Page 16 - eBook

LESSON 7

BITCOIN & CRYPTO

Now that we've learned the basics of Stocks and 'Dollar-Cost Averaging', let's
talk about Bitcoin! You can tell that I'm going to preach about not trading and
just buying and dollar-cost averaging into these asset classes. What is Bitcoin?

Bitcoin's defini�on is the transfer of value in digital currency. Bitcoin can be
referred to as a cryptocurrency or virtual currency.

There are no physical bitcoins. If you understand money, you can understand
Bitcoin. I will explain how money works, then I will explain why Bitcoin was

invented. Money is just a medium of exchange. It's what we use because we
believe it has value. Former United States President, Richard Nixon, removed

the Gold standard in 1971. The US Dollar was the world reserve currency, so all
countries of the world would trade in US dollars instead of gold. The US
government stated that money would no longer be backed by gold and instead

would be backed by US government promises. Today we call this "Fiat
Currency". If a group of people believes something has value, then it can be

traded.

So why was bitcoin invented?

We know that the government owns and prints our Dollar. And they can print as

much as they want. The government is a centralized authority; Centralized just
means one group that controls everything. Bitcoin is not controlled by any
group; that means Bitcoin is decentralized. Bitcoin is the first decentralized

cryptocurrency in the market. There are only 21 million Bitcoins in circula�on.
No one can print anymore bitcoins. Bitcoin was invented because it solves the

problem of Government control over money and prin�ng. In January 2009
following the US Housing Market Crash, an anonymous person or group named
‘Satoshi Nakamoto invented Bitcoin as a solu�on to removing centralized

authori�es as an intermediary to our money.

Sankeethan Ratneswaran – 2021 Copyright 16