A Layman's Understanding of Bitcoin

Gold.  The original standard for value in the world; historically used as currency across the planet.  What started as a shiny rock in the ground became the material to which we compared all others, the most treasured substance across the globe.  To think that once you could go into a cave and mine such a valuable good, enough to support yourself for the rest of your life, is a foreign concept to most of us in the modern world. 

Nowadays to make money you have to get a job, run a business, or invest.  There is no currency that can be mined out of the earth or elsewhere, at least not in as direct of a manner as gold.  Sure, oil is a natural resource that is worth its weight in paper money, but it is not something the average everyday man can walk out into his yard and harvest all on his lonesome.  So the days of mining substances that can be exchanged for currency are gone, right?  Wrong.  

In steps Bitcoin, the new "digital currency" sparking controversy across the planet.  The Bitcoin network, an electronically created medium of exchange, is comprised of individual bitcoins like American currency is comprised of dollars.  There is no physical basis for its value.  What sets Bitcoin aside from other mediums is that it is a decentralized form of currency, so no government institution, such as the United States Federal Reserve, can control its value.

When I first heard of Bitcoin I was rather confused.  I wondered how there could be a currency with no physical basis, with no value related to the physical world.  How could there be an exchange of goods when there were no goods to begin with?

Bitcoin is just like any other currency.  It began as way for people to exchange goods without having to barter.  When Satoshi Nakamoto created Bitcoin in 2009, the idea was to create a currency that was easily transferrable and independent of a central authority.  The computer world was in need of something like this—a way for people to exchange internationally without going through the hassle of an economic middleman.  The fact that people were in need of a currency with this level of freedom is what backs Bitcoin in the first place.

Bitcoin derives the core of its value from its utility.  Its utility comes from the fact that the Bitcoin economy is completely peer-to-peer, as in no third party is required for transactions or storing of Bitcoin.  While normal money as we know it generally has to be stored in a bank, Bitcoin can be stored right on your computer and can be sent to anyone else without any third party being aware.  Where this becomes advantageous is in the transfer of funds, when a bank can often charge a fee and take several days to complete the transfer.  Also, for those secretive spenders out there, Bitcoin is anonymous and cannot be tracked by anyone.

The only place that any evidence of Bitcoin transactions exist is within a virtual entity called "the blockchain."  The blockchain is essentially an online transaction log that follows every single bitcoin from its creation all the way to its final destination.  While the Bitcoin network is completely transparent and open to be viewed by anyone, every user has their own anonymous Bitcoin address comprised of numbers and letters.  If the user wishes to disclose their public address to other users, they can, but their address can only be accessed with their personal passcode that is granted by the Bitcoin network.

Bitcoins are valuable in another way: they're scarce.  While you can purchase bitcoins offline with any international currency, most are acquired through mining.  The miners utilize specialized hardware that runs several million math algorithms a second in the process of verifying and securing all of the Bitcoin transactions happening across the world.  When the miners reach a mathematical solution to the "problem" of processing all these transactions, the solution and all the information involving the transactions is metaphorically "packaged" into a "block,” which is then added to the blockchain.  When this occurs, 25 bitcoins are rewarded to the miner or miners who came to the solution.  If we're making metaphors here, the Bitcoin miners are like bankers and the transactions like processing computers—together the basis for creation of the currency.  

Along with how difficult it is to actually produce bitcoins, there is actually a limit on how many that can be produced, another element that adds to their scarcity.  There can only be 21 million bitcoins produced in a year, which makes it unlike any other currency.  This makes the mining process extremely competitive, which leads miners to join together into mining teams referred to as "pools."  These pools utilize collective processing power to arrive at the solution to the block first, rewarding them 25 bitcoins, which they split amongst the team.

While the entire process of mining bitcoins seems completely out of this world to anyone but a hardcore programmer, the Bitcoin network has received international attention from governments and investors alike who couldn't begin to tell you how it's created.  For example, the government of China has officially barred financial and payment institutions from accepting bitcoins as a form of payment.  On the other hand, British ex-banker Joseph Lee's meager investment of $100 in Bitcoin several years ago has landed him $200,000 in profit.  Through buying up bitcoins in one currency in selling it another, Lee is essentially playing the Bitcoin stock market.

So whether or not we fully understand Bitcoin, where it holds it's value or exactly how it's created, we all need to consider it's weight in the global economy.  Questionably there is a need for this so-called "digital currency" as it does serve certain individual functions, but there is no indication of whether it is merely a strange passing internet phenomenon, or a legitimate currency that will live on along with the dollar.  The conclusion that we can take, I believe, is that is like any other investment, Bitcoin can be lucrative as a generation embraces it, or it can flop, remembered by future generations as a interesting phase in technology.  If you're willing to take the chance, go buy the mining hardware and join a pool, and if not, sit back and watch the calamity ensue

Sources:http://www.scmp.com/business/banking-finance/article/1360696/bitcoin-investors-cash-us-says-it-could-embrace-virtual  

http://profit.ndtv.com/news/your-money/article-bitcoin-explained-in-laymans-terms-376029

Progression

How do we progress mentally? Here is my attempt at an explanation.

from my personal experience, life is a series of events that repeat. the first few times these experiences occur, as they are novel and unfamiliar to us, there is an element of uncertainty involved with our prediction of their outcome, as in, we do not think that we can wholly or fully control event. this uncertainty of the said events outcome is what makes us fear the event itself. this is especially true if the outcome of the event leads to a heavy amount of unpleasant consequences.

For example, in my case, I recently had to learn how to cook pizzas on a brick oven. at first I was unfamiliar with how to cook the pizzas properly, when to take them off the screen, when to put them on the screen, etc. this uncertainty I had when it came to the exactities of cooking the pizza lead me to have slight anxiety about cooking them for my fear that i would fuck up the pizza and cause the unpleasant consequences of fellow employees and managers being pissed at me for fucking up a pizza.

