The Bullish Case for Bitcoin -(Medium)
Vijay Boyapati. Many of the key value propositions and ideas of Bitcoin are discussed in this article. Why does Bitcoin not need “backing”? What are the origins of money? What are the attributes of a good store of value? What are the stages of evolution in a money?
Why Bitcoin Must Use Energy and Proof of Work (Dan Held)
Read this article by Dan Held. Proof of work might seem “inefficient” on its face, but in reality, it is what enables Bitcoin to be what it is and do what it does: enable a decentralized network of Bitcoin nodes to agree on the state of the ledger. Ultimately, it comes down to subjective valuation of what you believe the energy is “worth”. Since energy is available and priced on the market, the fact that miners are able to use it cost-effectively is an indicator that it is not wasteful. What makes proof of work efficient?
Why Deflation is Not So Bad
(STEPHAN LIVERA PODCAST: SLP153 PHILIPP BAGUS – WHAT MOST PEOPLE GET WRONG ABOUT DEFLATION)
Listen to this podcast episode (or read the transcript) with Dr. Philip Bagus, which explains the problems with the typical misconceptions about deflation. Listen out for the explanations around why deflation must be separated and understood in separate components. Growth deflation is beneficial to humanity, while “credit deflation” is typically feared and covered in mainstream news articles. Why is growth deflation good, but credit deflation feared?
Comparison of Monetary Standards
Though some might critique the energy expenditure required for Bitcoin mining, the real comparison is against other monetary standards. Read this article to understand more about what is enabled by easy money standards. Also, note the parallels the article makes with gold mining and living under a gold standard.
The History of Government Monetary Intervention
Read this section on the West’s monetary breakdown by Murray Rothbard. Are the monetary standards we live under today the result of free voluntary choice? If not, what were the government monetary interventions along the way?
Protection from Fiat Inflation
Listen to Michael Saylor, the CEO of MicroStrategy, explain his thought process around protecting his company assets from fiat inflation with Bitcoin in this podcast episode. Listen from ~4:55 to 20:04 or read the transcript from “And I didn’t pay much attention to macroeconomics until 2020…” until “…where I was conditioned to believe that you could you could get a decent return without becoming an investment analyst, or a speculator”. What are some of the traditional investments that Michael mentions in this segment? Are they still suitable? What kind of returns did they offer in the past, and what kind of returns do they offer now?
Do Bitcoin and Money Need Backing?
A common line of reasoning will be that money must be “backed by” something, whether that is another asset, government force, or something else. This article by Parker Lewis is an excellent answer to this challenge. Building on some of the ideas from Unit 1, read this article and see that ultimately it comes down to the credibility of monetary properties. What properties of a money are most important? How does Bitcoin compare against other potential monies? Why is it that government force alone is not enough for some governments, such as those of Venezuela, Argentina, or Turkey?
Bitcoin Obsoletes Other Monies
Read this article. Why do economic systems converge towards a single monetary medium? Why are there large gains to the economy under such a system?
Bitcoin is Not a Pyramid Scheme
As you read this article, consider the utility and innovation of Bitcoin. Also, consider the definition of a pyramid scheme relative to Bitcoin’s supply. What are the crucial distinguishing factors outlined in the article?
Bitcoin and the Unlikeliness of a Government Ban
Read this article. What are the stages of grief in relation to Bitcoin as money? As Bitcoin grows in popularity and use, how feasible will it be for governments to ban or stop Bitcoin? Would it be feasible to shut it down globally?
Cypherpunks Write Code
Bitcoin was not formed in a vacuum. It has a deep history of predecessor technologies, ideas, and research that combined to make Bitcoin possible. Take a look at this diagram and see which elements were referred to in the video series you just watched on the cypherpunks.
Bitcoin and the Genesis Files
Read this series, which documents some prior technologies that culminated in the creation of Bitcoin in 2009. What were the key features of each? What did they contribute to Bitcoin?
This article is partly based on two articles published in the 1990s: “E-Money (That’s What I Want)” by Steven Levy for Wired, and “Hoe DigiCash alles verknalde” (Translated: “How DigiCash Blew Everything“) by an unknown author for Next! Magazine. There is also a wealth of information on chaum.com/ecash.
