Bitcoins: the stupid questions you are afraid to ask. Even if you should…

Bitcoin, Etherium, miner, SegWit & BIP 91, ICO…

Any Google search on bitcoins or cryptocurrencies gives numerous results overflowed by cryptic terms.

Everyone talks about it… You feel to be a has-been as your knowledge is limited to ? bitcoin is money on internet ?… and your self-esteem prevents you to ask questions which are, you think for sure, too stupid.

Whatever! I am ego-agile and shameless. I will ask for you these stupid questions to walk you through the bitcoin world discovery step by step. And you will see… there is no stupid question at all.

I never have cash… Is then Euro (or US Dollars or…) a cryptocurrency?

You never have any cash with you and you pay everything by card or money transfer from your mobile. Nevertheless, no… Euro is not a cryptocurrency as it exists in the physical world (perhaps not in your pocket but in someone else’s one) and has legal quotation in countries.

Having less and less cash volume does not turn a currency into a cryptocurrency.

If so, why do banks and governments (and regulators) push for no-cash but not for Bitcoins?

I hope you know that ATMs do not print directly the cash you withdrawal… and that there is no elf filling during the night.

Cash management and distribution are expensive for the banks in terms of security (safe, transport), machines (ATMs)… While you do not want (most probably) to pay any fee for your withdrawals (or as less as possible), banks must reduce their costs as much as possible.

For governments and regulators, cash ban is to avoid untraceable money connected to tax evasion, money laundry and terrorism funding. As each coin and banknote cannot be traced at each step, regulators and government push for electronic transactions (cards, transfers…) and impose very strict controls to banks when it comes to cash.

What you will see in the next stupid questions is that Bitcoin is anonymous and stateless, crossing borders without any control in contradiction to regulators’ essence.

What is exactly a cryptocurrency?

A cryptocurrency is a peer-to-peer value (no third party as banks), existing solely in the virtual world and secured by cryptography.

Behind this short definition, cryptocurrency main characteristics are:

• No existence (no paper money) and no counterpart (no equivalence with gold or other) in the physical world
• A value determined by the user community through demand and supply: no central bank or government instance can influence directly the cryptocurrency’s value
• A volume controlled by the system itself: no government can decide to increase the volume (in example by printing new cash, which impacts the value)
• Exchanges done between people only (peer-to-peer): no imposed third parties as banks
• A security achieved through encryption.

Through these, you must understand one key element: cryptocurrencies are not regulated nor ruled by any governmental organisation or regulator.

Could I create my own cryptocurrency?

Easy!

I woke up this morning and decided to create a new currency: the ThierryDerungs (TDE). With my group of friends, we agreed that:

• mowing the grass for any of us grants 2 TDE: my currency has a value
• as we mow grass once per week, the number of available TDE will increase by 8 each month per member: the volume is self-determined by the user community
• we can exchange them among us as payment for other service or goods: my currency is peer-to-peer
• any of us can pay with TDE by sending a WhatsApp: my currency is virtual
• we secure our message by replacing numbers by letters (120 becomes BCA): my currency is encrypted

Creating a cryptocurrency? Done! As simple as that…

Of course, this community is very limited and my cryptocurrency will never grow in value or have any success outside my (very small) community.

If anyone could create a cryptocurrency (hopefully more elaborated than my TDE), the key is to reach a wide community and to generate transaction volume…

What makes bitcoin special? That blockchain stuff?

There are hundreds of cryptocurrencies around the world (LitCoin, Ether…). Bitcoin has been the first cryptocurrency to make the buzz to a large audience, surfing on several key dreams:

• a mystery wind on its creator(s), Satoshi Nakamoto. We are not even sure if this is a single person or a group…
• a liberty blow, free of banks, central authorities and any third party which could control our money. Just when several affairs and crisis hit the trust in the financial world…
• richness promise as anyone could receive bitcoins for free (see further the explanations on mining). Even if in fact, nothing is for free…

These have been amplified by the Bitcoin’s technical approach. Indeed, Bitcoins rely on the most famous distributed ledger technology: the blockchain.

What? Blockchain and bitcoin are not the same?

No… blockchain is and remains "just" a (brilliant) data exchange technology (if you want to learn more on blockchain, you can read my other post.

https://www.dhirubhai.net/pulse/blockchain-dummies-thierry-derungs/

So… how does a Bitcoin transfer work?

To explain the Bitcoin basics with blockchain notions, the best is to use a tangible physical example. Be aware that, if you have already some Bitcoin knowledge, I will use some shortcuts to keep the explanation clear and simple at this stage. I will inject additional details later through other stupid questions.

Imagine a highway… and to be more specific, a toll-free highway.

Each car has:

• a driver: the Bitcoins sender
• a trunk to put at the money: the Bitcoins

When John Doe wants to send Bitcoins to Jane Doe, he first get his money stored in a box located in any place belonging to him. It could be:

• a shoe box under his bed: John manages himself his Bitcoins
• a safe box at his home: John uses a wallet to store his Bitcoins
• a shopping mall’s storage facility: John has subscribed to a Bitcoin account with a third party

He puts the money in his trunk and drives on the highway to deliver the money directly to Jane:

• Jane and John do not need to know each other: Jane can be a nickname or she can be a he…
• John knows only where to drive to deliver the money to Jane's box, nothing else
• Nobody knows that John is driving his car with money in his trunk.

The free-toll highway is the blockchain and each car is a peer-to-peer and anonymous Bitcoin transaction.

When John inserts his car into the traffic, the transaction is in fact joining a block inside the Bitcoins’ blockchain.

Along the highway, you have many key players

Stations: they are the most important, as they check the cars (all controls, including the fuel) and manage the traffic. They guarantee that each car on the highway is valid (no empty trunk, no fake banknotes) and manage each car in the traffic until its final destination.Who are those heroes? They are the Bitcoin miners or Bitcoin nodes, the most important contributors in the Bitcoin blockchain. I will come back a bit more later on them.

Shopping malls: that’s the places where you can store, manage, exchange and spend your money. They facilitate everything around Bitcoins as they provide wide parkings, easy access to shops, nice and 24/7 storage facility (for your money)… They have been, and still are, key players in the Bitcoins extension and success to open public: Bitcoin exchanges (allowing to buy and sale) and Bitcoin wallet providers (the boxes to store).

Indeed, at the very early stage, without any facilities, Bitcoins requested strong computer and programming knowledge. Meaning that the Bitcoin community was rather small and specialised. Once there had been the first shopping malls, the snowball effect started: non-tech users joined the community, so more malls opened, increasing the number of people and transaction…

The dark side is that it even set bitcoins into danger as the highway started to suffer from traffic jam… but I will come back on this in one of your next stupid questions.

