Is Bitcoin dead? Thoughts on the Bitcoin crash

Bitcoin dropped 30% in value this week. Today it’s still down. Many friends and students emailed me, “Chris is Bitcoin dead?”

Here’s a video explaining my thoughts on “The Big Bitcoin Crash.”

In this video I cover:

  • Why I’m not worried…
  • Long-term thinking on the technology
  • Utility value vs. speculative value
  • Mr. Bean rides the bitcoin wave!

If you have any questions, let me know!

Bitcoin vs. Ethereum

What’s the difference between Bitcoin and Ethereum?

First, it’s important to understand that there are two categories of digital coins: Cryptocurrencies (e.g. Bitcoin, Litecoin, ZCash, Monero, etc) and Tokens (e.g. Ethereum, Filecoin, Storj, Blockstack, etc.)

Bitcoin is a “cryptocurrency.” Bitcoin and other cryptocurrencies are competing against existing money (and gold) to replace them with a truly global currency.

The promise of Bitcoin is that it is:

  • A global currency which allows individuals to own their own money (without having to rely on national banks).
  • Lower fees for transferring money across geographic borders.
  • Financial stability for people who live in countries with unstable currencies. (e.g. In 2016, the Venezuela’s currency hit an inflation rate of 800%). In addition, two-thirds of the current global population has no access to banking, or limited access — Bitcoin is changing that.

Ethereum is a “token.” What Bitcoin does for money, Ethereum does for contracts. Ethereum’s innovation is that is allows you to write Smart Contracts: basically any digital agreement where you can say “if this” happens, “then something else happens.” For example:

  • If I vote for the President, then my vote is official and no one else can vote as me.
  • If I sign my name on this document, then I own the car, and you no longer own the car.
  • Up until now we’ve carried out these agreements with a signature at the bottom of a paper document. Ethereum dramatically improves this model because it is digital, and proof of the transaction can never be deleted.

Comparison chart: Bitcoin vs. Ether

Bitcoin (BTC) Ether (ETH)
What is it? A currency  A token
Inventor Satoshi Nakamoto Vitalik Buterin; Other co-founders include Gavin Wood and Joseph Lubin
Went alive January 2009 July 2015
Supply Style Deflationary (a finite # of bitcoin will be made) Inflationary (much like fiat currency, where more tokens can be made over time)
Supply Cap 21 million in total 18 million every year
Smallest Unit 1 Satoshi = 0.00000001 BTC 1 Wei = 0.000000000000000001 ETH
New token issuance time Every 10 minutes approximately Every 10 to 20 seconds
Amount of new token at issuance 12.5 at the moment. Half at every 210,000 blocks 5 per every new block
Utility Used for purchasing goods and services, as well as storing value (much like how we currently use gold).  Used for making dApps (decentralized apps) on the Ethereum blockchain. 
Price Around $17,500 at the moment Around $800 at the moment
Purpose A new currency created to compete against the gold standard and fiat currencies A token capable of facilitating Smart Contracts (For example: a lawyer’s contract, an  exchange of ownership of property, and voting)

Coinbase Bitcoin

Ethereum vs. ether

Let’s go a step further:

Bitcoin itself is two things: (1) it’s a digital currency known bitcoin (lowercase, also referred to as BTC) and Bitcoin is a technology (also known more generally as  blockchain). Both are called the same thing which admittedly can be confusing for newbies.

  • Bitcoin = The name of the Bitcoin network
  • bitcoin = The currency (or BTC)

With Ethereum it’s similar, but slightly different: the token is called ether (or ETH) and the network is Ethereum. 

  • Ethereum = The Ethereum network
  • ether = The token (of ETH)

Bitcoin vs. Ethereum

Where do I buy bitcoin and ether?

Coinbase is the most popular, and easiest place to buy both bitcoin and ethereum. Other popular exchanges where you can buy them include: Gdax (owned by Coinbase), or Kraken

Join Coinbase now and get $10 of free Bitcoin if you buy or sell $100.

How much does it cost?

You can visit Coinmarketcap anytime for the latest price of BTC and ETH.

It’s important to know that you don’t have to buy one entire BTC or ETH, you can buy a smaller percentage of either.

bitcoin vs. ether: How many tokens are available?

For Bitcoin, the total supply cap is set at 21 million. At the moment, according to CoinMarketCap, the circulating supply is around 18,586,737 BTC

A new BTC is generated approximately every 10 minutes. And after 2140 no more new bitcoins will be created, which is why Bitcoin is said to be deflationary (the opposite of inflation).

When new bitcoins are created miners compete to get them. Miners are people with can play one of two  possible roles: they use their computers to claim new bitcoin AND/OR they help verify transactions on the network — much like a bookkeeper. 

There’s no set cap for a total supply of ETH. At the moment, around 96,815,798 ETH are circulating.

bitcoin vs. ether: What can I do with them?

You can use Bitcoin to send or receive money, or to purchase goods at popular sites like Overstock.com, Namecheap, or Tesla. You can also hold your bitcoin as an investment, or for long term storage of value (kind of like how people invest in gold). 

