Introduction Flashcards
(21 cards)
What is web 1.0, web 2.0, web 3.0?
Different stages of the internet
Web 1.0 - basic, early stages of internet
Web 2.0 - current (2009-201&)
Web 3.0 - future interent (2025+)
What is web 1.0?
1991-2004
- internet first invented
- “read-only” internet
- mostly static pages
- mostly browsing and searching information (info distributed through web pages)
- advertising was banned
- websites not interactive (not interacting with users generating content)
What is web 2.0
- current stage (2004-2025)
- Communities, User Generated Content
- Lots interaction with websites
- focus on front ends (GUI’s), communities, social media, interactions
- emphasis on design (UI/UX)
- Ajax, Javascript dynamic websites (animations, page changes, content changes, interactions, state changes)
- user data owned by controlled corporations (Google, Facebook, Amazon)
- Facebook, Twitter, Google
- all data on internet owned by centralized companies (posts, tweets, interactions, data owned by Facebook, Google, Twitter, Youtube)
Focus on Frontend (GUI, interactions, animations)
What is web 3.0?
future of internet
- still a new thing, more years before adopting
- cryptocurrency, bitcoin, metaverse
- how is data stored, how is data controlled
- focus on backend ledgers, etc.
- data is shared across a network (decentralized) owned by the network as whole
- data, availability, privacy focused
- immersion over interaction (live in the internet)
- Artificial intelligence, blockchain, decentralization
Focus on backend (data storage, databases, ledgers)
What is the difference between web 2.0 and web 3.0?
Web 2.0
- central company, owns all your data, controls everything
- entire network can go down (controlled by central authority) if server fails, etc.
- Ex. Rogers Telecom company (massive outage, no internet for entire Canadian country)
Web 3.0
- don’t need your data, know who you are, can send money freely
- servers can’t go down, distributed around world, not controlled by single entity or person
- network isn’t provided by one person, factory, server farm
- provided by 100k people running their own nodes (servers)
What is a blockchain?
a theoretially fault proof data storage mechanism (system)
- not reliant on a single entity, company, person
- theoretically impossible to change, hack, cheat
- a blockchain is tracking everything that happens on ledger (log of transactions)
- entire ledger (log of transactions) is duplicated and distributed across 10k-100k machines
- if one node goes down/is hacked, the other machines have the log of transactions (ledger)
- A tamper-proof notebook shared across thousands of computers
- Everyone can see every transaction
- Nobody can go back and edit previous pages
- Even if one copy is destroyed, others still have the full record
Ex. A Bank
- a central authority
- could go in and make your bank balances zero
- if gov approached them asked for all money in account, view what’s inside, they’d have to give it/do it
So what is bitcoin?
a currency (digital asset) that runs on a blockchain
protocol + token (BTC Token) + ledger (blockchain)
BTC Token = unit of value transacted and stored on the ledger (block chain)
Blockchain= the ledger that stores all transactions, making them fault tolerant and read-only
Protocol = defines the rules of the system (how transactions work, how new coins are minted, etc.)
Why does Bitcoin have value?
Scarcity:
- There will only ever be 21 million BTC. It’s hardcoded.
- Unlike fiat money, it can’t be printed infinitely
Security:
- It’s backed by math and cryptography, not a government or central bank.
- Changing a transaction would require rewriting history across 10,000+ machines
Decentralization:
- No one controls it. That makes it censorship-resistant.
- This appeals to people in authoritarian regimes or unstable economies.
Utility:
- You can send money globally, 24/7, without banks.
- It can’t be reversed, frozen, or inflated away.
Belief:
- Like gold or dollars, value ultimately comes from collective belief.
- If enough people treat BTC as valuable, it becomes valuable in practice.
Bitcoin’s blockchain doesn’t run on cloud compute like AWS or GCP so are there a bunch of people with servers (computers) maintaing the ledger from their home?
Bitcoin doesn’t rely on centralized cloud providers like AWS or GCP.
Instead, thousands of independent nodes (servers or personal computers) run the Bitcoin software around the world.
These nodes form a distributed network — like a global, peer-to-peer cloud — where each node stores the full ledger and verifies transactions.
🏠 So… who’s running these nodes?
Yes — some are literally:
- Crypto enthusiasts running full nodes from their home PCs or dedicated servers.
- Mining farms with data-center scale setups (often in countries with cheap electricity).
- Organizations like exchanges or infrastructure providers (e.g., Blockstream, Chainalysis) also run nodes for reliability and analytics.
Each node runs Bitcoin Core (the software) and stores the entire ledger — currently over 500 GB — to validate and propagate transactions.
There is cloud — just not in the traditional centralized sense.
- For Bitcoin and Ethereum, compute/storage lives across:
- Home setups (Raspberry Pi to custom rigs)
- Self-hosted data centers
- Some nodes on cloud providers, yes (AWS, DigitalOcean, GCP) — but not the majority.
- Decentralized cloud platforms (e.g., Filecoin, Arweave, Akash) are emerging to offer alternatives to AWS.
So what is Bitcoin?
Bitcoin is not a file, a coin, or an object. It’s an entry in a shared ledger — updated by cryptographic rules.
There’s no chunk of code that represents a Bitcoin.
You own Bitcoin if you can prove you control a private key that corresponds to an address with BTC recorded in the ledger.
❌ What Bitcoin is NOT:
- A file
- A chunk of code
- A “thing” you can extract and carry
- Encrypted or stored like a document
When you send 1 BTC, what happens?