Just keep in mind that nothing is for free… you will pay for each of these facilities. It may be cheap but for sure not free. I will also come back on this.

So… bitcoin is just a peer-to-peer payment?

If John would have done a classic peer-to-peer (or person-to-person, P2P) payment instead of a Bitcoin transfer? In fact there are not so much differences but they are essential:

• John and Jane must both have a money boxes in a common shopping mall (PayPal for example)
• John and Jane cannot be anonymous… indeed, the money boxes must be connected to classic bank accounts (or to a credit card account) to feed and/or retrieve the money
• John do not need to drive to the shopping mall… he just need to call the mall’s employee who will move the requested money from one box to another… for a fee of course
• Jane can then call the mall at any moment to check if she received the money

In this case, there are no stations and the highway has 1 and only 1 shopping mall.

The shopping mall is full of shops (which rent a space in the mall and are not owned by the mall) but all of them have a money box in the mall’s facility. To buy and pay something in one of the shops:

• John will call the mall’s employee to move the requested amount from his box to the shop’s one
• The shop will after call the mall’s employee to check if there had been a money drop from John.

Of course, the mall’s employee works very fast, almost instantly.

Is a bitcoin transfer really so different than a bank transfer?

If John would have done a classic money transfer, there would have been many differences…

• John must have his money box in a specific shopping mall: his bank. And Jane must have also her box in a shopping mall. At the opposite from the peer-to-peer, the malls can be different between John and Jane.
• To have a subscription at his (her) mall, John (Jane) must have provided full evidence of his (her) identity
• Instead of driving himself to his mall, John calls the mall’s employee and ask him to move the wished amount of money to Jane while indicating Jane's mall
• If Jane’s money box is in the same mall (John and Jane have the same bank), the employee just need to move the money from one box to another as for a peer-to-peer transfer. Let’s assume that Jane’s money box is not in the same mall than John.
• The mall’s employee must call a cab from a specific company depending on how far is the other mall. To simplify, let’s say that there is one cab company to drive inside the country, and another one (the most famous being Swift) if any border must be crossed. The money is still put in the trunk but the cab driver sets very strict conditions and asks to be paid in advance. The money transfer is not for free…
• The cab driver will agree to drive only if John’s mall certifies that they fully know him and have controlled the origin from any cash deposit done in John’s money box. No anonymous money transfer… banks must control all information to prevent any money laundry, terrorism black money…
• No toll-free highway… The cab driver must pay a fee. In this case, the toll highway is the different parties involved by the banks to proceed the money transfer, in example: Swift (the used network, meaning the road itself), the clearinghouse (if the transfer is to another bank, they manage the change between 2 cab companies)… All of them are not for free and the bank must pay the requested fees (which are included in costs of your cab).

My son bought some Bitcoins for me. But they are on my PC… Should I do a backup?

Yes.

But your Bitcoins are not on your computer… or even on any computer! Calm down… please do not have any heart attack… you still have them.

We are now at a very important step to understand Bitcoins. As said, they are a virtual currency. When John sends money to Jane, he has in his car’s trunk a signed coupon. See it as a simple piece of paper on which John writes the amount and signs (with his private key for encryption, see a bit further for explanations).

The highway stations (you remember? the heroes who check everything on the highway) checks John’s car and the coupon before to let him go in the highway’s traffic. At the same time, the station records John’s travel (the transaction) in the traffic ledger (the accounting book).

This traffic ledger is available to everyone and you even can take your own copy. The "only" limitation is that you can consult solely the travels where you are the driver or for which you are the destination.

Finally, as John’s travel (the transaction) has been checked and validated by a station, Jane can consult the traffic record and check she is indeed John’s destination with a valid coupon in his car’s trunk (John had indeed the amount of money and transmitted the agreed amount to Jane).

In fact, as soon as you have your first Bitcoin, you join the Bitcoin community and you own a money box: it could be at home (your computer), in a wallet or at a shopping mall. Whatever your choice have been, your money box has an address (your public key) and you have a unique signature (your private key). This is like your home! Everyone can consult and know your home address but you are the only one having the key to open its door.

That’s what you have on your computer: your public and private keys.

All the transactions you participated to (as payer or as beneficiary) are registered in the blockchain. In fact, all the traffic on the free-toll highway has been validated and registered: each time John took his car to send money, each time anyone took his/her car to give money to John. Each validated transaction is recorded in the ledger.

So John’s money box does not contain any money! It contains John’s key allowing him to consult his transaction in the common ledger (which can been seen as the account book).

How John knows how many Bitcoins he has? He just consult the traffic register and, with his private key ask his balance: the sum of all the coupons he received minus all the coupons he generated.

There is only 1 special coupon: the one done when the Bitcoin is created. But this is a next stupid question…

Who creates the Bitcoins? A bank somewhere?

Through the previous questions, you already discovered the shopping malls and their roles to facilitate cryptocurrencies transactions and/or storage. You pay them for any service they provide that you use.

Now, it is about time to tell you more about the stations. Do you remember? Those heroes checking all cars and managing the traffic? They are the so-called Miners.

They are very hard worker and, for now, the transaction fee is very low. So low that (too) many people believe that there is no Bitcoin transaction fee (which is not true but this is a next stupid question)…

As the fees are almost negligible, how do miners survive? I come back to one important cryptocurrency characteristic: the volume (the number) of cryptocurrency is controlled by the system itself. In fact, each time that a traffic portion must be checked (the cars, including their trunk, and the way they are inserted in the traffic), the first station achieving the job is rewarded with the newly created Bitcoins.

The traffic portion is what is called a Bitcoin block: each transaction (each car) is added in a block (the traffic) and the miner (the station) builds the block (the traffic portion) while others check that the block is valid.

An important notion is that the maximum total number of Bitcoins is set to 21.000.000: there will never be more.

Based on the efforts to mine a block, the winner miner (the one who finished first) is currently rewarded by 12,5 bitcoins.

Should I become a miner? Seems that there is some easy money to do…

If at an early stage, mining could be done with classic computers, today’s miners are highly specialised and use specific & performant infrastructure to mine.

Imagine the free-toll highway at the early stage… with 2 or 3 cars per hour, a very low traffic. Then your station can be very small as it will not be too busy.

Now, the number of cars has jumped to several thousands per minute, leading to a highly complex traffic management. You understand that your station is now huge, very well organised and highly optimised to manage specifically cars and traffic.

