Fake News, Fake Money, and Living in a World Without Authority – Andreas M. Antonopoulos (Video & Transcript)

Today, we again revisit one of Andreas’ greatest hits, “Fake News, Fake Money and Living in a World Without Authority” , unedited, and transcribed in full. This talk took place over three years ago, (yet seems more relevant than ever) at the Silicon Valley Bitcoin meetup on April 11th 2017 at the Plug and Play Tech Center in Sunnyvale, California. Support Andreas at https://antonopoulos.com/

“Today’s talk, the title is Fake News, Fake Money and Living in a World Without Authority. So fake news has been in the news a lot lately and you have all of these accusations swirling around, right? The established media, The New York Times, The Washington Post, they’re pointing fingers and going “These purveyors of fake news,” primarily at internet-based sites, and internet-based sites are pointing right back and going, “Do you remember Judith Miller? Anybody? What about this Judith Miller? Yeah, there WMDs with aluminum tubes in Iraq. Bullshit. So fake news happens on both sides, right? And that’s really the perplexing thing. How did we arrive in a world where we can’t even tell what’s true and what isn’t?

You see well-established backbones of authority and truth like The Washington Post and The New York Times or even CNN and Fox News and other TV, CBS and ABC, and what are they doing? They’re cheerleading for a war based on false premises and that was just last week. Again, not Iraq, Syria this time, right? And you’re like, “Did we learn nothing? Did we learn nothing?” We didn’t learn anything.

How did we arrive at this world?

Why do we have this debates over fake news? And part of it has to do with the rise of the internet in the early ’90s. So work with me here, let’s walk through the steps. The internet didn’t disrupt newspapers and TV companies by stealing their audience for news. That came much, much later. First, the internet disrupted their sources of most profitable revenue. And for newspapers, that was the classified advertising section. That was where they made most of their money, small business advertising in the classified section. And the internet came along and Craig listed that shit, right? And just completely undermined it. Oh, you can do all of that free and it’s instantaneous and boom. And suddenly, all of the most profitable revenue disappears and the newspapers have to [inaudible 00:02:46].

And then it happened again with TV. They started losing advertising revenue to the new popular websites that were getting more eyeballs. So they started losing, first, the local and small advertisers who were able to position as targeted to specific demographics and audiences because they could get much more fine grained information. TV is a one way thing. You have no idea who’s watching, right? And with the internet, they could really target advertising. So TV starts losing advertising revenue, too.

So what did they do? Trim the fat, right? Trim the fat. So in newspapers, that’s oh, journalists, we don’t really need them. So no foreign desk, cut that. Investigative journalism, cut that. What’s selling more papers? Ask Judy and the astrology section and infotainment and cartoons and sensationalist news, and if it bleeds it leads. And inexorably, the long downtrend of the news industry started. They gutted their foreign desks. They gutted their investigative journalism. They gutted their fact checking. They gutted their copy editor desks.

Until what was the left was a bunch of interns running around copying the press releases of powerful corporations and presenting them as fact, and were taking notes when someone who seemingly was important said something, not questioning any of it, and just writing it down, publishing it as truth. Fake news happened because the very basis for producing truth was removed from the very institutions whose job it was to produce truth. And this caused a very weird situation because until that time, how do you know if something’s true? Well, The New York Times said it. The Washington Post said it. It was on CBS. Surely, they have fact checked it. Therefore, it’s the truth. The fundamental basis for discovery of truth was to examine the source.

You go to college. You’re writing an essay. They say, “What are you basing this argument for? Give me citations. Source your arguments. Where are the facts?” And if you took a headline from The New York Times and sourced it, they go, “Okay, great. That’s a citation that’s valid. It’s a valid source.” We used the issuer to determine the quality of what they issued. We looked at the authority of the news based on the authority of the institution that said it because that was a good model. That was a good heuristic. That gave us a good false positive, false negative ratio. It was a bet. It was a way to say, “I can’t fact check all of that, but these people have, so if I read, I will become not only educated, but also informed.”

And now, we’re in a situation where the people who watch the most TV and read the most newspapers are the least informed part of the electorate.

