Basics from Alden

Question 1

How are bitcoin transactions secured?

Answer 1

multiple processors encrypt and verify, earning coins and transaction fees in the process

Question 2

Where are bitcoins stored?

Answer 2

Not in any central place - all distributed ledgers in the network

Question 3

How are bitcoins accessed?

Answer 3

through an encypted private key

Question 4

How are bitcoin private keys stored?

Answer 4

often on a hardware device, but can be a memorized seed phrase

Question 5

How does btc have scarcity?

Answer 5

software limited to 21 million coins, protected by decentralization

Question 6

What threatens bitcoin’s scarcity?

Answer 6

any number of competing cryptocurrencies, including government-backed

Question 7

How does the network effect enhance bitcoin’s security?

Answer 7

a low network effect in the form of low adoption and low hash rate makes a coin vulnerable to takeover by a single actor with enough processing power

Question 8

What 2 resources are needed to mine bitcoin?

Answer 8

hardware (special processors) and energy (processing power to solve the puzzles)

Question 9

How are the resources needed to mine bitcoin adjusted with demand?

Answer 9

the difficulty of the puzzles adapts to demand, up or down

Question 10

How is the difficulty of the puzzles related to security?

Answer 10

More difficult puzzles increase security of the network

Question 11

As of 2022, wht advanatages does bitcoin have over other cryptos?

Answer 11

huge network with large hash rate has higher security and trust, first network effect hard to replicate (evidence: not losing a lot of value with FTT crisis)

Question 12

How do bitcoin exchanges and platforms show an advantage for bitcoin over other coins?

Answer 12

Some take bitcoin only, showing increased trust and network effects. FTT contagion is an example why one would want to avoid other coin scams.

Question 13

What happens to bitcoin every 4 years?

Answer 13

the number miners earn is cut in half. decreasing supply (and historically increasing prices with sustained demand)

Question 14

What is the stock-to-flow rate of a commodity?

Answer 14

how many months (years) supply (stock) versus how much is sold in a time period (flow)

Question 15

How does the 4-year halving affect miners?

Answer 15

inefficient ones (older processors, expensive energy) can’t compete (capitulate)

Question 16

What bitcoin exchange does Lyn ALden recommend?

Answer 16

Swan Bitcoin

Question 17

How does the SEC classify Bitcoin?

Answer 17

as a commodity (source: Swan)

Question 18

How does the SEC classify all other cryptos?

Answer 18

securities (unregistered)
(source: Swan)

Question 19

What network provides a payment layer on top of bitcoin’s store-of-value layer that may convert it into a medium of exchange?

Answer 19

the Lightning network (source: Lyn Alden, also on Swan)

Question 20

What is the Dunbar number?

Answer 20

the maximum (humans) in a network, related to size of brain (around 150)

Question 21

What is ASIC?

Answer 21

application-specific integrated circuit (optimized efficiency for bitcoin algorithm)

Question 22

Are CPUs or GPUs used for bitcoin?

Answer 22

not any more, too inefficient

Question 23

What is a 51% attack?

Answer 23

having to do more work than everyone else in the network, to take it over

Question 24

What is used to encrypt a message?

Answer 24

your public key

Question 25

What is used to decrypt a message?

Answer 25

your private key