In addition to this increasing complexity, mining is… a race! The first who has mined a block wins the bet! In addition, access to the blocks to be mined are ruled by a priority system. And this system is based on the computing power you have (which is in fact the hashing power, mandatory to encrypt fast the bocks). Indeed, Bitcoins must remain efficient and the speed to hash a block is crucial. In fact, there is no room anymore for small players…

In fact, today, if you were mining a block with classic computers ("s" is on purpose as you need a lot of processing power), the Bitcoin reward could not cover… your electricity bill… This is why the miners have developed very specific and efficient computers designed for hashing, and why the biggest miners are in countries where electricity costs (and other infrastructure costs) are low.

Who could be the best miner? Well… I should say an electricity producer! Having electricity at the best cost is currently the most important benefit-cost consideration. And there are some miners in this best case.

I heard that Bitcoin is not "Green". Why?

As mentioned, mining Bitcoins is a high electricity consumption process.

Early 2017, the annual electricity consumption for mining was estimated to a bit more than 9 TWh. Mid January 2018, it is estimated to 41 TWh! This is equivalent to the total annual consumption from New Zealand or almost 10% from France’s one (448 TWh in 2016)…

Last, but not least, miners looking for electricity best price go to locations where the electricity production could be at higher pollution degree.

Nevertheless, these figures are estimations and are controversial. The estimation model used is… a model and the calculation method is hotly contested by some. Indeed, following this model forecasts that Bitcoin mining will consume in 2020 more than the U.S., which is a bit hard to believe.

What is for sure is that cryptocurrencies, by their technology essence, contribute to the global carbon footprint. Do they more than a classic currency (when including the printing and the distribution)? Good question to which no one has answered (yet) at my knowledge…

I heard that Bitcoin will end around year 2040. What does this mean?

Firstly, you must understand that 21.000.000 Bitcoins is the ultimate limit. Today (January 2018), there are a bit less that 17 millions of Bitcoins.

Indeed, the Bitcoin volume is increased through the 12,5 Bitcoins reward per mined block.

Knowing that the average number of blocks per day (for now) is 144, the last 4 millions of Bitcoins to be created should reward 320.000 blocks mining. 144 blocks per day means that all should be done in about 2.200 days (about 6 years).

In fact, this calculation is wrong…

The mining reward is indeed 12,5 bitcoins but it will decrease in time. It will be divided by 2 each 210.000 blocks: with 144 blocks per day, the reward is divided by 2 every 4 years.

If you do the math, we will then reach 21 millions of Bitcoins in the year 2048.

Satoshi Nakamoto made several important bets… As the mining reward will decrease and as the mining complexity (and costs) will increase, Satoshi foreseen that mining rewards will not fully pay the miners after about 20 years (year 2029). This will then be compensated by:

- The transaction volume which should then generate enough fees to pay the miners

- The Bitcoin value

As we could see today, these bets seem accurate for now (January 2018) as Bitcoins success is increasing together with its value. Nevertheless, we are still at the beginning… I personally cannot make any prevision on the future. What is for sure is that if anything makes the transaction volume decrease (heavily) or if miners become too constrained for any reason in the coming few years, Bitcoin could collapse. These are not the current trends (far away) but Bitcoin is and will remain very volatile at least for the coming few years…

Was Satoshi not too timorous? 21.000.000 bitcoins cannot be enough for all of us…

A Bitcoin can be divided. The smallest unit, called ? Satoshi" is a one hundred millionth. In fact, there will be 2.100.000.000.000.000 units of bitcoins (2.100 trillions of units).

To compare, January 2017, there were €1.109.000.000.000 in circulation. As the cent is the smallest unit, there were about 110 trillions units…

What about USD? With USD 158.000.000.000.000 (USD 1,58 trillion) in circulation, we talk about 158 trillions units (again USD cents).

So Satoshi was not timorous but… generous! The number of Bitcoin units (Satoshis) are far higher than all euros and USD (banknotes) units in circulation… 

Of course, if we take today’s Bitcoin average quotation (January 2018) at about USD14.000, the Satoshi value is microscopic (USD0,00014 or about a hundredth of USD smallest unit, the cent).

Nevertheless, you must also consider the incredible capacity of Bitcoin’s value increase… USD5,49 the 2nd of January 2012, USD316 the 2nd of January 2015, USD998 the 1st of January 2017 and USD19.343 (top value) the 16th of December 2017. At that pace (but again, I have no divination super power, even if I wish), with an actual total valuation of about USD0,23 trillion (17 millions Bitcoins at average USD14.000), Bitcoin need "only" to multiply ten times its value (and since August 2017 is has more than tripled) to be equivalent to all USD banknotes in circulation.

So… yes… the number of Bitcoins should be enough if it continues its current trends.

Is Bitcoin really for everyone? I heard this is for terrorist and drug dealers… I even heard that some countries want to ban cryptocurrencies.

As in many cases, there are always "bad guys" to use, or should I say hijack, systems with dishonest purpose.

Cash has been a worldwide fight against black money, tax evasion and terrorism financing. Nevertheless, cash still exists… What has been done across almost all countries through laws and regulations is mainly to prevent big cash amounts to travel anonymously and/or be injected in the economy without knowing its origin. This sounds simple and easy but has been a very long, constant and huge efforts for all countries…

As Bitcoins, and most of the cryptocurrencies, are anonymous and borderless (can cross countries without any control and/or limitations), we could consider them as a dangerous step-back if we compare to cash control. Nevertheless, this is not fully true… and not fully false…

You cannot live today solely with Bitcoins: have your salary, pay your mortgage and credits, do all your groceries and shopping, pay insurances…

You remain connected to traditional currencies and need them to buy and sell your Bitcoins. At least today, at the start and/or at the end of your Bitcoin adventure, you must go back to a currency under regulation.

At the same time, you could have illegal activities and use bitcoin (or other cryptocurrency) to hide yourself. Imagine a drug dealer selling on internet (the darknet as Tor, the anonymous internet part, is unfortunately full of illegal activities offering) and be paid with Bitcoins. Then he can follow many path to move his Bitcoins across countries, buy legal goods and resell them in classic currencies…

Is this a fantasy? Just read about the Silk Road site (online drug market): after its closure in 2013, US government sold the ceased 144.000 Bitcoins in 2014 and 2015.