How did that happen? Because the institutions are still standing. Their authority is still standing in some ways. The basis of credibility is still there. They still have the big buildings and lots of circulation and big name, but the mechanism that delivered truth is no longer there. The mechanisms that ensured quality is no longer there or is significantly eroded. And what’s their response to that? We’ll try harder? No. They turn, they look at the internet and they go, “You’re fake news.”

And arguably, a lot of the stuff on the internet is fake news because it never had any of the mechanisms of producing truth, but the internet that has none of the mechanisms and the newspapers that no longer have any of the mechanisms are now producing truth on a relatively equal basis. Every now and then, some blogger uncovers some incredible story that nobody’s noticed and it is the truth, and the networks pick it up. And every now and then, the institutions of traditional truth fall flat on their face and deliver bullshit to us packaged in a fancy name, and people start questioning whether they should believe anything.

What’s the option? Where do you go from here? Do you have to evaluate every fact for yourself? Do you have to build into your critical thinking the fact checking department that they fired? How do you go about evaluating every piece of knowledge as fact or fake news? Well, there’s an easy heuristic. If the esteemed leader of your political party says it’s fake news, it’s fake news. Now, we outsource fact-finding to the tribes that we belong to. If the tribal leader says that those guys are lying, we just go with it, right? Happens with Bitcoin, too. Tribalism is part of the human nature.

Well, what’s really interesting is that what just happens in news that has left an entire generation of people now unable to discern truth from fiction, easily manipulated through propaganda. What I’m going to suggest today is that this is about to happen to money. This is about to happen to money. How do you know money is valuable? I get asked this question every time I do a seminar about Bitcoin, especially if there’s people in the audience who are new, they say, “But Bitcoin isn’t backed by anything. This thing I have in my pocket, it says central bank of blah, blah, blah. It’s backed by the nation, the queen, the king, the parliament, the GDP of my country or the gold that we have in our vaults.” You don’t have any gold in your vaults. They still think there’s gold in the vaults. Many people do. It’s a common misconception.

Most of my understanding of money comes from myth. It is just barely removed from the level of myth that is Santa Claus. We have this constructed fantasy about money that we have received as children. And then as adults, when we notice inconsistencies, we kind of just shore it up with some rusty nails and some planks to keep it in place and we try to keep the illusion. And as part of that, we adopt these preposterous ideas such as, “Oh, there’s gold in the vault so then if the … Yeah, it kind of works. I don’t know. Don’t … Go make your room. Don’t ask me any more questions, honey. I don’t understand money either.”

We had a heuristic, and the heuristic was if a stable democratic government based on some broadly free principles sanely manages the economy, if they say it has value, it has value, and that’s a great heuristic. That removes the necessity for us to independently evaluate every note that comes into our hands. Will this still be worth $20 tomorrow? Okay, not this one because this one was counterfeit as I told you before, but this other one, this one’s real. Will this still be worth $20 tomorrow? Yeah. It will be worth $20, maybe not buy you $20 in today’s money. Maybe it will buy you $19.80 in a year and you don’t really notice that so, that’s okay. But you trust, you trust that it’s still going to be there.

Unless you’re Greek or Cypriots or Venezuelan or Argentinian or Brazilian or from Zimbabwe or from the Ukraine or from … Just keep adding to that list. It’s happened so many times. One day you wake up and you discover that the banks are closed and the bank governor’s on TV and they say, “People, don’t panic. Everything is under control.” When government official says that, “Panic,” that’s the time to panic. Now, it’s about who gets to line up in front of the bank because they’re not opening next week as they promised. The temporary emergency measure will become a permanent emergency measure guaranteed every time. So line up and run for your money in the bank and suddenly, the institution of money has crumbled. And now, what do you trust? Now you go back to basics, things that you can examine and validate for yourself. Gold, chicken, rice, salt, sugar, whatever you can get your hands on or the other country’s money. US dollar is hard currency, right?

And so, the concept of money is one of those things that primarily holds value because we attribute the value as a direct result of its issuance by a trusted authority and we outsource our own determination of value to this trusted third party. And what happens when that trusted third party stops delivering on that promise on purpose, by accident, through mismanagement or deliberately, who knows? But one day, that phrase that seemed so meaningful and strong and satisfying, the full faith and credit of the United States government, America, the full faith, not just some of the faith, the full faith and credit of the entire United States of America. Satisfying.

