Crypto in Plain English - by cryptohunt.it

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Every day, we explore the world of crypto and blockchain in one minute and in plain English.

00:01:48

Crypto in Plain English - by cryptohunt.it Why does crypto go down when interest rates go up? - Crypto in Plain English - Episode 164 - by cryptohunt.it Why does crypto go down when interest ra...

Why does crypto go down when interest rates go up?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let’s try and understand the recent events in the stock and crypto markets.

You’ve seen the news: The US Federal Reserve is raising interest rates and suddenly the markets freak out. What does one have to do with the other?

When a governments’ central bank raises interest rates, it means that they will guarantee a certain amount of return on investment to anyone. For you, that means you will soon get more interest for money in your savings account, thanks to the government.

But more money in savings accounts also means that more people will take money out of risky investments, such as stock and crypto, and put it back into savings. The reason is simple: It’s much safer, and will now make them enough to be happy with.

And because those people sell that stock and crypto, it drives prices lower. And suddenly other people get worried and also sell, causing a downward spiral.

So, why on earth would governments want this? Right now, it helps reduce high inflation: People lose some money in their investments, they spend less, prices have to go down. And it gives them another powerful tool: When central banks need to, they can now lower interest rates to induce the opposite effect: Increase stock prices when markets need stimulation.

Now you know why investments have lost value recently. Hang in there and keep learning!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.


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00:01:53

Crypto in Plain English - by cryptohunt.it Are there 19 million Bitcoins or 21 million? - Crypto in Plain English - Episode 163 - by cryptohunt.it Are there 19 million Bitcoins or 21 mill...

Are there 19 million Bitcoins or 21 million?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

You and us, we’ve talked about this a few times now. Theoretically, there could be 21 million Bitcoins out there, but only 19 million are actually in circulation. Why is that?

Let’s take a step back in history! The year is 2008. Investment banks are collapsing under the load of their own bad financial products, and governments are bailing them out. And people are mad: The governments are printing money to do it, which is creating inflation. You, the normal citizen who caused no harm, suddenly see prices increase everywhere around you.

Bitcoin, which came out shortly after in 2009, is believed to have been created in response to these policies. The idea was: What if we created a new type of money that nobody can mess with, not even the government?

To make that happen, it was written in code that there can only ever be a maximum of 21 million Bitcoins. But things started out much more moderately than that - only 1m were in circulation. The rest is set aside as rewards for mining, the process that validates transactions. It costs money to operate the hardware, and so this reward was made part of Bitcoin.

Which brings us to today. 18m or the 19m existing Bitcoins have all been earned through mining, and 2m are left until the maximum of 21m is reached. Sounds like a small amount, but it will likely take another 50 years to get there thanks to a process called Halfing. Go check out episode 50 for that.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

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00:02:01

Crypto in Plain English - by cryptohunt.it What is diluted market capitalization? - Crypto in Plain English - Episode 162 - by cryptohunt.it What is diluted market capitalization? -...

What is diluted market capitalization?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let us explain diluted market capitalization, a term any crypto investor should understand.

But first, jump back one episode where we explain market capitalization itself. A cryptocurrency’s market capitalization is the total amount of money in circulation of that cryptocurrency. Let’s take Bitcoin as an example. Currently priced at around $30,000 per Bitcoin, there are 19 million of them. In total they are worth 590 billion dollars.

That’s a lot of money, but it doesn’t actually include all of the possible Bitcoins. Eventually, there will be up to 21 million Bitcoin in circulation. The difference, a whopping 2 million, is just being held back as rewards for those operating the network, also called miners.

Fully diluted market capitalization refers to the theoretical value of all possible Bitcoins in circulation. If you add those 2m yet-to-be-mined coins to the market cap, you get a total diluted market cap of 650 billion at the current price, a 60 billion US dollar difference.

Head buzzing? Let’s recap. Market cap refers to all the actual money that is currently floating around in a cryptocurrency. Fully diluted market cap is the higher, theoretical value of the maximum possible number of coins.

