Bitcoin

The prospect of buying 1,245,000 sats in 10 years is going to be completely out of reach for the average person. 

How much does 1,245,00 sats cost right now?

$500 at a $40k BTC to USD price.

Go ahead and loan me that money in BTC.  I'll pay you back.

posted by ernest_t_bass

Go ahead and loan me that money in BTC.  I'll pay you back.

Elon probably bought the dip.

$750,000,000 worth of #bitcoin was just moved off of exchanges in the last 10 minutes. Someone bought the dip. pic.twitter.com/uvHVk0i37Q

— Documenting Bitcoin 📄 (@DocumentingBTC) May 19, 2021

The original tweet is the start of a good thread that explains a very plausible reason for the movement today. The reply has a couple charts from the 2017 bull run. I could certainly be wrong, but I don't think this bull run is any different than the previous cycles. 

Here’s what happened: the little brother of July 2017 was born and I was named May 2021 #Bitcoin pic.twitter.com/eprgkhkYGj

— Diarpi (@diarpie) May 19, 2021

Putting the current drop from the ATH in perspective.

A little drop in price has never stopped #Bitcoin before. pic.twitter.com/eMSA4iP1Sa

— Documenting Bitcoin 📄 (@DocumentingBTC) May 20, 2021

Sats are still on sale. 

You can get $5 free using the link. Convert it to sats within the CashApp. That’s roughly 15k sats as of this moment.

https://cash.app/app/QXZTJHP

posted by QuakerOats

https://amzn.to/34cZ5E2

geeblock, pretty sure you said something about buying through paypal earlier in the thread. Looks like they're finally allowing withdrawals to your own wallets.

PayPal will now allow users to withdraw #bitcoin to their own wallets.

— Documenting Bitcoin 📄 (@DocumentingBTC) May 26, 2021

Things have been pretty boring lately. Decided it was a good time for another Bitcoin 101 post.

What are Bitcoin blocks?

Blocks are what make up the blockchain. Miners compete to mine them, and once found, they are linked to the previous block through a hashing algorithm so it is easy to verify the longest chain going forward.

What is in a block?

A block contains the coinbase transaction, which includes the newly minted coins (6.25 btc until the next halving) and the transaction fees given to the miners, as well as all other normal transactions that are now included in the blockchain (almost). A transaction isn't considered final until a couple other blocks have been mined but that's a more advanced topic.

What does a block look like?

Mempool.space is a great resource for exploring blocks.

See the following link for block 685,804.

https://mempool.space/block/0000000000000000000b44c231fed1bea9d83ddefe75aa2936d74a9d525cd843

At the top you see several green blocks on the left and several blue blocks on the right. The green blocks contain all of the unconfirmed transactions. These are transactions that have not been included in a block yet. The blue blocks are the latest blocks add to the blockchain. These are now official record.

This screenshot includes just the coinbase transaction of the 685,804 block. You can see that it includes .53 btc in transaction fees (existing btc), plus the 6.25 btc in newly mined coins. This means the miner now has control of 6.78 btc that they didn't have before the block was mined.

The following screen grab includes the first few non-coinbase transactions. These transactions are people "spending" their bitcoin by transferring it to different addresses. These could be other addresses they control, or addresses other people control.

You can see in the first transaction someone paid $41 to move about $1800 worth of btc. Kinda high, which means they really wanted it included in the next mined block. A cool thing about the protocol is you can set your own fees depending on how big of a hurry you are in for confirmation. This person set their fees absurdly high to guarantee it would be included in the next block. The transaction below that one, someone moved 94 btc ($3.5m) for $28. And given the span of fees in that block, could have been moved for a couple bucks if they didn't set the fee artificially high to guarantee inclusion in the next block.

This is a good way to show that fees have nothing to do with how much your bitcoin is worth. They are completely dependent on the number of bytes in your transaction. The sat/vB denomination just means you're willing to pay X number of sats per byte of the transaction. Some transactions include more data than others, and a .01 btc transaction could be heavier than a 1000 btc transaction depending on the inputs.

In the green blocks above, you'll see the first line says something like ~1 sat/vB, or ~41 sat/vB. This is the median fee for the block, so far. You'll see below that the range of fees for the block. And again, these fees can be set by the user depending on how quickly they want to transaction confirmed. Looking at these numbers, if I were wanting to move some btc around I'd probably set my fees at around 10-12 sats/vB. Almost all good wallets will give you this option, and make it very clear how much you'll be paying to move your btc around before you do it. Mempool has a great feature where they give you an estimate of how much you should pay depending on how quickly you want to confirm the transaction.

So, what... are these all hidden, and are being mined?  Is mining basically a big scavenger hunt?  If they are hidden, then who hid them, and how?

Blocks aren't hidden, they don't exist yet. They are created by miners for solving, essentially, a guessing game (finding a very big number). The reward for winning the guessing game, and mining the block, is the newly created bitcoin and all miner fees from every transaction in the block.

The new bitcoin is, much like the USD, created out of thin air. But, unlike the USD, it is fully auditable by anyone with their own node, has a known, fixed supply (every four years the newly mined number of bitcoin is cut in half until it reaches 0 (in 2140ish). Governments can modify their monetary policy on a whim. Bitcoin's monetary policy is code and will not change. Rules without rulers.

Does that answer your question?

To further clarify, they cannot exist already because the transactions do not exist yet. And a block is just a collection of transactions being added to the blockchain for all eternity. 

Follow up to yesterday's post. Now is a GREAT time to move your bitcoin around. Notice only one green block on the left? Those are all the transactions currently waiting to be mined, which means a 1 sat/vB fee will get you into the next block.

justin, you know i'm stupid. but i just read through your posts, and i'm less confident i know what the fuck is going on than i did before i started. and i have money in crypto (not bitcoin as we've established).  Can you clarify these things?

1. the green blocks, you said are unconfirmed transactions and once they are added to a block, the miner of that block controls those coins (are coins transactions?). does that mean that the miner of the block owns the actual coins used in the transaction, or just the fees taken from the transaction?

2. once a coin is mined, you make it sound like there is a period of time where the coin exists, but isn't part of a transaction and thus isn't part of the blockchain. is that right? is the coin worth nothing during that time? 

3. why would you move your coin around? what is the benefit? 

1. The miner controls the NEW coins, as well as the miner fees. All other coins are controlled by whoever controls the addresses they were moved to in the transaction. 

2. The coin is created and is now part of the blockchain, because they are included in the block. They are free to be "spent" (moved to another address) by the miner immediately after being mined. Or they could just let them sit there. But at that point they exist and are part of the blockchain.

3. Many reasons. Over the years, addresses have been updated to allow for more data to be included at a lower fee. Addresses start with a 1, 3, or bc1, depending on the type of address. Addresses that start with 1 are the original addresses, and incur the highest fees due to the amount of data included. bc1 addresses are a newer type that split out unnecessary data and incur lower fees due to less data. So, currently, I've got coins in a "1" address that I'd like to move to a new bc1 address. 

Another reason is if you're moving from a wallet on your phone or computer to cold storage. Cold storage is when your keys don't touch the internet. If you have your coins on in a wallet on an internet device, there is a slight, but still possible, chance that they could be stolen through a hack. If you put them in a wallet that has never touched the internet (there are devices specifically for this, see Coldcard wallet, etc) there is no chance that they can be taken in a hack. This is the situation I am in right now, deciding on my cold storage setup to get my coins off the internet.

Cold storage is a huge topic that I can go deeper into, but that will take some time to put together a coherent post

Hopefully this helps. Always happy to dive deeper if needed.

This reminds me of the Friends episode where they are playing bamboozled