Okay, compare it to this one, the full faith and credit of the National Bank of Zimbabwe. Do you cry? Do you laugh? Do you run? What do you do at that point? That sentence no longer has much weight to it, right? That thing that you put all your faith in because they give you their full faith and credit, and in return, you give all of your full faith and credit in return. Every time you receive one of those bills, you’re giving credit. You’re giving them a product or service in return for the bill. That’s credit. You are giving faith, your full faith and credit, and your a full faith and credit is based on absolutely no rational thinking other than you somehow believe in this thing that’s printed on it, the full faith and credit.

I have a prediction. This sentence is going to become increasingly untenable, not just in the hotspots, not in the back quarters, not just in the developing nations, in the third world as we used to call them, but in many places simultaneously; $220 trillion of debt say that the phrase the full faith and credit is ringing hollow all around the world.

And what happens when they can no longer shore it up? Because Bitcoin is not going after replacing national currencies. Oh, no. It’s doing something far more dangerous. It’s encouraging people to put their savings outside the system, and that is the worst thing you can do to assist them based on full faith and credit. We are taking away the credit and the faith by presenting an alternative that some people will find more useful, and in some places where the full faith and credit of the national currency has been damaged, they will flock to Bitcoin as a valuable alternative because they know that it’s safer and we’re seeing that happen.

We saw it happen in mass after November 8th in India when Narendra Modi demonetized 86% of the country’s money.

Where’s the faith now? No full faith. Can you print on the money the 14% faith in credit of the National Bank of India? We took out 86% so that leaves 14%. This money is backed by the 14% of faith and credit of the National Bank of India. Doesn’t sound so good. People flocked to Bitcoin.

So just like it wasn’t bloggers challenging the truth of news that created this dichotomy of fake news, it wasn’t better news gathering that undermined the newspapers. It was undermining their advertising revenue, cutting off their feet, cutting them off at the knees really, and then forcing them to adjust their news gathering to the new level of income they had.

What happens when Bitcoin does that to banks? Because when they say close all the doors and keep all the money in and there’s one door they can’t close because it’s Bitcoin and the money keeps leaking and leaking and they say, “Put the minister on television. Tell them everything is going to be fine. The yuan will not be devalued any further. The full faith and credit of the People’s Bank of China is behind this currency.” And then a month later, it’s devalued another half percent, and that’s happened eight times the past year. And at some point you’re like, “That doesn’t count anymore. I’m taking my money elsewhere.”

And a few people do and a trickle of billions of dollars has fled into Bitcoin from the yuan. And the insidious damage its doing is not in offering a better way for Chinese people to buy things, to invest in companies, to transact with each other. It’s undercutting the very source of revenue and value and stability of a national currency by removing the full faith and credit of the people and putting it in an alternative currency, by taking their savings and instead of putting it in a deposit account where it becomes the basis for fractional reserve lending, they’re sucking liquidity out of the economy, and that is the worst thing you can do with an economy like that.

So what are they doing next? What the hell can they do now? Drag the finance minister on TV. “Dear citizens, drug dealers, terrorists, pornographers, criminals, and most importantly, those really nasty people who live in the country next door are undermining our nation through this fake currency, Bitcoin, the fake money. They are in a criminal conspiracy to damage our economy. Don’t trust it. Do not invest your money in this Bitcoin. It’s fake money. It’s backed by nothing. Fake money, fake money, fake money,” they cry and scream and protest, fake money.

You think that’s not happening? It’s happening right now. Watch, translate if you like, what Venezuelan said about Bitcoin just a few months ago, fake money. In fact, they said, “It’s the Colombians doing it,” right. It’s always the weirdos next door who speak with the funny accents and soft tacos instead of hard tacos. Abomination. And so, the cry starts slowly at first, fake money, fake money, fake money. Bitcoin is considered fake money in a few places in the world. Where do you think it’s considered fake money? Not here. Nobody’s called Bitcoin fake money here. Certainly, no official would do that. They’d rather it remain in obscurity, but in Venezuela, Bitcoin is fake money. In Zimbabwe, Bitcoin is fake money and they write articles about it. In China, they’ve tried it a few times, hasn’t played very well with the audience.