Ether is not as popular as BTC for purchasing goods. At the moment ether is mainly being used by developers building applications on top of it. Over time, and as more apps are developed, the value of ether will likely move from being speculative (as it is now), to more useful in everyday life. 

How to storage bitcoin and ether 

Once you buy digital currency you’re going to want to store it in cold storage (this is a much more secure place to store your currency. Exchanges like Coinbase are where you want to buy currency, but after you purchase the currency it is not advisable to leave your money at the exchange.)

Bitcoin, ether and many other types of coins can be stored on a cold storage option like Trezor or a Ledger.  If you’re serious about buying, sending, or storing larger amounts of cryptocurrencies I’d suggest you pick one up.

Bitcoin vs. Ethereum: Want to learn more?

I teach about Bitcoin and Ethereum at Columbia University’s Business School. And also teach online with One Month.

Join my online Bitcoin and Blockchain tutorial or leave a comment below if you have any questions!

 

5 Essential Books for Learning Bitcoin and Blockchain

How do you learn about Bitcoin and Blockchain?

First, it’s important to know there are five audiences Bitcoin appeals to: the bitcoin user (someone who sends and receives bitcoin), miner (aka. the bookkeeper of the network), developer, investor and business owner.

I’ve read about a dozen books on Bitcoin, and I’m happy to share the top five that I think appeal to all bitcoin users, the beginners as well as the more intermediate.

You could read all five of these without feeling they are overly redundant, therefore I’ve put them in order of a curriculum that I’d suggest:

1. The Internet of Money

The Internet of Money is your best introduction to Bitcoin. At a slim 150 pages, the book is a collection of transcripts and highlights from eleven lectures that Andreas Antonopoulos gave on Bitcoin between 2013 and 2016.

“Saying Bitcoin is like digital money is like saying the Internet is just a fancy telephone.”

The Internet of Money is a must-read whether you’re a bitcoin beginner, or already a seasoned pro. I came into this book knowing quite a bit about Bitcoin (I head read Antonopoulos’s other book Mastering Bitcoin), but still took away a lot! Antonopoulos explores Bitcoin as both a currency, and a technology, and then reframes the social impact through the lens of history, politics, and social change. One of my favorite chapters is his lecture on how Bitcoin will give 4 billion people in the world, without regular access to stable banks, immediate access to a global banking system. It’s hopeful, inspiring, and a book I come back to again, and again.

2. The Age of Cryptography

The Age of Cryptocurrency explores the who, what, where, why and when of Bitcoin:

  • What is Bitcoin?
  • When did it start?
  • Where did Bitcoin come from?
  • Who are the major players in the Bitcoin community?
  • Why is Bitcoin important?

This book is a fabulous intro to Bitcoin, but parts of it may seem redundant if you’re very familiar with the lore of Satoshi Nakamoto, the fall of Mt. Gox, and the controversy of Bitinstant. I’d suggest you check out the documentary The Rise and Rise of Bitcoin, and if you enjoy this kind of linear history of the Bitcoin, then you’ll love this book because it starts at the beginning, and walks you year by year through to the present of where we are today with Bitcoin.

3. Cryptoassets

Cryptoassets is a bitcoin book for investors. The authors (Chris Burniske & Jack Tatar)  define a cryptoasset taxonomy, made up of cryptocurrencies, cryptocommodities, and cryptotokens. The book covers portfolio management of cryptoassets, historical context, tips for how to make sense of ICOs (Initial Coin Offerings), and predictions on the future of digital currencies.

4. Mastering Bitcoin

Mastering Bitcoin is not for Bitcoin beginnersThe book starts with a brief overview of Bitcoin and blockchain, and then goes pretty deep into the code, and underlying features of the blockchain technology. Overall I feel like Mastering Bitcoin covers everything you would want to know about the technical aspects Bitcoin. And while I didn’t understand every single mathematical equation, between the code there are very readable takeaways, as well as a comprehensive glossary of terms for understanding the technology behind Bitcoin.

Topics covered: bitcoin mining, public and private keys, bitcoin addresses, paper wallets, transaction outputs and inputs, the bitcoin network, merkle trees, proof-of-work, blockchain forks, and mining pools.

5. The Starfish and the Spider

While this isn’t a book specifically about bitcoin, it’s a book about how decentralized systems work. The title is based on the idea that: If you cut off a spider’s head, it dies; if you cut off a starfish’s leg it grows an entirely new starfish. The Starfish and the Spider looks at a variety of use cases for decentralized systems such as Napster, P2P networks, Wikipedia, and even gives examples from history looking at the Aztecs, and the Soviets. This is a philosophical book on decentralization, and while it doesn’t mention bitcoin explicitly , it lays the groundwork for understanding the philosophies behind why bitcoin is so powerful.

Bluehost vs. HostGator – Which is The Best Web Hosting?

 

Bluehost vs HostGator

Bluehost and HostGator have been around since the early 2000s and are both great choices for Web Hosting. Each offers a cloud plan that boasts a good mix of reliability, scalability, and performance at very reasonable prices. How do they stack up against each other?