So again… even if the shortcut to associate cryptocurrencies to illegal active ties is controversial (and too simplistic), we cannot deny that it could be currently a fertile ground. But should we throw the baby out with the bath water? Surely not…

Nevertheless, at my very personal point of view, claiming that Bitcoin freedom must remain as it is today is exactly what sets Bitcoin existence in danger… With a knife, you can be a Top Chef but also a murder. There is no point to forbid knives but many to prevent misuses… Finding the right balance is the key exercise for the regulators.

Why is Bitcoin’s value varying so much?

At launch in 2009, Bitcoin value was… USD 0,001.

It took until February 2011(almost 2 years) to reach USD 1. Ridiculous? Well… I do not know many assets which values increased from 100.000% within 2 years… Do you?

In fact, Bitcoins pricing principle is very simple: it is based on demand and supply.

A good example is Bitcoin price jump in the fall 2013. The value has been multiplied by 10 when Chinese suddenly started to buy Bitcoins massively.

Another very recent example… Early January 2018, South Korea (followed by China) strongly reacted against all crypto currencies. In fact, its regulator is determined to regulate strictly the cryptocurrencies to curb speculative investments. But at the same time, South Korea’s Minister of Justice said they were preparing a domestic ban on all cryptocurrencies.

Then the 16th of January, a report leaked that China (after having already blocked ICO and domestic exchange) is about to shut online access to all Bitcoin trading services by blocking wallet services and exchange websites.

The reaction has been immediate… massive sell in South Korea and China made Bitcoin price dropped by more than USD 1.000 in just 1 hour (and the other cryptos also dropped, even strongly)… When December 2017 was the Bitcoin’s price record at about USD 20.000, 17th of January sees price opening at about USD 11.300…

You now understand that cryptocurrencies are volatile. Any event can generate massive buy or sale transactions, impacting immediately the value. But this is as any value… equities, or physical currencies are the same!

Why is Bitcoin highly volatile? 16Mi Bitcoins for 14Mi wallet holders and, still, a too low Bitcoin value… under USD 20.000, many wallet holders are still buying entire Bitcoin instead of fragments, pushing Bitcoin’s scarcity. This leverages strongly the pricing impact of any transaction volume variation: demand or supply are, today, always extreme.

Will Bitcoin volatility be high for ever?

This is difficult to say… My very personal prediction is that its volatility will decrease when Bitcoin value will reach USD 100.000.

Why? Because most of the transactions will then be on Satoshis (remember, a Satoshi is one hundred millionth of Bitcoin), increasing the supply volume which will better balance the demands volume.

You could wonder why Satoshi Nakamoto (the Bitcoin creator) limited the number of Bitcoins to 21 millions… Why not 21 billions or even trillions?

Only 21 millions of Bitcoins is in fact a very clever decision from Satoshi Nakamoto.

Indeed, you must remember that Bitcoin’s price is determined through pure demand & supply. To start increasing Bitcoin’s value, it was mandatory to:

• limit the availability (what is rare is pricy)
• allow that a small number of transactions (compared to USD 5,1 trillions daily trade volume on currencies!) impacts strongly the pricing. Rather small demand increase pushes strongly the value as supplied Bitcoins are scarce
• inject slowly new Bitcoins to avoid breaking the demand and supply balance
• decrease the number of new Bitcoins in time.

This is the brilliant bet from Satoshi Nakamoto: hope that Bitcoin price will be high enough when the new Bitcoin creation will decrease or end.

And by that, make the Satoshi as the trade unit instead of the Bitcoin itself. Only the future will tell us if it will succeed or not…

How is the Bitcoin’s price calculated? By who?

As mentioned, Bitcoin price is determine by supply and demand. You must understand a very important factor: there is no central bank or any institution to regulate the rate.

Indeed, traditional currencies are strictly managed by central banks which can buy or sell their currency to counter balance volatility. There is too many currency sale (dropping down currency’s value)? They buy massively to balance the supply and demand. Too much buy (increasing the quotation)? They sale their reserve to compensate.

And they do these also by buying foreign currencies to regulate the exchange rate. Few years ago, when euro rates were declining strongly, Swiss National Bank decided to fix the CHF/€ exchange rate through buying & selling euros. Why? to fight against a too strong swiss franc which hurts country’s industries for their exportation…

Nothing like that for crypto currencies…

The important factor to know is that Bitcoin’s price isn’t set by anyone in particular. It’s set by the market, and to make things even more complex, it varies.

Indeed, Bitcoin’s blockchain does not calculate itself in any way the Bitcoin’s value.

In fact, each exchange calculates their own price based on their own volume. If you google Bitcoin price, you will find different rates on the exchanges like Kraken, Bitfinex, Gemini….

If you look to Bitcoin indexes, you will also see variations. If they gather prices from several exchanges to average them, each index uses different exchanges for their data.

To trade bitcoins (or any other crypto), I strongly advise you to look to several indexes (not only on your buy/sell day but also on the past) and then choose carefully your exchange place (not only for the rates but also for the fees… this will be a next stupid question…). Indeed, the price of bitcoin fluctuates (highly) in the moment, depending on who you talk to.

Does all the bitcoins belong to Satoshi Nakamoto?

Of course not. Any cryptocurrency is not globally owned by anyone as a "classic" currency is by its country (or by an association of countries as for euros).

What is for sure is that the first million of Bitcoins is owned by a single person (or group of person). How? As explained, the new Bitcoins are created to reward the miners working on the Bitcoin’s block. Bitcoin’s blockchain being an opened ledger which you can freely consult, some people analysed the first 36.258 blocks (when the mining reward was 50 Bitcoins per mined block) and determined a path indicating that a wide set of these blocks seems to be mined by the same computer (“seems” as the information is anonymised but some fields allow to determine is different blocks have been mined by a same entity/computer).

As that computer mined the very first block and as the Bitcoins rewards from that computer have never been sold (showing complete trust in Bitcoin), analysts assume that this computer belongs to Satoshi Nakamoto.

There is no certainty but it is widely admitted that Satoshi (again, we do not know if he is a single genius person or a group of brilliant people) owns currently about 980.000 Bitcoins.

And the remaining 16Mi bitcoins belongs to all the other wallet owners.

Can I loose my Bitcoins?

Yes.

As explained, your first Bitcoin transaction provides your private key. After, for any transaction, you will use it. If for any reason you loose your private key, you will not be able to access anymore to your Bitcoins and there is no way for anyone to regenerate your Bitcoin private key.