In the absence of institutional authority, there is no basis for evaluating whether money is real or not or is there? And what is fake money and real money? Who knows? Are we back in the same conundrum? Are we back in the same situation where we can no longer tell the difference? Is this just like fake news? Do we all have to discover the truth for ourselves? No, because money has markets and markets discover truth. That’s what they do. That’s what a market does.

So if you want to know if Bitcoin is fake money or the bolivar is fake money, you have an easy test. You take your Bitcoin and you take your bolivar and you take them to someone on the street and you say, “How much will you give me for this?” And if the official exchange rate for the bolivar is five times less than the unofficial exchange rate, and if the official exchange rate for Bitcoin carries a 20% premium, the market is telling you exactly which money is fake.

The market discovers truth. And no matter how many pronouncements and currency controls and bank bans and bank holidays and demonetization incidents you do, no matter how big you try to make that wall, that dam, once it’s got a little flow, a little pinprick and water is flowing through, it will make that hole bigger and the truth will come out and the truth will be evaluated by the markets, and you can call Bitcoin fake money and the market will say, “Well, I’d rather take that fake money then your fake money.”

On November 8th in India, the price of Bitcoin went up and maintained a 22% premium against the rupee over any other currency in the world. And I always asked when I went to India, why is Bitcoin so expensive here? Why is Bitcoin so expensive? Are the exchanges making obscene profits? No, they’re not. They’re not allowed to do arbitrage. Individuals are doing the arbitrage. And so, I explained it’s not that Bitcoin is too expensive.

If I go down the street right now with US dollars and buy Bitcoin, the price that they will give me is the exact same price I can get in San Francisco. Bitcoin’s price is exactly the same, but if I give them rupees, they’re going to want 22% more rupees. It’s not the Bitcoin price that went up. It’s the rupee discount that went up. The rupee price collapsed by 22% because Bitcoin could be moved across borders to settle the arbitrage difference and then, you’re stuck with rupees and you can’t move them. And the fact that you can’t move them imposes an immediate 20% discount. That money is worth 20% less because it is not portable and portable is one of the three characteristics of what makes currency and you just lost one of them. Actually, two because you demonetized most of it.

Rupees are trading at a discount against Bitcoin. Bitcoin is the stable price. The market is telling you this is more real money than that stuff. And so, the market discovers truth and it tells us, but be ready because we’re going to start hearing this again and again and again. As economies collapse, as currencies get into crisis, and it’s happening even in developed nations, it’s happening in the European union. It could happen here in the US dollar. Who knows? The markets are trying to correct the situation and they’re going to create a flow of money going out into Bitcoin. People will start removing their full faith and credit from the system and putting it in safe haven assets, gold, silver, Bitcoin, whatever.

And as soon as that happens, you’ll start seeing the articles in the newspapers and the news media, the fake news telling you about the fake money. And maybe you can’t tell the truth about what is fake news and what isn’t fake news, but you can always tell the truth about what is real money and what is fake money. And the easiest way to find out is to go out on the street and ask the market, and the market will tell you the truth, thank you.”

The Beginners Guide to Buying Bitcoin using the Square Cash App

Setup a Cash App account and start buying Bitcoin today!

This is the exhaustive guide for buying Bitcoin using the Square Cash app. We will go over each step and what you’ll need to do. Note, this has a know your customer (KYC) process that gets pretty involved, so be ready for that. Also, if you’re new to Bitcoin, it’s advisable that you should transfer your Bitcoin to a hardware wallet, such as a Ledger Nano X, or some other non custodial wallet. You can learn more about that with a quick google search, but this tutorial is just to get you started with buying Bitcoin so let’s get started!

(This was written as of 9/15/2019, Use this app at your own risk!)

