Bitcoin for Beginners

My dad (a retiree) came over for dinner just now, and I was trying to explain Bitcoin and crypto to him. I think I managed to simplify it enough for him to understand, which is good. 

I'm taking the same approach for this series of articles I am writing, namely: to keep things short and simple, and largely focused on what laypeople are interested in. (Or what I am interested in, as my blog is called "Anything that Interests Me".) 

In this post, I am going to talk about Bitcoin, for absolute beginners. 

Cutting through the technicalities, Bitcoin is basically a digital currency. 

(As an aside, as far as I understand it, when we are referring to Bitcoin, the proper noun, there is a capital "B", but if we are talking about it as a unit of currency, it is with a small "b". 

So, when talking about Bitcoin in broad terms or as software or technology, it is with a capital 'B', but you buy 100 bitcoins with a small 'b'.) 

Essentially, Bitcoin is the most successful cryptocurrency (or crypto) out of hundreds if not thousands of attempts to create virtual money. 

Currently, Bitcoin's market cap is more than US$1 trillion. [1] 

Yes, you read that right. 

As at the time of writing, 1 bitcoin (or 1 BTC) was worth about S$77,900, or about US$58,800. [2] 

Recently, companies have started investing (but I think the correct word is speculating) in bitcoin. 

For instance, South Korean gaming giant Nexon reportedly allocated $100 million into bitcoin, while China's Meitu, the developer of China's wildly popular beauty-enhancing photo app, reportedly accumulated about $100 million worth of bitcoin and Ether. They follow hot on the heels of other companies, like Elon Musk's Tesla, which bought $1.5 billion of bitcoin. [3]  

For most laypeople like ourselves, bitcoin is purchased on an exchange, such as Coinbase (https://www.coinbase.com/) or Coinhako (https://www.coinhako.com/). 

An exchange is basically like a stock exchange, a place where buyers and sellers come to buy and sell cryptocurrencies, such as bitcoin and ether. 

If you buy bitcoin, it will be stored in your wallet (somewhat similar to storing money in a wallet in real life). 

I know I promised to talk about Bitcoin for beginners, but really there's some scope for basic economics here. 

Since the meteoric rise of the price of Bitcoin, it would not make sense to invest all of your life's savings into this currency. However, if you would like to speculate, this would make a good punt. 

If you apply some basic financial principles, such as diversification, you would probably also look into other cryptocurrencies, such as ether (in second place) and other altcoins (alternative cryptocurrencies) to place some bets in, rather than going all in on one type of crypto or the other. 

There is also great volatility in the price of bitcoin, which has seen its fair share of rapid rises and equally rapid declines. 

Unlike Bitcoin, which can be thought of as a store of value, ether is the token used on the world's currently most used blockchain, Ethereum. Ether has powered the ongoing NFT (non-fungible tokens) craze. And it is also going through upgrades that could boost its price. 

I think that's really it.

But I would like to conclude this simple post on Bitcoin for absolute beginners with a well-intentioned piece of nagging. 

When it comes to mining, running nodes, and doing computer programming, in my experience knowing what they are about does not protect ordinary speculators (or anyone, for that matter!) from the simple fact that as a layperson you will be facing volatily, soaring highs and crashing lows, if you put money into bitcoin (and other crypto). You could stand to lose a lot, especially if you need to pull out your money urgently. 

And no less a luminary than Elon Musk himself has said that people should not invest all their life savings into crypto. That would be unwise. 

But if you fancy a punt, as I do, I have taken up some crypto (mainly ether), with some small amount of money that I can afford to lose. 

And let's see where this rollercoaster ride will go! Rocketing to the moon, perhaps? 

Anything that Interests Me! - More to come on crypto for absolute beginners and laypeople like myself

Sources cited:

[1] https://sg.news.yahoo.com/how-to-decide-whether-to-invest-in-bitcoin-or-ether-020413608.html

[2]  Based on a simple Google search. Seriously. 

[3] https://asia.nikkei.com/Spotlight/Cryptocurrencies/Asian-companies-accelerate-shift-to-bitcoin-as-price-surges 

Non-Fungible Tokens (or NFTs)

In March 2021, a digital work of art by Mike Winkelmann, the artist known as Beeple, sold for US$69 million, in an auction by Christie’s. 

What is perhaps more surprising is that this record-smashing NFT sale came after months of increasingly valuable auctions. [1] 

In October 2020, Beeple sold his first series of NFTs, with a pair going for $66,666.66 each. 

In December 2020, he sold another series for $3.5 million. 

And in February 2021, one of the NFTs originally sold for $66,666.66 was resold for $6.6 million. 

Yes, you read those massive figures right. 

So, what are NTFs, and what is going on here? 

NFTs, or non-fungible tokens, are unique, one-of-a-kind files that live on a blockchain and are able to verify ownership. 

To go deeper into the concept, some things are fungible, i.e. exchangeable for another, or equivalent to another. Money is fungible. One US dollar is equivalent to another US dollar. 