Let’s take back the example with your home. You are the only one able to open the entry door with your home key. The important difference with cryptocurrencies is that there is no locksmith to force the door (and let you in), no way to replace the door and no possibility to create a new key without the original one. What can you do in the crypto world? Build a new home and forget all your belongings inside you previous home…

The good news is that, as for your home key, you can make copies of your private key and store them in several safe places.

I insist very strongly on the “several safe places”. Do not trust your computer (it can burn or be hacked) or a paper (you can print your key but a paper is easy to loose).

Moreover, do not trust a single wallet and choose very carefully your wallet provider! There had been several attacks on some wallet providers resulting in either all private keys erasure (the wallet owners lost their keys… definitively…) or in stolen private keys. Last but not least… there had been scam cases…

Never forget: Bitcoin (and other cryptocurrencies) are not regulated. There is no organisation (as bank regulators) to impose security level or service guarantee or… Without regulation, there is no way to verify that a wallet service is reliable.

Some example? Sadly, I have some...

Fraud case: MyBitcoin was a popular web wallet provider. It suddenly disappeared in 2011… with all its clients’ bitcoins…

Ponzy scheme: Bitcoin Saving & Trust offered high interest rates but the new deposits were just used to pay the interests to the other clients… The shutdown in 2012 did cost about 265.000 bitcoins.

Theft case: Mt Got exchange had been hacked in 2014 and 850.000 bitcoins were stolen in 2014.

Theft and fraud (at my very personal opinion) case: in 2016, Bitfinex announced that they had been hacked with 120.000 stolen bitcoins. What I personally consider as fraud is that Bitfinex reversed there losses (about USD 72Mi) to… their customers! By decreasing by 36% the value of their deposits…

Which Bitcoin wallet should I choose? My friend has a cool one...

There is plenty of exchange places and/or wallet providers, and new ones pop-up all the time.

If I cannot recommend you one wallet provider (sorry… honestly I will not take that risk…), I can provide key principles to consider while choosing yours.

Never ever consider a web wallet which stores your private key unencrypted and/or encrypts your private key on their site.

Be aware that a password (or any other strong authentication) to access your wallet is definitively not enough. The wallet you choose must absolutely allow you to encrypt your private key on your computer (with your own password) before storing it in the wallet.

And to be really safe… the encryption on your computer should be possible totally offline (having your computer disconnected from the web) to ensure at best that the password you use to encrypt is not sent to the wallet provider in the background… In fact, the encryption should result in a separated encrypted file which will after been sent by yourself to your wallet. This is not a full safe guarantee but at least a better one…

Read carefully the terms and conditions for the wallet.

I know that’s boring (and often difficult to fully understand) but it is absolutely a must do. Do not trust friends (“take that one, it’s nice”) except if he is a cautious lawyer understanding bitcoin.

Why? Wallet providers are not regulated and you do not know where they are located! They can insert in your agreement terms like “in case of hack, we are not responsible and you will pay our losses”. Shocking? Unbelievable? Well… that’s what Bitfinex did (go back to “Can I loose my Bitcoins?”).

Prefer a well known and long lasting provider.

I know... this is not very friendly to the startups launching brilliant wallets, but this is about storing my money. Be aware that even so, risks remain…

Bitfinex case is there to demonstrate…

Kraken had been down for 55 hours recently (January 2018). No Bitcoin theft (just a difficult software upgrade) but the unavailability occurred just when Bitcoin’s price was dropping (and others as Ripple were growing). Platform availability is important and, again, not guaranteed with the lack of regulation (Kraken terms and conditions says that they are not responsible in case of loss due to their platform unavailability…).

Last but not least: keep a copy in at least a second safe place…

Print it (and split the pages in different safe places)! Tattoo it in several parts split on your body and on your family bodies (it’s a joke… don’t do that, the private key is very long…). Seriously? Just copy it on a dedicated usb key (preferably encrypted) that you store in a very safe place.

Is bitcoin really for everyone? I heard this is a kind of investment product…

Reading some press or listening to your friends could make you believe that Bitcoin (or any other cryptocurrency) is easy, fruitful and for everyone.

I strongly recommend you to consider any cryptocurrency as a high risk investment.

As you could have seen already for a “simple” wallet selection, do not improvise yourself as a Bitcoin trader.

My very personal recommendations are that you must

• learn and understand what is a cryptocurrency (including the used blockchain technology). If you have read this post until here, you have done already a good move on that.
• google and read what is ongoing on Bitcoin. Because of its high volatility, you cannot check information once a while…
• select very carefully your wallet and/or your exchange place. I again insist: read very carefully all terms and conditions.
• play with the idea for a while… make your own simulation and do not rush suddenly to any cryptocurrency. Never ever improvise yourself as a crypto trader from one day to another. Even if you read some very positive forecast… Anyone predicting a Bitcoin price (short, mid or long term) does it with a very (very very very) high prediction error probability. Indeed, at the opposite of stocks, analysts cannot base their prediction on companies expected revenues… Based on several analysts predictions for 2018 (published in January 2018 as many of them revise heavily their predictions many times…), Bitcoin price could be by end 2018 between USD 2.000 and… USD 500.000! You want my personal prediction for sure? Well… I predict that Bitcoin price will vary a lot and will be almost unpredictable…
• Last but not least, again, keep in mind that bitcoin and all other cryptocurrency is a high risk investment. You can win as much as you can loose a lot. Please… do not invest your pension in it…

Investment must be a wise decision with always diversified and balanced investments accordingly to your knowledge (you must know what you do) and risk appetites. Always be aware of what you do and evaluate what is suitable to you (and not to siren songs that you could ear…).

I heard that Bitcoin fees are very low, almost free. True?

Yes and no…

If the miners are paid by the system when they mine a block, they also receive the transactions fees. As they choose which transactions they include in the block they mine, they will obviously pick the transactions providing the best fees total while fitting in the block size.

Who decides the fee? Just you… And this is a very tricky part. Luckily for you, there are facilities to calculate these fees. Most of the wallet providers include a tool which calculates at best the fee you should include for your transaction.

I think it is important to understand how the fee mechanism is working.

Let’s start first the explanation through a simple example… Imagine that the miners are a new delivery service allowing you to drop your box and fix yourself the delivery price.

Whatever the number of boxes waiting for delivery, the truck starts their trips at regular time and are already paid for them (this is the system fee of 12,5 Bitcoins to mine a block).