Step 1: Download Square Cash app from App Store or Play Store

For this step, be sure you’re downloading the correct app, as of now it looks like:

Cash app iOS

Step 2: Provide Your Phone Number or email Address

Step 3: Verify The Code sent to your phone number or emial

Step 4: Add Bank Information Using Debit Card

Step 5: Enter first and last name

Step 6: Create Cashtag $

Step 7: On the welcome screen, click the icon on the top left

Step 8: (optional) Invite Friends to use Cash app

Step 9: On the Cash App accounts screen click on the BTC Bitcoin icon

(Optional) To earn $5 you can use my referral code SCLSXPK after clicking on the upper left icon, on the account screen scroll down to Referral Code and enter SCLSXPK 

Step 10: At the Cash App Bitcoin account screen click on ‘Buy’

Step 11: (optional) add Face ID

Step 12: Verify first and last name

Step 13: Add your date of birth

Step 14: add the last 4 of your SSN

Step 15: Scan your ID

Step 16: You’ll need to scan both sides of your Drivers License

Step 17: Authorize the bank you’d like to buy Bitcoin with

Step 18: Back at the Bitcoin screen, enter the amount of BTC you’d like

Step 19: Verify ID (follow prompts)

Step 20: You’ll receive a verification Text

Step 21: Verify amount and click Confirm

Step 22: You’ll see the ‘You purchased’ prompt

Step 23: Enable Bitcoin Withdraws for Cash App

Step 24: More KYC for withdraws (only need to do this once)

Step 25: Select ‘reason’ you use Bitcoin (doesn’t matter)

Step 26: Enter main source of income

Step 27: Select employment status

Step 28: Enter job title

Step 29: Enter name of employer

Step 30: Take a selfie

Step 31: You should receive this prompt

Step 32: Once Cash App verifies you, you’re able to withdraw Bitcoin!

Step 33: Go back to your Bitcoin Wallet in the Cash App

Step 34: If you choose to withdraw, you can do so now

Step 35: After selecting withdraw amount,you can send to address by scanning QR code, or copy/paste the destination address

That’s it, You can now use the Cash App to Buy/Sell Bitcoin!

Learn more about The Distillery

The Significance of Bitcoin, Part 2: Proof of Work & Immutability

What Makes Proof of Work Important?

It’s set in stone. The idiomatic expression ‘set in stone’ or ‘written in stone’ have come to signify permanence, unchangeable, absoluteness, and immutability. The best way to conceptualize Proof of Work is to look at examples from the ancient world. The most recognizable records of human history that come to mind are often massive stone architectures such as the Pyramids of Egypt, the Great Wall of China, Machu Picchu, the Aztec Temples at Teotihuacán, and so forth. These structures embody immutability, these structures are Proof of Work. They required massive amounts of man hours, labor, design, and engineering to complete.

These monuments go beyond great structures, they’re also systems of record. It’s no surprise they’re considered important historical artifacts. They signify the greatness of their respective cultures, and often within they contain the cultural history, etched in hieroglyphics, characters, sculptures, and depictions, carved into the edifice. Immutability of this record comes from the fact it would be nearly impossible to re-create or rewrite the history without massive proof of work or evidence of tampering.

Proof of Work in the Digital Age

So, if few things in human existence can truly be considered ‘immutable’ how does this extend to the modern era? In Bitcoin’s case, how do you create an immutable, decentralized, open, borderless, neutral system of money and economic model?

Bitcoin indeed solves this. The Bitcoin blockchain, the immutable system of record, cryptographically secured, backed by a massive distributed network of computation is a digital monument of immutability. Let’s have a quick look into how this works.

Securing the Bitcoin Network

At the heart of Bitcoin’s Proof of Work is the SHA-256 cryptographic hash function. This standard encryption method is what the miners of the Bitcoin network use to compete with each other to construct the next block in the chain by finding taking the ‘header’ of the current block, and finding the ‘nonce’ a random number that when found by a miner, produces a unique deterministic fingerprint of the next block, and the only way to do this is brute forcing SHA-256 calculations using massive computation.

To get an idea of how competitive bitcoin mining has become, there exists across the globe, massive warehouses, full of ranks and rows of specialized mining computers that do nothing but perform SHA-256 as quickly and as efficiently as possible using special ASIC (Application Specific Integrated Circuit) chips.