So as you can see in this case, my anxiety, or the fear I experienced when thinking about making pizzas, spawned from my uncertainty as to whether I could make the pizza correctly, as if I failed I would experience negative consequences. It is this anxiety and uncertainty that makes my heart pump, my blood rush, and my mind flex when I am making a pizza, which while on one hand is unpleasant, but on the other is what keeps pizza making exciting and even fun.

How is that fun? You ask, how are fear and anxiety things that lead to taking pleasure in an event? Generally when we think of something we enjoy doing, we tend not to think of things that cause us a great deal of anxiety and fear. We tend to enjoy events that we are comfortable with, that we have confidence in, and that we can somewhat maintain a level of certainty and control in.

Simply, we enjoy doing things that we are good at.

No one likes to be the noob, the kook, the rookie, the poser, however you want to put it. Nobody wants to be the person who sucks in a group of people who are awesome. It automatically puts you in a awkward social position, as generally respect is gained through skill of some kind, and not merely through personality, and as most humans know, being respected is a fundamental element to being mentally and socially healthy. Those in history who go unrespected deal everyday with anxiety and fear that is so stressful it drives them into depression, madness, and other delusions that take them farther away from the respect they already do not have.

So the question is then, how do the good separate from the bad? How do the unskilled and the skilled become such, and what is the mental boundary that separates them? We have already established that uncertainty is at the root of fear and anxiety, that fear of an events outcome ultimately causes fear of that event. What we have not covered the types of fear that can be experienced. There are three:

1. Anxiety: Fear of a future event. Whether it is actually going to happen or not, it is a fear of a prediction. The mind plays out the event in an attempt to plan for it to avoid it's potential negative consequences. This is an act of imagination and takes the mind out of engrossment from the present.

2. Shock: Present moment fear. The irrational, second-nature reaction to an event whose outcome is either already unpleasant or is predicted to be unpleasant in the near future. It is simply a reaction, however short or long, to something bad that happened, just reflecting on how bad it actually is. This is an engrossed fear where no rational prediction or plan for the present has been established , but the mind is in a state of reflective panic.

3. Anguish/regret: The reflection on an event that ended in negative consequences. Is a reflective act and is therefore a non-engrossed act of mind that draws you away from the present. Can cause anxiety if the event is predicted to occur again in the future.

None of these three are productive when it actually comes to performing a task, or dealing with an event, as they take out of the present moment, which is ultimately all that you know to exist, and lead you to reflectively stress over delusions of negative realities. Simply, they keep you thinking and not acting, which is what you should be doing in any situation, no matter how bad it is.

What's the solution to these fears? There's three options.

1. Let them overcome you. That's right. Put down the golf club, the surfboard, stop calling her. Give up. Realize that wow, I really don't like X because I suck at it so I don't think I'm ever trying X again. While I can't say I think this a good option, I can't say I haven't done it. Everyone has, and this is what is part of what separates us and makes us individuals. Some people opt for this option, and is wholly natural.

2. Avoid them completely. Easier said than done. Psychologists only wish they could find pills that could rid of all three of these things. Maybe a very high amount of alcohol could perhaps rid you of all three for a limited time, but I can guarantee there will be regret in the morning. The sad fact is, that these fears are probably natural and are bestowed upon our psyche most likely for reasons of survival. So to rid of these fears completely, I believe is impossible. Not even the most zen of Buddhist monks don't occasionally feel some anxiety, especially when they see a woman.

3. Attempt to find a balance. This is what I attempt to do. You accept that fear and anxiety are natural and are likely to occur when trying something you are not familiar with, but you realize that these fears and anxieties are illusory and that they ultimately distract your mind from the event or task itself. Knowing to return to the moment is key. When you realize that you are off in the reflective conciousness, thinking about how you are going to approach some girl standing across the bar from you, you need to realize that you are actually staring off into the distance during this illusory attempt at prediction, hence taking you away from that moment where you could be talking to her. Action instead of anxious thought is essential to this philosophy.

Now I'm not saying I am perfect at this, and that my fears and anxieties never get in the way of my performance because that is definitely not the case, but what I am trying to point out is that fear is essentially a distraction from the moment, which detracts from performance in the moment. This distracted nature can lower performance which can start a vicious chain of performance anxiety leading to decreased performance and therefore anguish and regret afterwards which again leads to more anxiety. Breaking this chain is the key to being able to become comfortable in performing a task, and not being overcome by the fear of failure.

So now we can attempt to define the antonym of fear, which of course is courage. If fear is an anxiety or unpleasant reflection on a failure or negative consequence because of a failure, then courage is to charge headfirst into situations where the consequences of such actions are unknown, where you can't theorize whether you will fail or succeed, you just try. And that's all there is to it. Just try. Don't let your illusions and delusional reflections distract you. Don't consider the consequences, as Nike says, just do it.

Once you have gained the ability to at least try something without fear, it then gives you the ability to develop your skills in that thing or gain confidence in that situation, as the more times you try it without fear, the more outcomes you have to judge as a gauge for what you did successfully and what you did wrong. With failures and mistakes will come reflections on those mistakes and therefore theories of how to change to attempt to fix those mistakes. This is the only situation where I believe reflection is necessary. The key is that it is neither a negative or positive judgement. It is an objective, regretless reflection on your performance with a critical eye on what you can do change the outcome, to gain certainty and form correlations between actions in the event to outcomes after the event. That is how progression occurs, when a new action is performed in order to produce a novel consequence, both requiring uncertainty, over and over again until success is attained.