type of exchange is a crypto to crypto exchange. These exchanges don’t accept fiat currency, and instead, require users to trade their cryptocurrencies directly with one another. Binance is one example of such an exchange.
What is an ICO?
An ICO is an ‘Initial Coin Offering’. It is a fundraising campaign where new projects can sell crypto tokens in exchange for Bitcoin or Ethereum.
Investing in an ICO can pay off big time. For instance, the price of an Ethereum token during its ICO was approximately $0.311. In January 2018, the price of a single Ethereum token broke the $1,300 barrier. Buying even a single token during its ICO could have led to massive returns.
However, while participating in ICOs can provide significant rewards, it is also extremely risky. For many ICOs, the idea never takes off, and the tokens are rendered redundant.
What is a Fork?
There are multiple different types of fork, and they are triggered by different events.
An accidental fork occurs if coin updates turn out to be incompatible and the developer is required to eliminate the bugs that are causing incompatibilities and figure out how to merge the blockchains.
A hard fork occurs if developers want to make substantial changes to the programming of the coin that will result in an incompatibility between the older and newer version. If a hard fork occurs, all holders of the cryptocurrency are required to update all applications in order to continue using the cryptocurrency.
The first hard fork for the splitting of Bitcoin (BTC) occurred in August 2017. This resulted in the creation of Bitcoin Cash (BCH). For every BTC a person owned, they received 1 BCH.
Ethereum has gone through a substantial number of both planned and unplanned hard forks. For instance, Ethereum Classic (ETC) was created as a result of a hard fork of Ethereum (ETH) following The DAO attack, where 3.6 million Ether (worth approximately $50 million USD) was taken from the accounts in The DAO and moved to another account without consent.
What is a Wallet?
A wallet is where users store their cryptocurrencies. There are several different types of wallets. Each type has its own pros and cons.
Online Wallet - these run on the cloud, and can be accessed from anywhere with an internet connection. They are extremely convenient but are also more vulnerable to attacks, which means they require additional layers of security.
Mobile Wallet - an application on your phone. These even allow you to use crypto as a payment method in stores. However, if you lose your phone, you will also lose your crypto wallet.
Desktop wallet - safer than an online wallet. However, if your computer gets hacked or breaks down, you could lose all of your assets.
Hardware wallet - users store their private keys on a hardware device, such as a USB drive. This is one of the most expensive options, but it is also one of the safest.
Paper wallet - this can be as simple as a printed sheet of paper that contains your generated public and private keys. You can withdraw and send cryptocurrencies by simply scanning the QR code in your paper wallet with your phone.
Which wallet you use depends on what you need it for, and how much you value security. Often, it is merely a case of weighing up security with usability and choosing accordingly.
What would happen if you tripled the US population? Join Matthew Yglesias and Charles Duhigg at 1pm ET on Monday, September 28.
The idea of 'absolute time' is an illusion. Physics and subjective experience reveal why.
- Since Einstein posited his theory of general relativity, we've understood that gravity has the power to warp space and time.
- This "time dilation" effect occurs even at small levels.
- Outside of physics, we experience distortions in how we perceive time — sometimes to a startling extent.
