Why does bitcoin need to exist?

One way of answering is with another question. Why can't we all just trust each other?

There are, of course, many ways to build financial networks. But all of the alternatives to bitcoin, such as central banks or Proof-of-Stake, require that we trust a small group of managers (who are only human) to do the impossible – wear the Ring of Power without becoming corrupted by it.

Bitcoin's accelerating adoption reflects a desire to be able to trust money when we can't trust each other. That might sound somber, but it's actually uplifting: Bitcoin allows strangers to unload that natural distrust onto a mathematical protocol, and get it out of the way of their personal interactions.

If you know that your money cannot be corrupted by a self-interested group or institution, you can trust it – and you can therefore use it to trade and transact with people you've never met who have all manner of backgrounds, experiences, and cultures.

When people trade with each other, horizons expand and new human connections are made. It's hard to imagine a technology with more positive significance than bitcoin.

News

🤔 SEC Chair: Bitcoin is different

Gary Gensler said what bitcoiners have been hoping to hear: bitcoin is different. He said the Securities and Exchange Commission has "jurisdiction over probably a vast number of cryptos" but "Bitcoin – maybe that's a commodity token." Gensler has been under fire for his lack of action in regulating cryptocurrencies because most are similar to securities and should be regulated by the SEC.

🍕 Bitcoin community celebrates its tasty beginnings

The first time bitcoin was traded for a physical good took place on May 22, 2010, when someone paid 10,000 bitcoin for 2 pizzas. In today's prices, that's $300 million. At the time, the price of 1 bitcoin was .0041¢, or four tenths of one cent.

Before that day, bitcoin had been used for bartering and settling bets online. Soon after, it was listed on open exchanges, causing it to surge to 6 cents per coin. The rest is history. Today, bitcoiners around the world celebrate "Bitcoin Pizza Day" by sharing pizza with friends and family.

💡 Still sore about bitcoin's price dump? Here's some perspective

Leading bitcoiner Michael Saylor offered an analysis of bitcoin and other major asset classes to the growth in M2 money supply, which can be used as a proxy for economy-wide inflation. To outrun inflation, an asset would need to appreciate more than the increase in M2, which was +36% over the past two years. Here are the results:

• Gold +7%

• Nasdaq +19%

• S&P +29%

• Bitcoin +229%

This is a great reminder that hodling and stacking during market downturns is still the wisest move, if history is any guide.

BITCOIN ADOPTION CONTINUES

Japan's second largest bank will offer digital asset custody services. The announcement came soon after Japan's largest investment bank Nomura announced a crypto subsidiary.

Central African Republic launches crypto platform. The second country to make bitcoin legal tender will provide crypto access to their citizens in order to tackle bureaucracy, promote competition, and improve the economy. The President said that "the formal economy is no longer an option."

More luxury brands jump in. Two weeks after Gucci announced they would accept bitcoin payments, fashion giant Balenciaga did the same. A spokesperson said they "anticipate a future powered by crypto and are unfazed by currency market volatility because they are not novel." Other luxury brands following suit include LVMH and Tag Heuer.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week: Bitcoin minimizes trust.

Decentralization is one of the most vital features of the bitcoin network because it allows bitcoin to be incorruptible.

The problem with state controlled money is that it is centralized, and therefore easily manipulated. The few people who control the money supply can increase it whenever they want and distribute new money to whomever they choose. Money flows through political connections before it goes to people who produce value for others.

A decentralized network is better, but usually requires trust among the participants. Otherwise, how could any one person trust anonymous strangers to follow the rules of the network?

Bitcoin solves this paradox with a computing concept called Proof-of-Work. Decentralized nodes ensure the rules are being followed by individually validating transactions and broadcasting their findings to the network. If any node tries to broadcast false information, the others recognize and reject it.

You can even run your own node on any inexpensive computer. When you do, you avoid the need to trust others to validate bitcoin transactions for you, and you help make bitcoin the largest planet-wide, trustless, decentralized network.

Ready to get started with bitcoin? Coinbits is the best option. It's fast, safe, and free to create your account.

COIN CHECK

What is the double-spend problem?

1. When a bitcoin is spent on a different blockchain, such as ethereum

2. When a node and miner both spend the same digital token

3. When the same digital token is spent more than once

4. When a miner spends a digital token owned by someone else

Check your answer at the end of the page.

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ANSWER

3. When the same unit of digital currency is spent more than one time

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