BTC mining
Bitcoin Mining Warehouse – Source ieee.org

Transactions & Mining on Bitcoin

When a Bitcoin transaction occurs, as in moving any amount form one address to another address, regardless of who controls it, the following process as seen below in Fig. 1 occurs. First, the sender authorizes the transaction, and broadcasts it to the bitcoin network consisting of mining nodes and full nodes. Mining nodes are also full nodes, but full nodes are not always mining nodes. These transactions get added to the memory pool (mempool) and await validation from nodes. The miners then add the transaction to the candidate block they are constructing and if they find the nonce of the candidate block they create the cadidate block (with or without transactions) and broadcast to the other nodes on the network. All the other nodes confirm the transaction to verify that the consensus rules have been followed and the candidate block gets added to the blockchain.

Fig.1 Bitcoin Mining Process – Source tech.eu

But, this fully doesn’t explain the security of the Bitcoin network. If miners are the validators of the transactions, then anyone owning enough miners could potentially subvert the Blockchain, also known as a 51% attack. Intuitively, Bitcoin’s Proof of Work algorithm prevents this. It is algorithmically designed so that it takes the miners, on average, 10 minutes to ‘mine’ a single block.

The massive compute power and randomness required to obtain the nonce prevents having rogue miners fully control the Bitcoin blockchain. The nonce difficulty is dynamically adjusted so that approximately every two weeks, the network checks how fast the miners have worked. If they’ve mined blocks faster (or slower) than expected, the network then automatically modifies the difficulty of the Proof of Work and increases/decreases it to keep the 10 minute block time.

Cutthroat Competition Keeps Bitcoin Secure

Due to the competitiveness of proof of work mining, if a miner finds a nonce for a block it may very well be that another miner has also found the nonce at the same time. During this ‘fickle’ time, as multiple mined blocks propagate throughout the network, only one will survive, the block with the longest chain. Furthermore as a safeguard preventing miners from quickly dumping its newly minted bitcoin before determining the longest chain, the algorithm dictates that the miner cannot spend it’s Bitcoin reward for 100 blocks, and as Andreas Antonopoulos explains:

When you earn a reward check for mining a block, you can’t spend that for 100 blocks. Why? Because for one block, history is fickle, right. After 100 blocks, if your transaction is still in the chain, it is history, right. Think about the Bitcoin blockchain as geological strata. You’re drilling a core sample in the ice in Antarctica, the top ten centimeters are slush, they come, they go, they melt, the wind blows, stuff around, you can’t tell anything. You go three meters down, you’re looking at 100 years of history and that layer hasn’t moved in 100 years. You go 300 meters down and you’re looking at the Cretaceous era and that millimeter thin layer hasn’t moved in millions of years at all. And the way that happens is because layers get deposited on top and compacted. And the deeper they are, the harder it is to change them. Bitcoins consensus algorithm creates a geological history if you like. At the top, the winds blowing and things are very fickle. You go 144 blocks down which is one-day old, the probability of a block changing after 144 confirmations is vanishingly small.

Consensus Algorithms, Blockchain Technology and Bitcoin UCL – by Andreas M. Antonopoulos

Immutability as a Service

This game theoretical model is the heart of Bitcoin, this gives it it’s immutability, the effort involved to launch a 51% attack on the Bitcoin network is exceedingly difficult, and due to the cumulative mining effect, the network gets stronger with every block. Without proof of work it is impossible to modify or change data that is embedded in the Bitcoin network.

An open, global, neutral, immutable, censorship resistant, store of value is a killer application. Asset forfeiture, unlawful seizure, This goes beyond individual stores of value. Where it really gets interesting is that Bitcoin enables the ability of nation states to avoid financial and economic sanctions. This is a game changer. Powerful nations can no longer use sanctions as a weapon.

Governments will try (and fail) to Sanction Bitcoin Addresses


More than anything, the above effort was more of a symbolic gesture, to deter the use of cryptocurrency. Since state actors only can use legislation to try to stop the use, and not actually destroy Bitcoin. Without valid Proof of Work, there really is no way to stop Bitcoin, and even then, Bitcoin is more than resilient to attack, due to it’s Anti-Fragile properties. We will discuss this in an upcoming blog, so stay tuned!