Read the Bitcoin white paper for context on how this all started. Pay attention to the initial design of peer to peer cash. Why was Bitcoin built to minimize trust, and how did it go about doing so?
Browse the SNI (Satoshi Nakamoto Institute) Literature page, exploring some of the earlier technologies mentioned.
As you read the papers, see if you can identify some of the relevant parts that later inspired Bitcoin.
SegWit2x was a pivotal and instructional moment in Bitcoin’s history. There was an upgrade to Bitcoin’s protocol that would fix bugs (like transaction malleability) and more easily enable higher layer function on top of Bitcoin, such as the lightning network. However, while implementing this upgrade, there was a kind of “deadlock” among the parties in the Bitcoin world. In this time, Bitcoin’s different stakeholders learned new things about how Bitcoin’s network truly operates. The question was: do miners control Bitcoin? Or, do users and nodes control Bitcoin? What is the role of developers? Read this article and watch the accompanying video to learn more.
How Bitcoin Works Under the Hood – *ADD EXTRA LINK*
Watch this video to learn a bit more about how the technology behind Bitcoin works. How does Bitcoin act like a ledger? How do Bitcoin transactions take place? How does Bitcoin, as a system, reduce the need for trust?
Intro to Bitcoin Mining
Listen to this podcast interview with Yan Pritzker for an introduction to Bitcoin mining. As you listen, consider the following questions. What does mining do, and how does it secure the Bitcoin network? Should you mine Bitcoin as a retail individual? How are Bitcoin miners compensated? What is the block reward, and what is the block subsidy?
Think of a Bitcoin node as a fake Bitcoin detector. Just as people transacting with gold want to use special equipment to verify that the gold is legitimate, Bitcoin nodes check the rules of Bitcoin and enable the user to interact with the Bitcoin network. Note, though, that some wallets connect to a central node and are run by a third party. You can run your own Bitcoin node for a more “trust-minimized” Bitcoin experience. When you run your own Bitcoin node and use it in conjunction with your own Bitcoin wallet (and private keys), you are said to be self-validating. This may be particularly useful in the case of verifying that you have truly received Bitcoins (rather than trusting another party or service to tell you and not lie to you). As you read this article, consider how Bitcoin can act as an impenetrable fortress of validation.
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As you read this article by Pierre Rochard, consider the process for Bitcoin upgrades to take place. Note the different parties involved, such as Bitcoin developers and Bitcoin users. Using Bitcoin is a voluntary, opt-in choice, and while Bitcoin developers may write code, Bitcoin users do not necessarily have to run that code. In this way, the different parties within the Bitcoin ecosystem “check” each other. Recall the earlier material on Segwit2X and merging SegWit into the Bitcoin protocol, and the interplay between different actors in the Bitcoin space, such as exchanges, merchants, miners, developers, and users.
Who Controls Bitcoin Core?
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In this article, Jameson Lopp delves into further detail in how Bitcoin Core (the reference implementation of Bitcoin) is developed and how changes are made. As you read, consider the following questions. Which parties may propose upgrades? Which parties may block upgrades or changes to code? What other controls exist to stop unwanted or malicious code from entering the Bitcoin Core codebase?
How Bitcoin Open Source Contribution Works
In this interview with Jon Atack, you will learn about the process behind open source contribution to Bitcoin Core. As you listen, think about the discussions around the following topics. What is being worked on in Bitcoin right now? How do contributors to Bitcoin discuss and make decisions? What is the process of peer review for Bitcoin like?
For more technical information about contributing to Bitcoin Core, review this document from the Bitcoin Core code repository: https://github.com/Bitcoin/Bitcoin/blob/master/CONTRIBUTING.md#peer-review
As an optional extra, you may want to listen to this interview with Gloria Zhao for an enjoyable discussion on learning to become a Bitcoin Core contributor: https://stephanlivera.com/episode/216/
The Great Plague of Altcoins
Read this article by Thib Maréchal on why battles in the monetary market are not about incremental technological features, but rather monetary properties.
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