Described as the ‘most disruptive financial technology of the last 100 years’ , Bitcoin is quickly evolving the way we view sovereignty over our own finances.
Enjoy our guide and welcome to the future of decentralized universal currency.
What is Bitcoin in NZ?
Bitcoin is a groundbreaking decentralized currency and digital payment system that allows individuals to transfer value directly between peers without the need for a central authority, middle man or bank.
Bitcoin is cheap to send, is accessible to anyone with internet and has no comprehension of international borders; acting as a universal internet money.
Known as the gold standard of crypto, Bitcoin is now owned by hundreds of millions across the world, including roughly 300,000+ Kiwis.
Bitcoin is a peer-to-peer version of electronic cash that allows payments to be sent directly from one party to another without going through a financial institution. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work.
What is the Bitcoin Ethos?
Conceived in 2008 in the wake of the Global Financial Crisis and launched in 2009, Bitcoin is more than just a digital currency; it is a revolutionary, values based concept shaped by a distinct ethos which has evolved over decades.
At its core, Bitcoin is built on principles that redefine our approach to money, emphasizing privacy, freedom, decentralization, self-sovereignty, individual responsibility, and autonomy.
- Privacy: Bitcoin enables users to transact with an enhanced level of privacy often absent in traditional banking system – the ability to conduct financial transactions without revealing personal information.
- Autonomy: Users wield direct control over their wallets if held in self custody, liberating them from reliance on central authorities and ‘middleman’ third parties.
- Decentralization: In stark contrast to centralized financial institutions, Bitcoin operates on a decentralized network. This lack of a single controlling entity ensures resistance to censorship, manipulation, and mitigates the risks associated with centralized weak points. Bitcoin has no CEO, issuer, or customer support desk if a user makes an error.
- Self-Sovereignty: Bitcoin promotes the concept of self-sovereignty, emphasizing that individuals should be the ultimate authority over their own financial reality. Users typically hold their own private keys, granting them unparalleled control and access to their funds.
- Self-Responsibility: An inherent part of the Bitcoin ethos is individual responsibility. Users are tasked with safeguarding their private keys and securing their wallets, instilling a sense of personal stewardship in the pursuit of financial freedom.
History of Bitcoin
Bitcoin has been a hot topic for over a decade, but the complexity of this expanding market can be overwhelming due to the fast paced evolution of the world surrounding it.
However, understanding the history of Bitcoin, the worlds first and most widely traded crypto, can simplify this task.
The inception of Bitcoin begun with a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System“, which was posted to a cryptography mailing list on October 31st, 2008 – with “ Satoshi Nakamoto ” as the author.
Satoshi’s true identity is still a mystery to this very day.
The Bitcoin network was deployed in 2009, released as open-source software when Nakamoto mined the first block of the blockchain (also known as the Genesis Block.
This bundle of transactions contained the first 50 Bitcoins ever created.
From there, other early contributors mined BTC until 2010, when programmer Laszlo Hanyecz made the first known commercial transaction – he used 10,000 BTC to buy two pizzas from the American fast food chain Papa John’s.
Interesting fact: As of this writing, that amount of Bitcoin is worth over $1 Billion USD!
Since then, Bitcoin has been traded over 1.27 billion times, with the earliest significant transactions taking place in darknet markets - the original test net. The largest of these markets was Silk Road, created by “Dread Pirate Roberts”, aka Ross Ulbricht, which traded almost 10m BTC throughout its existence.
How Does Bitcoin Work?
Bitcoin's Blockchain
The Bitcoin blockchain is a digital exo-skeleton that records all transactions made with Bitcoin. It's a sequential chain going back to the first transaction, and it's total size is about 699GB. It's stored across every node in the network.
Each transaction made with Bitcoin is verified by the miners, and recorded on the blockchain, which is maintained by the network of users around the world in a peer to peer fashion.
This means there is no single weak point in the network.
This decentralized system ensures the security, censorship resistance, and accuracy of Bitcoin transactions, while also making it difficult for fraudulent activity or hacking attempts to occur.