HostGator Cloud Plans

Screengrab of Bluehost Cloud Plans

 

Bluehost vs. Hostgator: Basic Cloud Plans

Host BlueHost Hostgator
Plan Prime Baby Cloud
Number of websites Unlimited Unlimited
Storage Space Unmetered Unmetered
Bandwidth Unmetered Unmetered
Domain name included? Yes Yes
RAM 4 GB 4 GB
Available CPUs 4 4
Local Caching Yes Yes
Introductory Price $8.95/mo. $7.95/mo.
Renewal Price $13.99/mo. $11.95/mo.

How does “unmetered” differ from “unlimited”? Unmetered means that you won’t be charged according to your usage, as long as it remains within reasonable limits. For example, if you want to download and host every Will Ferrell movie ever made you’re likely going to be asked to scale back your usage. Otherwise, you probably don’t need to worry about it.

The features offered by the introductory plans are almost identical (see chart above), save for the price. It’s important to note that introductory prices apply only if you pay up-front for a 3-year plan. HostGator has a slight edge here, but not by much. Before you make a 3-year commitment, consider the following important hosting metrics.

Bluehost vs. Hostgator: Reliability

If you’re paying for a professional hosting service you probably expect your site to always be available. Hence, uptime is an important measure of a host, even though it isn’t often included in the usual list of “what you get for the price”.

Fortunately, hostingfacts.com has been monitoring test websites for Bluehost and HostGator since 2016. For the months measured Bluehost showed an average of 99.96% uptime, while HostGator averaged 99.96%. That’s not much of a difference, so let’s look atthe worst month measured for each service. Bluehost’s worst measured uptime was 99.81%, while HostGator’s was 99.87%. Again, HostGator has a slight edge, but this time it’s practically negligible. The high level of uptime is accomplished by mirroring your data across three devices and implementing a strict failover protocol. For example, if one of the three devices goes down, your data is immediately copied from one of the remaining two to a fourth device.

On top of this service redundancy, both hosts offer an option to create a daily backup of the code that powers your site. For example, if you’re experimenting with a new feature and it breaks your whole site, you won’t have to worry about rebuilding anything. Just a few clicks, and you’ll be able to restore your site to the way it was yesterday. This option is an extra $2.99/mo at Bluehost and $2.00/mo at HostGator.

Bluehost vs. Hostgator: Performance

“Ping speed” is the time it takes a server to receive and respond to the most basic request, which makes it an ideal standard with which to compare services. Thankfully, hostingfacts.com also measured average monthly ping speed:

Ping Speed Overall Average Worst Monthly Average Best Monthly Average
Bluehost 487 ms 705 ms 277 ms
HostGator 470 ms 728 ms 252 ms

HostGator has an edge here, but it’s even more miniscule than the difference in uptime. The chart above shows a difference of about 21 ms. For reference, the average duration of a single blink of a human eye is around 250 ms. Both hosts have lightning fast speeds, even in their worst months.  

Bluehost vs. Hostgator: Ease of Use

On both Bluehost and HostGator, you’ll use cPanel to manage your servers. “cPanel” stands for Control Panel, and is exactly whatyou would expect. At a glance, you can monitor your disk space, memory, and CPU usage, as well as bandwidth transfer for the month. Managing file uploads and applications on your server is all accomplished through a graphical interface that will be familiar to anyone who has spent time with a computer in the last decade (i.e. basically everyone).

You can get a WordPress site up and running in no time with an easy one-click install. If you’re unfamiliar with WordPress, both hosts also offer a drag-and-drop solution. The free version of Weebly is included with all Bluehost and HostGator cloud packages. It’s worth noting however, that if you need extra features, like SSL or payment portals, you’ll end up paying a little bit more, depending on your package and the applications involved.

Bluehost vs. Hostgator: Support

Bluehost and HostGator both advertise robust technical support: you can either call or chat online 24/7. However, user reviews of customer support are mixed, ranging from “no problem, perfect service” to “waited two hours and they couldn’t help me”. Unfortunately, the negative reviews seem a little more common than the positive ones. This is the only real issue with Bluehost or HostGator. Frankly, at the low price point offered, spotty support shouldn’t be too much of a surprise.

Our advice: stay on the safe side and do some research on whatever it is you want to build before you sign up with either service.

Bluehost vs. Hostgator: Conclusion

Both Bluehost and HostGator are great choices for a beginner website: cheap, reliable, and fast. Although customer support may not be stellar, the tools provided with all cloud accounts should make it easy enough to fulfill just about any of your basic website needs.

Hostgator Winter 2017 Promotion:

  1. Want HostGator for 1 month free? Enter the code “onemonthcode″ for a discount. If you choose the Baby Monthly plan it should go down to only $0.01. Note that after 1 month it will renew for full price of about $8/month. So if you don’t want to keep this after the class then please just cancel it within a month.
  2. (OR) Want HostGator for 30% off the lifetime of your account? Enter the code “golongerplease″ instead. (this is a better deal if you plan on keeping the account for longer than a few months).

 

* Disclosure: One Month uses both Blue Host and Hostgator, and benefits from their affiliate sales program.