As there is some space left in the truck, the delivery service tries to fill it as much as possible with the boxes waiting for a delivery. For this, they follow some rules while their goal is to have a full truck with a maximum of revenues:

• the tiny small boxes have a fix price and are managed last: they will be used to fill the very last small available space. Indeed, whatever the box size, it requests handling and the delivery service wants to be dissuasive… You will see that transaction under 0,01 Bitcoin have a special fee treatment.
• to set priorities, the delivery service considers the waiting time of each box and each sender's loyalty. If your box has a high priority and if there is available space in the truck just when he must leave, the delivery service could take your box for free. You will learn that the age of each Bitcoin in your transaction is important.
• the goal is to fill all remaining spaces in the truck. Obviously, the box size is very important and the largest one should pay more. You will see that depending on how you build your transaction, its size can vary. In case of over-size, the transaction fee will increase.

Simple example but which contain the 3 rules used to calculate Bitcoin transactions fees. Let’s move now back to Bitcoin explanation.

Before starting, you need to understand what is called an input and an output.

Let’s say that you have bought bitcoins several times: 4 Bitcoins then 2 then 2 and finally 80 times 0,1 Bitcoin. Your total is 15 Bitcoins and your wallet contains 83 lines (one per received amount).

When you do a transaction, you must choose which lines you will combine. The number of lines you combine is what is called the number of inputs.

Bitcoin is not as classic currencies on a bank account! On your bank account, you can have many debits and credits which result in your account balance. Then you can do any payment accordingly to your balance (with or without credit facility): you only check your transaction amount. You do not combine different lines (received amounts) to build up your transfer. When it comes to Bitcoin, you work very differently.

If your transaction amount is 7 Bitcoins, you have 3 possibilities of selection:

• 4 + 2 + 10 times 0,1: your transaction has 12 inputs.
• 70 times 0,1: your transaction has 70 inputs.
• 4 + 2 + 2: your transaction has 3 inputs but the amount exceeds what you want to send. You will then receive back a change of 1 bitcoins: your transaction has also 1 output.

Let’s get back to the fee calculation. There are several rules.

First, if your transaction is less than 0,01 Bitcoin, the fee is automatically 0,0001 Bitcoin.

When Bitcoin price was USD 200, there was almost no 0,01 Bitcoin transaction (equivalent to USD 2). But even if, the fee was USD 2 cents… Peanuts! With a Bitcoin at USD 14.000, this is another story! Any transaction less than USD 140 has a fee of USD 1,40. But this is only the starting fee…

Secondly, the age of your bitcoin is important: older Bitcoins (meaning the ones you have since long) have a higher priority. As the fee you decide is to determine your transaction’s priority (to be considered by miners), you should choose preferably your oldest Bitcoins as input for your transaction.

The priority is calculated through the sum of each input amount multiplied by its age, divided by the transaction size. If the result is less than 0,576, a transaction fee is requested. If over 0,576, your transaction could be free but the fee you could add will still incentive the miner for a faster inclusion…

Finally, the size of your transaction is key: the more you have inputs and outputs in your transaction, the bigger it will be. If the size of your transaction is under 10.000 bytes, and if your priority is over 0,576, your transaction can be for free.

Otherwise you must pay a fee of 0,0001 Bitcoin per 1.000 bytes. How is the size calculated? Very simple: 148 X (number of inputs) + 34 X (number of outputs) + 10.

If we take the 7 Bitcoins transaction built with the 70 inputs (70 times 0,1 Bitcoin), the transaction size is 10.370 bytes. Your transaction fee is then 0,0011 Bitcoin (if the Bitcoin price is USD 14.000, the fee is USD 15,40).

As you can see, Bitcoin transactions are not always for free, fare away! And the more Bitcoin’s price will increase, the higher the fee will be.

• in USD (or other currency) as the fee’s increment is in Bitcoin. Never forget when you are happy to sell your Bitcoins with the highest value that the fee will be automatically higher. Stupid to say but still important to underline…
• in Bitcoins as people will buy more and more small Bitcoin portions while trying to sell in once. Imagine the Bitcoin price at USD 100.000. As an investment, you invest (again, do not forget that it is a high risk investment) often small picks of 0,001 Bitcoin (trying to buy each time that the price is lower). Then arrives the D Day to sell the 1 Bitcoin you have saved: 1.000 inputs result in a transaction size of 148.000 bytes. The fee is then 0,0148 Bitcoin… USD 1.480!

This last example is of course a fantasy but, today (mid January 2018), be aware that the average fee is about USD 28 and did hit the USD 55 record the 22nd of December 2017.

Last but not least, there are could be additional fees on top of the transactions fees (the fees to the miners to proceed your transaction).

You can also have:

• subscription cost for your wallet (not all of them are free) and/or account fees (some even invoices fees per input registered in your wallet). Again, I strongly recommend you to read carefully the terms and conditions (and the price catalog) when choosing your wallet…
• conversion fees. Again… read terms and conditions as the conversion fees and/or rates could generate very bad surprises by increasing a lot your total transaction fee.

It is not rare at all to read on blogs or on social media, people complaints about outrageously high fees for small Bitcoin transaction (buy or sell)… even USD 120 for selling 0,1 Bitcoin (at that time, 0,1 Bitcoin was about USD 1.600).

Obviously, this is not solely the transaction process fee (which could have been for free or about USD 16)… I have sadly seen few wallet/account providers billing 2% per transaction with on top a 1,35% conversion rate! In the previous sad case, the USD 1.600 equivalent transaction costs already USD 53,60 (32 + 21,60)! And this is without the transaction processing fee…

Are Bitcoin transactions in real-time?

Not at all… The time to transfer Bitcoin between wallets varies from transaction to transaction. Through the delivery service example on fees explanation, you could already suspect that…

• the service considers priorities between the boxes to deliver.
• the available space in the truck is limited… All waiting boxes cannot enter the truck. The service wants to maximise revenues. Between all the waiting boxes, some will just wait until they have a priority high enough…

Back to the Bitcoin transactions. Through the miners, they need to be approved and, for obvious security reasons, validated with 6 confirmations. This is an extended 4-eyes confirmation: the work done by one must be checked by others to avoid any fraud. It is only at the end of these confirmations that a transaction is completed.

As for the delivery service example, there are 2 factors influencing the transaction time

• the transaction volume (the number of boxes and the available truck space), meaning the network activity. The more transactions to process, the longer each transaction takes. There are a finite number of miners and there are a finite number of transactions in each block. 
• the transaction fees. Miners prioritise transactions by the fee they receive for confirming them. With a higher fee, a miner is more likely to process which decreases the transaction time.

As mentioned earlier, a Bitcoin transaction needs 6 confirmations from miners before it is completed. As the average time to mine a block is 10 minutes, you could expect a transaction time of about one hour.