The blockchain also ensures BTC can not be counterfeited, making it’s scarcity absolute. This is one of the key technological revolutions of Bitcoin, and how it solved the double spend problem inherent to digital currency.
The use of the blockchain has many potential applications beyond Bitcoin, including in areas such as supply chain management, voting systems, and identity verification.
However Bitcoin’s blockchain is the first to ever exist, crediting Satoshi’s work with prestige far beyond creating a universal, censorship resistant, borderless internet cash.
The blockchain industry and its adoption is quickly evolving, through highs and lows, as industries explore the benefits of this innovative and open technology.
How to Store Bitcoin as a Kiwi?
Bitcoin are stored in Bitcoin wallets – which are generally free to set up, use and operate, and you can set up as many bitcoin wallets as you like.
Best of all, you don’t have to ask anyone for permission to use it, to send and receive payments in Bitcoin (BTC).
Note: Although most wallets are free, the most secure kind (hardware wallets) do cost money. It is highly recommended to get one, they are truly the apex of wallet security and are best practice for holding any large amounts of coin.
What is Bitcoin Mining?
Bitcoin mining is the practice of running a copy of the blockchain, and verifying transactions on the network, in return for transaction fees and block rewards.
In other words, Bitcoin mining refers to the computational process of validating and adding transactions to Bitcoin’s Blockchain. Miners use specialized hardware to solve complex mathematical equations and compete with each other to add a block of transactions to the blockchain.
Upon successfully adding a block, the miner is awarded newly created bitcoins along with transaction fees from the transactions incorporated in the block.
This process is known as proof-of-work and is essential to ensuring the security and reliability of the BTC network. This is the
"Mass collaboration powered by collective self interest"
Private Keys and Public Keys
What are Public and Private Keys?
Until today, you've been accustomed to accessing your various online accounts by using your email address and password.
In the world of Bitcoin, wallet access and ownership is instead represented by something called a public and private key pair.
Acting as your digital identity and signature, every Bitcoin wallet is distinct by having its own unique public and private key (pair) – with each unique key pair being freshly generated whenever a new Bitcoin wallet is created.
- Private Key: Private keys are the password to your Bitcoin wallet, and they’re required to sign off on outbound transactions from your wallet. Never share your private key with anyone, and the security of your wallet rides on how safely you store your private key.
- Public Key: Bitcoin public keys are like your Bitcoin bank account number – an address others can use to send you Bitcoin. You can safely send your public key to anyone, knowing they can’t change or open your wallet, but rather use it to send you Bitcoin.
Best Bitcoin Wallets in NZ
Cryptocurrency NZ chooses Trezor hardware wallets such as the Model T as the best Bitcoin wallet for New Zealanders.
These are physical, USB like hardware devices, where you store your private key. Whenever you want to make an outbound transaction, you must physically hold a button on your hardware wallet, making them immune to remote hackers.
By holding the button, you activate your private key to authenticate the transaction.
Hardware wallets are the most secure wallet choice for anyone looking at holding a meaningful amount of Bitcoin, before entering more complicated wallet storage methods like multi-sig setups.
If you're keen to jump straight in and set up your first wallet today (rather than wait for your hardware wallet to arrive in the mail, you can view our full wallet guide here.
Why Do Most Kiwis Explore Bitcoin?
Most Kiwis who buy Bitcoin (BTC) are either doing it as an investment, or to leverage it’s utility as a decentralized, borderless digital currency. Because Bitcoin is 100% intangible, you can easily transfer it internationally or move across countries, with your Bitcoin still stored in the blockchain. As long as you have access to your keys, you can access your Bitcoin from anywhere in the world – and spend it on goods and services as you please.
Although Bitcoin is now a mainstream word, Bitcoin global adoption rates still sit between 1-3%, with less people using it as currency and the majority as a store of value (SoV) or speculative investment. Regulation and interest from traditional financial institutions has continued to expand, showcasing that institutions are now forced to pay attention to this rising asset and technology class.
Stay humble and stack sats.