No Bitcoin “moves” — just the ledger state changes.
You sign a transaction
- like “I, 1A2B, give 1 BTC to 3X4Y…”
This signed message gets broadcast to the Bitcoin network
Miners (or validators) confirm it’s valid
A new block is added, updating the ledger:
- 1A2B… now has 2 BTC
- 3X4Y… now has 1 BTC
Was bitcoin pre-mined?
No — Bitcoin was not pre-mined, and no tokens were distributed in advance.
- Every single Bitcoin has been created through mining — not gifted, preloaded, or funded by VCs.
⛏️ What Is Mining, Really?
- Mining is solving a cryptographic puzzle:
- Every block must meet a challenge:
Find a nonce (a random number) so that the hash of the block starts with a certain number of zeroes (determined by difficulty)
- This takes massive computational effort (Proof of Work)
When a miner wins:
- They broadcast the new block
- Other nodes validate it
- The miner gets a block reward — newly created BTC
How did people get bitcoin in the early days?
✅ Mining:
- Anyone could download Bitcoin Core, run it on a PC, and start mining
-Back then, CPUs were enough (now it’s ASICs or specialized hardware)
✅ Peer-to-peer transfers:
- The first recorded transaction was 10 BTC from Satoshi to developer Hal Finney on Jan 12, 2009
✅ Bitcoin Pizza Day (May 22, 2010)
- A guy named Laszlo Hanyecz paid 10,000 BTC for two pizzas — the first real-world trade
💰 Total Supply & Halving
- Max BTC supply: 21 million
- Mining reward started at: 50 BTC per block
- It halves every 210,000 blocks (~4 years):
- 50 → 25 → 12.5 → 6.25 → 3.125… (we’re currently at 3.125 BTC per block in 2024)
How did Laszlo get 10,000 BTC?
Laszlo Hanyecz was one of the early Bitcoin developers and miners.
- Back then (2010), anyone with a decent CPU or GPU could mine hundreds of BTC in a single day.
- Mining difficulty was very low.
- Laszlo likely mined his 10,000 BTC himself just by running the Bitcoin software on his computer for a while.
- 👉 At the time, those 10,000 BTC were worth ~$41 USD.
- He posted on a forum asking:
- “I’ll pay 10,000 BTC for two large pizzas.”
Someone accepted the offer, ordered him pizzas, and got the BTC.
What is the mechanism of Halving?
As of April 2024, the block reward is 3.125 BTC ($262,500 USD at 1BTC = $84,000 USD)
every ~4 years (every 210,000 blocks), the reward cuts in half:
How many BTC are left to mine?
Total that will ever exist: 21 million BTC (fixed)
Currently in circulation: ~19.7 million BTC (as of April 2025)
Left to mine: ~1.3 million BTC
What happens after all 21M BTC are mined?
No new BTC will be created.
But the Bitcoin network will keep running because:
✅ Miners will be paid in transaction fees
Instead of getting new BTC, they’ll earn the fees users include in transactions.
This mirrors how gold mining slows down, but gold still gets used, traded, stored.
As more people want BTC, but the supply doesn’t grow, price rises. That’s basic economics.
How does scarcity affect BTC price?
Price = Supply x Demand
Bitcoin’s supply is fixed: only 21 million will ever exist.
If demand increases, and supply doesn’t change, price must go up.
Why Do People Expect Bitcoin to Hit $1,000,000+ per BTC?
if BTC is viewed as a global settlement layer or digital store of value.
If BTC reaches $1M, total market cap = $21 trillion
Digital Scarcity
- Only 21 million BTC → supply fixed forever
Institutional Demand
- BlackRock, Fidelity, MicroStrategy, and others now own BTC
- Nation-states (e.g., El Salvador) starting to buy and hold BTC
Stock-to-Flow Model (S2F)
- As flow decreases (via halving), scarcity increases
- S2F models predicted major price jumps after each halving
Global Macro instability + inflation
- BTC as hedge against currency debasement
- Sovereign debt crises → capital flight into hard assets
- Inflation devalues fiat currencies
- Digital-native generations are more open to digital money
When was the most recent halving?
📅 Date: April 19, 2024
⛏️ Block Height: 840,000
Old Block Reward: 6.25 BTC
New Block Reward: 3.125 BTC
The big moves in previous cycles usually occurred 6–18 months after halving, not immediately.
This is Bitcoin’s fourth halving since launch in 2009
What’s the halving=automatic 100x myth?
Bitcoin hasn’t 100x’ed in recent cycles, and it’s unlikely to do so again — at least not from current levels in the same timeframes.
People now expect 3x–10x, not 100x, from each cycle.
Why Some Expect Multiples (3x–10x) Still:
Scarcity + Institutional Demand
- Halving = less new BTC entering supply
**ETFs (BlackRock, Fidelity) now buy BTC daily
**- Demand increasing, but supply issuance now cut in half
**ETF Inflows → Liquidity Spike
**
- $10–20B already entered through Bitcoin ETFs
- If pension funds and sovereign wealth funds allocate 1–3%, that’s trillions of potential inflow
Global Financial System Stress
- Rising debt, inflation, currency devaluation
- BTC positioned as non-sovereign store of value
- “Digital gold” narrative is gaining mainstream traction
Layer 2s & Real Yield
- Use cases beyond just holding: Lightning Network, Ordinals, Bitcoin DeFi (e.g., Stacks, Runes)
- More network activity = more demand = potentially higher value