But… the recent (2016, 2017) Bitcoin’s popularity boom has increased so much the transaction volume that the confirmation average time jumped recently between 30 minutes up to… 16 hours!

Coming back to my blockchain highway example, the traffic is congested, even… stuck! Remember your last car trip at holiday’s black traffic days and you can easily imagine that the travel time could vary a lot. You will see in a next stupid question how Bitcoin community has worked to solve this issue.

For now (mid January 2018), Bitcoin transaction time average is about 3 hours. But it had been up to 10-12 hours in average early January 2018. And again, these are averages with peaks up to… 60 hours (yes… 5 days) the 1st of January.

How can I spend my Bitcoins? Could I use my credit card?

No… your classic debit or credit card does not allow you to pay in Bitcoins in (e)shops You can use them to buy Bitcoins (as several wallet providers and exchange places allow that) but not to spend.

But…

Yes... there are some account/wallet providers which offer a specific debit and/or credit card linked directly to your Bitcoin account/wallet. And there are also cryptocurrency cards providers.

You must be aware of a very important characteristic of all these cards: when you use them to pay, you are always doing a transaction equivalent to an international payment.

To pay your hotel bill in USD, the Bitcoin debit card provider:

• uses your Bitcoins from the account you have with them. This means that you must transfer (some of) your Bitcoins to a third party which is your card provider.
• converts the bill amount to Bitcoins. Is Bitcoin’s price just then falling? increasing? In fact… you should check Bitcoin quotation before paying your bill… Imagine a price drop of 30% just when you were about to pay your bill!
• applies a conversion rate… up to… 3%!

And in addition to that, Bitcoin cards are rarely for free… usual monthly fee is USD 1.

This is for debit but you can also have a Bitcoin credit card. Be aware that these credit cards are often pre-paid credit card. In fact, from your Bitcoin account, you will sell Bitcoins to load up-front your card.

What I prefer in this approach is that you master fully when to sell your Bitcoins. Of course, the disadvantage is that you have to foresee the amount you need on your card. When you have spent all the money on your card, it takes some time to reload it…

You know now that you can have a Bitcoin card. You want one? Perfect! But check:

• again very carefully the terms and conditions
• not only the maintenance fee (the monthly fee for the plastic card itself)
• also the shipment cost… some card providers bill crazy costs to ship your plastic card…
• the applicable conversion rate
• any hidden cost as some could also request fees for… the account itself!
• which exchange place they rely on (as this is about selling Bitcoins)
• finally all classic card conditions such as insurance terms…

What are the Bitcoin futures?

First a short explanation on what is a future. Futures markets allow traders and investors to take a risk by selling commodities and future contracts at a later date with a price already set.

Let’s imagine that you are an apple producer. A buyer could contact you during winter to buy your summer production the 1st of September at a specific price of USD 2 per kilogram.

Your buyer is in fact betting that he will find apple sellers in September willing to buy at a higher price than USD 2: the higher the price will be, the higher profit he will make. If the price falls under USD 2, the buyer will loose money. And if no ones wants any apple… the buyer could loose a lot!

What’s in for the producer? She/He is sure to sale her/his production and to be protected against over-production (demand & supply will then push the apple price under USD 2).

Coming back to Bitcoin Futures, the trader (the apple buyer) speculates on future Bitcoin’s price and ultimately takes a gamble on its unknown price volatility.

The futures market allows traders to bet on whether Bitcoin’s price will rise or fall, without actually owning them.

I heard a lot about ICOs and warnings on them. What’s that?

ICO is for Initial Coin Offering.

Do not mix up with IPO… I heard too many times that an ICO is “just” an IPO in cryptocurrency: not at all or at least this is a too simplistic (and wrong) shortcut…

First, what is an IPO?

IPO is for Initial Public Offering, used by private companies to become public. It is the first sale of stocks issued by the private company.

When proceeding the IPO, and of course once done, the private company becomes public (meaning that anyone can buy their shares on the stock market) and is subjected to strict rules and regulations: have a board of directors, provide quarterly financial and accounting reports (which can be audited)…

What is an ICO?

An ICO is indeed to raise funds but is done by the candidate through the creation of a new cryptocurrency, also named as “token”. To participate to the ICO, the participants buy the tokens with another cryptocurrency (very often Bitcoins) or with “classic” currencies (as USD or euros).

If the candidate does not reach its fund raise target, all the collected money is returned to the participants. If the candidate reaches its fund raise target, the ICO is completed by the creation of the tokens. Then:

• the candidate invest the collected money in his/her company for its project
• the participants can immediately trade their tokens on an exchange
• a new cryptocurrency is born.

An ICO is much more similar to a crowdfunding campaign. There are important differences compared to IPOs:

• ICO fund raise is done through the creation of a new cryptocurrency. Even if the company is a cryptocurrency provider, its IPO would be exclusively to buy its new shares managed by a stock market.
• the ICO participants can invest with another cryptocurrency. IPO investors buy the new shares exclusively with “classic” currencies (USD, euros,…).
• ICOs are not regulated in all countries countries In the U.S., for example, ICOs are considered as an IPO and must follow now the same rules.
• initially for start-ups fund raise, ICOs can be used by public (but more and more countries do not allow) and private companies. This has been, and is still, a major concern for many regulators. Indeed, a public company could use an ICO not only to raise funds (which should have been done through a ruled additional IPO) but also to manipulate their stock quotation or worst… someone can launch a (fake) ICO in the name of the company (which is not aware about it) to push wrong information to the public about the company. Why? To manipulate the company’s quotation to sale or buy its stocks.
• the ICO candidate must only publish a whitepaper to state its goals (describe the project, what it will deliver), the requested investment (how much they need to achieve their goals), the ICO duration, how many tokens they will keep (equivalent to how much they invest themselves in their project) and which type of money they accept (other cryptos as Bitcoin and/or classic as USD). But… As ICOs are not regulated, who checks that the company exists or that the project is real or…
• most of the time, the ICO candidate has… just the idea and a piece of code to manage its cryptocurrency. For an IPO, the company must have established business, clients and assets, and must generate already revenues (even if not enough).

As you could understand, there are many concerns on ICOs while they remain a perfect tool for their primary usage: allow startups to easily raise funds.