Additional Information on Proof of Work

For an excellent explanation of how mining works see Chapter 6 of this guide .

The Significance of Bitcoin, Part 1: Stealing Fire from the Gods

94,504 bitcoin were moved today in a transaction. That’s $1,000,000,000 transfered[sic] for a $700 fee. No government, bank or third party had to verify the transaction, nor could they have stopped it if they wanted to. The true power of bitcoin. 🔥


Think about that for a second. In an age of financial surveillance, regulations, KYC, global trade wars, negative interest rates, and speculative bubbles, a massive and more importantly, unstoppable move of capital was conducted peer-to-peer with no intermediary, no government, no bank, and we really don’t know who or what conducted the transaction. This is the age of digital currency, this is the future of finance, this is the significance of Bitcoin.

You can view the bespoke transaction here.

In this series, we take a look at the technological significance of the Bitcoin protocol. Invented in 2008 and introduced in 2009 under the pseudonym Satoshi Nakamoto, Bitcoin has emerged from the fringes of the cypherpunk movement to become an unstoppable force in technology and finance.

Prometheus and the Gift of Fire

By Heinrich Füger – [1], Public Domain, https://commons.wikimedia.org/w/index.php?curid=175869

According to Greek Mythology, Prometheus took pity on man’s primitive and fragile state, and stole fire from Hephaestus’s workshop on Mt. Olympus and gifted it to mankind. Prometheus also taught man how to use this newfound technology, ushering great advances is science and metalworking.

Outraged by Prometheus’ theft, Zeus bestowed punishment by having Prometheus chained to a rock and having an eagle devour his liver, to perpetuate suffering, the liver regenerated nightly so the eagle would also return to torment Prometheus.

So how does Bitcoin fit into this? Andreas Antonopolous describes:

“Satoshi is Prometheus. He took money from the banks and gave it to man, and now there’s no taking that back. Once you have knowledge, knowledge is eternal.”

Andreas Antonopoulos – Melbourne Bitcoin Technology Center, 2016

Privacy and Disintermediation

Looking at the privacy model of Bitcoin and you’ll quickly notice efficiencies straight away. Bitcoin eliminates the need for Trusted Third Parties, and Counterparties.

Bitcoin Privacy Model “Bitcoin: A Peer-to-Peer Electronic Cash System”, Satoshi Nakamoto

Rethinking the Concepts of Money

On its surface, Bitcoin appears to have many of the attributes of traditional currencies and stores of value with the obvious advantage that it has no ‘physical form’ and thus no need for storage. Digging further, you’ll notice it’s much more than this.

From a very high level, all Bitcoins are ‘stored’ in virtual addresses only accessible via private/public key keypairs. Software known as ‘wallets’ serve as the user interface for transferring value from address to address. New Bitcoins are created using a Proof of Work process called ‘mining’ where computers try to solve mathematical equations to earn whats called a ‘block reward’ where every 10 minutes new Bitcoins are created on an algorithmic schedule. These newly minted bitcoins are either held by the miner, traded for goods or services, or sold on a exchange for cash.

Now if you’re new to Bitcoin, this may seem like a lot of jargon. Don’t worry if you don’t understand it right away! The important part of this is that anyone, anywhere in the world at any time can without trust, personal identification, credit worthiness, conduct commerce or send value for any reason, regardless of race, color, creed, religion, or even sentience (addresses can belong to software programs!).

Bitcoin Clearing & Settlements

One of the most important features of Bitcoin is the manner in which it eliminates certain counterparty risks associated with monetary exchange. Bitcoin transactions are cleared in near real time on a global basis, as they are made. Until now, this was impossible with the current financial infrastructure. To do this with traditional financial instruments, the only true way to really do this is to physically trade currency for goods and services. And no, PayPal and Venmo, and other such services don’t count, as they are not technically settled instantly, nor are they final!

With the introduction of Bitcoin and other cryptocurrencies, you’re able to create a immutable financial arrangement on a peer-to-peer basis between any two entities, anywhere in the world. You are transferring value over the internet, peer-to-peer, in a trust-less fashion, where the transfer of coins from address to address are rearranged when the transaction is confirmed on the bitcoin ledger which is known commonly as “the blockchain”.