Physics without time<p>In his book "The Order of Time," Italian theoretical physicist Carlo Rovelli suggests that our perception of time — our sense that time is forever flowing forward — could be a highly subjective projection. After all, when you look at reality on the smallest scale (using equations of quantum gravity, at least), time vanishes.</p><p style="margin-left: 20px;">"If I observe the microscopic state of things," writes Rovelli, "then the difference between past and future vanishes … in the elementary grammar of things, there is no distinction between 'cause' and 'effect.'"</p><p>So, why do we perceive time as flowing <em>forward</em>? Rovelli notes that, although time disappears on extremely small scales, we still obviously perceive events occur sequentially in reality. In other words, we observe entropy: Order changing into disorder; an egg cracking and getting scrambled.</p><p>Rovelli says key aspects of time are described by the second law of thermodynamics, which states that heat always passes from hot to cold. This is a one-way street. For example, an ice cube melts into a hot cup of tea, never the reverse. Rovelli suggests a similar phenomenon might explain why we're only able to perceive the past and not the future.</p><p style="margin-left: 20px;">"Any time the future is definitely distinguishable from the past, there is something like heat involved," Rovelli wrote for the <a href="https://www.ft.com/content/ce6ef7b8-429a-11e8-93cf-67ac3a6482fd" target="_blank"><em>Financial Times</em></a>. "Thermodynamics traces the direction of time to something called the 'low entropy of the past', a still mysterious phenomenon on which discussions rage."</p>
The strange subjectivity of time<p>Time moves differently atop a mountain than it does on a beach. But you don't need to travel any distance at all to experience strange distortions in your perception of time. In moments of life-or-death fear, for example, your brain would release large amounts of adrenaline, which would speed up your internal clock, causing you to perceive the outside world as moving slowly.<br></p><p>Another common distortion occurs when we focus our attention in particular ways.</p><p style="margin-left: 20px;">"If you're thinking about how time is <em>currently</em> passing by, the biggest factor influencing your time perception is attention," Aaron Sackett, associate professor of marketing at the University of St. Thomas, told <em><a href="https://gizmodo.com/why-does-time-slow-down-and-speed-up-1840133782" target="_blank">Gizmodo</a></em>.<em> "</em>The more attention you give to the passage of time, the slower it tends to go. As you become distracted from time's passing—perhaps by something interesting happening nearby, or a good daydreaming session—you're more likely to lose track of time, giving you the feeling that it's slipping by more quickly than before. "Time flies when you're having fun," they say, but really, it's more like "time flies when you're thinking about other things." That's why time will also often fly by when you're definitely <em>not</em> having fun—like when you're having a heated argument or are terrified about an upcoming presentation."</p><p>One of the most mysterious ways people experience time-perception distortions is through psychedelic drugs. In an interview with <a href="https://www.theguardian.com/books/2018/apr/14/carlo-rovelli-exploding-commonsense-notions-order-of-time-interview" target="_blank"><em>The Guardian</em></a>, Rovelli described a time he experimented with LSD.</p><p style="margin-left: 20px;">"It was an extraordinarily strong experience that touched me also intellectually," he said. "Among the strange phenomena was the sense of time stopping. Things were happening in my mind but the clock was not going ahead; the flow of time was not passing any more. It was a total subversion of the structure of reality."<br></p><p>It seems few scientists or philosophers believe time is completely an illusion.</p><p style="margin-left: 20px;">"What we call <em>time</em> is a rich, stratified concept; it has many layers," Rovelli told <em><a href="https://physicstoday.scitation.org/do/10.1063/PT.6.4.20190219a/full/" target="_blank">Physics Today</a>.</em> "Some of time's layers apply only at limited scales within limited domains. This does not make them illusions."</p>What <em>is</em> an illusion is the idea that time flows at an absolute rate. The river of time might be flowing forever forward, but it moves at different speeds, between people, and even within your own mind.
Dominique Crenn, the only female chef in America with three Michelin stars, joins Big Think Live.
Having been exposed to mavericks in the French culinary world at a young age, three-star Michelin chef Dominique Crenn made it her mission to cook in a way that is not only delicious and elegant, but also expressive, memorable, and true to her experience.
Controversial physics theory says reality around us behaves like a computer neural network.
- Physicist proposes that the universe behaves like an artificial neural network.
- The scientist's new paper seeks to reconcile classical physics and quantum mechanics.
- The theory claims that natural selection produces both atoms and "observers".
Vanchurin interview:<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="539759cbfd8fcd5b6ebf14a3b597b3f9"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/bmyRy2-UhEE?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
Vanchurin on “Hidden Phenomena”:<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="18886ffd5e5840bb19d4494212f88d82"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/2NDVdNwsHCo?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>Vitaly Vanchurin speaking at the 6th International FQXi Conference, "Mind Matters: Intelligence and Agency in the Physical World." The Foundational Questions...
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Quarantine rule breakers in 17th-century Italy partied all night – and some clergy condemned the feasting
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