Indeed, as ICOs are not regulated (except in few countries) you can have:

• an ICO by a company which does not exist. The crook collects the funds, of course exclusively in another cryptocurrency, and… disappears with the money.
• the company could exist but declare bankruptcy during the ICO and… vanish with the money.
• a crook could launch an ICO on any existing company which is totally not aware about that. If it is a public company, the fraudster could try to manipulate the company’s stocks quotation. Or, for both public and private companies, the con man tries to, again, run away with the collected money.
• a useless new cryptocurrency… most of the ICOs’ ones have no business interest (as Bitcoin, Ripple… could have) as the candidate has no asset to put in the balance.

Luckily, as for crowdfunding, there are serious players providing an ICO marketplace with:

• rigorous due diligences on the candidates
• clear and strict processes to collect the funds, check the tokens creation, return the funds (if ICO target is not reached)…

As said several times, cryptocurrencies must be considered as a high risk investment.

ICO, as it is about investing on a startup’s project, puts an additional high risk on top of the crypto’s risk.

Before considering to participate to any ICO, I strongly recommend you to:

• read, learn and understand in depth not only the cryptocurrencies but also the market, the key players and the ICOs
• play with the idea and never jump on it
• select carefully the ICO market place and... ready all terms and conditions
• be fully convinced by the startup and/or its project: as for crowdfunding, you must be a believer about the idea
• keep always in mind that you enter a high risk investment jungle…

Bitcoin community seemed hectic in 2017 about some tech stuff… SegWit, Lightning… What’s that?

As you have understood through the other questions that Bitcoin transaction volume increase raised a critical issue… the transaction time.

Many people believe that Bitcoin is a free real-time currency. You know now it is not (always) for free and surely not real time:

• the size of the Bitcoin blocks is limited, initially to 1Mb
• each transaction has a size and the number of transactions in a block is limited
• the number of miners is limited

All these together limits the Bitcoin capacity at 3 to 7 transactions per second with at best a transaction average time of 60 minutes (10 minutes per block, 6 validations in total).

You want to compare? In 2016, Visa processed and average of 1.667 transactions per second… with an average process time of 130 milliseconds…

Speed is THE critical issue to solve for Bitcoin (and for other cryptocurrencies). Back to my blockchain highway example…

The traffic has increased so much that the 2 lanes highway is most of the time jammed. Most of the time, your usual 10 minutes trip takes now hours… What could you do?

Expand your highway with additional lanes.

Debate has been intense in the Bitcoin community as expanding the block size requests more power from the miners.

If that solution could seem “simple” (but in fact it is not…), the most discussed drawback is that small miners have not the capacity to mine very large blocks. Imagine the small highway station which should expand 8 times its parking and all its services capacities… Indeed, 2Mb blocks are affordable for most of them (but does not expand so much the volume capacity) but community members were discussing to go up to 8Mb.

Why is the number of miners a sensitive topic? To avoid that a too small number could take the control of the Bitcoin through alliances (and decisions such as on fees) which could be against the freedom and best interest of the community.

Build a brand new large highway.

As for the expansion, the disadvantage is for the small miners… this time not only for the block size but also for the workload to connect to the new blockchain: this is about building a new highway station…

Add a secondary highway in parallel for a part of the traffic: SegWit solution

As you have learned, the transaction size is determined by the number of inputs and outputs. But in the transaction, the signature data takes about 65% of the space.

The solution is then to use the current highway for the transactions themselves and build a new parallel highway for the signature.

Called Segregated Witness or SegWit (or BIP 141 for Bitcoin Improvement Proposal 141), this solution goes together with a block size increase to 4Mb. In addition, it solves also another problem (risk) which is the transaction malleability (the possibility to alter a transaction).

Use many alternative roads and come back to the highway only when needed: the Lightning Network.

To explain this as simple as possible, let’s imagine that you are a coffee shop. How could you allow your clients to do micro payments in Bitcoin to buy there daily coffee? You cannot do Bitcoin transactions… as the fees would be higher than the cup of coffee itself! And your clients cannot wait 60 minutes up to several days that their transaction is completed to receive their coffee!

The solution? You open a so-called private channel with your client. You can see it as a pre-paid Bitcoin wallet between the shop and the client. When the clients loads it with 0,1 Bitcoin, the pre-payment transaction is recorded in the blockchain: 0,1 Bitcoin for the client, 0 Bitcoin for the shop for a duration of 1 year.

Then the coffee shop and the client can do as many transaction as they want between their 2 connected wallets at the maximum speed allowed by the wallets themselves: the Bitcoin blockchain is not involved.

Everyday, the client buys a coffee at 0,0001 Bitcoin. After the agreed period of 1 year, you close the private channel through a transaction which will send 0,0365 Bitcoin to the shop and return 0,0635 Bitcoin to the client.

In this case, the 365 coffee purchases requested only 2 transactions on the Bitcoin blockchain and all purchases could be done in real time (“just” depending on the wallets capacity and speed, not on the blockchain).

Why must it be a common decision and why was it so difficult to agree?

Sorry for this long explanation… but it has been an intense debate inside the community on highly critical decisions for the future of Bitcoins.

As blockchain is a distributed ledger, all participants must do the decided upgrade at precisely the same block. You cannot have 1 miner working the “old”way on a block when others are already on the new way: they have to cross-check the block one to each other and must use the same logic in perfect synchronisation. Not so obvious when the information is spread on about… 200.000 computers around the world (this is a 2016 estimation on the number of computers involved in mining).

What have been the results?

• Bitcoin community has been divided…
• Part of the community decided to move away and create a large block size: the Bitcoin Cash is born with a 8Mb block and a new community. And they plan to increase further in 2018 the block size.
• The other part decided to move on to Segregated Witness which has been activated the 24th of August 2017.

And currently, several groups are working on the Lightning Network.

Few words to conclude…

I have sometimes simplified the explanations… my goal is firstly to give all basic explanations as clear as possible. To keep it simple, I sometimes had to skip some details. All my apologies to the purist and to the cryptocurrency specialists.

You also noticed that when mentioning any Bitcoin price, I always mentioned the date or period. You have seen that Bitcoin value is a roller-coaster with a high volatility... I just do not want to give stupid disconnected values if you read my article some months after its publication...

To conclude, I will insist a very last time… today, cryptocurrencies (and everything related as ICO) are high risk investments. Be cautious with what you do, whom you work with (and read carefully, thoroughly the terms and conditions) and, again, read & learn as much as possible.

Do not be impulsive, be wise.

My objective has been to explain all the foundations and to open your eyes on crypto’s complexity too often avoided in all the enthusiast communications or discussions.

It is an exciting, fascinating and dynamic world but still in its early boom.

I hope that I helped you to see clearer and convinced you that there is no stupid question… just ask.