But there are other things in life that are non-fungible, or one-of-a-kind, like a piece of art or a bespoke wedding ring, or a limited edition, autographed collectible card. One wouldn't consider these items equivalent with others, or easily exchangeable for another. 

A token is an asset on a blockchain. You own a token if it is associated with your wallet, or your identity online. 

When you have a digital asset on the blockchain (when you own it), everyone can see that you (or the account associated with you) own it. 

So, an NFT basically indicates which wallet or address it currently belongs to. 

Another way of thinking about the issue is that artwork can be tokenised to create a digital certificate of ownership that can be bought and sold. And as with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain. [2] 

What are NFTs used for? 

These days NFTs are mostly used for digital artwork, but technically can be used for other digital and cultural assets, like tweets or even basketball trading cards (https://nbatopshot.com/). 

Taking artwork as the primary example, buyers of NFTs are essentially buying bragging rights of owning the original digital artwork (this assumes that authenticity in fact has a value). 

They are also buying a speculative asset that they may be able to resell later at a higher price. 

Another benefit is "patronage" or "support", where buying an NFT allows one to financially support an artist. [3] 

Yet another way of thinking about it is like you are buying an autographed print. [4] 

One important point for speculators and investors is that most NFTs are part of the Ethereum blockchain. 

As I mentioned earlier, this is one of the possible reasons why the price of Ether (the crypto) has been rising, as more and more people jump onto the NFT bandwagon.  

This implies that there are two main ways of speculating or investing into NFTs. One is to create (or mint) NFTs and the other is to invest into Ether, the cryptocurrency that these NFTs are largely traded in. 

OK, that's it for today. 

Thank you for reading! 

More to come on Bitcoin, Dogecoin, and more. 

Anything that Interests Me! - On NFTs, Ethereum, and Ether  

Sources cited:

[1] https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million

[2] https://www.bbc.com/news/technology-56371912

[3] https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq 

[4] https://www.bbc.com/news/technology-56371912

Ether and Ethereum (for Complete Laypeople)

One of the biggest trends these days is cryptocurrency (or crypto, for short). 

A friend of mine recently commented that an article in Today newspaper was really badly written, while many others have told me that they didn't understand crypto. (Well, neither do I, to be honest, as I am also a layperson. I am not a developer.) 

But I have been reading up on this topic recently and also speculate (not invest, as there is a distinction) in crypto, such as ether and bitcoin. 

So, I thought I would try to do up a series of simple articles for laypeople like myself so we can all get on the bandwagon. 

Maybe, we can even be cool and talk like the developers, computer engineers, and start up founders today. And maybe we can see what the hype is all about too.  

So, what is Ethereum?

Ethereum is the community-run technology powering the cryptocurrency, ether (ETH), and thousands of other decentralised applications. [1]

Today, Ethereum is the most actively used blockchain. 

A blockchain is a system of recording information in such a way that makes it difficult or impossible for people to change, hack, or cheat the system. 

Or, as the technical people explain it, a blockchain is "a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain" [2]. 

And Ether is the native cryptocurrency of the Ethereum blockchain. That is to say, it is like the coin that is tied to Ethereum, the blockchain. 

Currently, Ether is the second largest cryptocurrency after Bitcoin by market value. [3] 

Depending on what you read (or who you read), both Bitcoin and Ether have hit all-time highs this year in 2021 because institutional investors and corporations have started buying cryptocurrencies to add to their balance sheets. 

As at the time of writing, 1 Ether equals S$4,657.62 or above US$3,500. 

Some are speculating (or is it divining?) that, despite its recent 1,500% rise in price in the past year, Ether will go up to US$5,000 to US$10,000 by end 2021 or 2022. [4]

Yes, you read that right. I have included the source in case you think I made up this "fake news". 

You might also have heard about NFTs, or Non Fungible Tokens (don't worry if you haven't - as I'm interested in it, I will cover it in a future post here on my blog, Anything that Interests Me). 

It is definitely worth reading about. 

It is said that user demand for Ether to buy digital assets such as NFTs also could be driving prices higher. 

In addition, unlike Bitcoin which is used only for transferring digital value, Ether is not just used as a digital currency, but also supports the Ethereum blockchain on which more types of transactions are possible. 

OK, that's it for today. 

I am keeping my articles short and sweet, 'cause ain't nobody got time to read long articles and posts these days. 

But I do sincerely hope that at least what I write as a layperson will be easily understood by people who are interested in this topic (as I am) but do not have a technical background. 

Thank you for reading! 

More to come on NFTs, exchanges, Bitcoin, Dogecoin, and more. 

Anything that Interests Me! - On Crypto, in particular Ether and Ethereum 

Sources cited: 

[1] https://ethereum.org/en/

[2] https://www.euromoney.com/learning/blockchain-explained/what-is-blockchain

[3] https://observer.com/2021/05/etherum-founder-buterin-billionaire-cryptocurrency-surge-bitcoin/

[4] https://www.theedgesingapore.com/capital/cryptocurrency/ethers-1500-jump-just-start-crypto-faithfuls