And in the next episode we’ll explain why the inventors of Bitcoin set a limit at 21 million of them and how you could get some of the ones being held back today.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

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00:01:55

Crypto in Plain English - by cryptohunt.it What is market capitalization? - Crypto in Plain English - Episode 161 - by cryptohunt.it What is market capitalization? - Crypto...

What is market capitalization?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let us explain market capitalization, a very basic term any investor should be familiar with.

Market capitalization simply refers to the amount of money all the shares of a company are worth when taken together. Let’s take an example: Coca Cola, the company. Right now, a single share is worth about $65 dollars, and there are about 4.4 billion shares in circulation. Multiply the two, and you will see that Coca Cola has a market cap – short for capitalization – of 281 billion US dollars.

That value helps you compare companies. Pepsi for example, has a market cap of 240 billion US dollars, slightly less than Coca Cola. That means that investors think that Coca Cola has a little more business potential than Pepsi.

The same applies to blockchains. A cryptocurrencies market cap is the amount of coins that exist, multiplied by the value of each. Is your head buzzing? This example will make more sense: A single Bitcoin is currently worth about $30,000. There are roughly 19 million Bitcoins. Add all those zeros and you will see: All of the Bitcoins together are worth 600 billion dollars in market cap, almost three times as much as Pepsi and more than double that of Ethereum.

And now that you understand market cap, go browse the web and compare: How much larger is Apple than Microsoft? How many car companies could you buy with all of the Bitcoins? We are sure you’ll find tons of interesting comparisons, whether they are useful or just fun.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

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00:02:09

Crypto in Plain English - by cryptohunt.it How the NSA helped create Bitcoin - Crypto in Plain English - Episode 160 - by cryptohunt.it How the NSA helped create Bitcoin - Cryp...

How the NSA helped create Bitcoin

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

You’ve heard it everywhere: most governments are really cautious about cryptocurrencies, some even feel threatened by the new technology. It will come as a surprise to you then that the NSA, America’s National Security Agency and one of the largest intelligence agencies in the world, actually created the technology that Bitcoin is based on.

How is this possible? Let’s dig in.

It is the year 1993! The internet is just at the brink of mass adoption, very exciting times! And the military had been using it for a while already, and so have universities, and the US government started to think about security: What if someone figured out a way to listen in?

The problem at the time was that security was based on encryption algorithms that kept getting cracked by talented hackers and mathematicians. So the NSA decided: Let’s create our own and make it available to everyone. A secure internet for all is better than one everyone can hack. They called it SHA, for “secure hashing algorithm” and it took off like crazy: Everyone uses a version of it today. In fact, even the data transferring my voice to you is encrypted by it right now.

And ironically, the very thing the US government aims to regulate also uses the same algorithms. Bitcoin would not be possible without SHA, and thanks to the NSA anyone can use it for their project. In fact, SHA is so good that Bitcoin was never hacked.

So, next time the topic at the family dinner table turns to the government, you can point out that our internet would not be the same without the NSA.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

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00:02:22

Crypto in Plain English - by cryptohunt.it What is a hash used for? - Crypto in Plain English - Episode 159 - by cryptohunt.it What is a hash used for? - Crypto in Pla...

What is a hash used for?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

No doubt: You’ve heard the word hash thrown around by crypto enthusiasts. Strap in, this is a complicated one, but we’ll break it down. And hey - we guarantee you that lots of those crypto folks don’t actually know what it means either and are just trying to impress you, so here’s your chance to get ahead!

First, let’s talk about the purpose those hashes solve: Simply said, they help prevent fraud in blockchains.

Here’s how that works: Remember that blockchains are nothing other than long lists of transactions, stored as separate copies on many different computers. Altering the history of that blockchain is attractive to hackers, because they could create a different record that suddenly shows them as having lots of crypto.

When people pay with crypto, each group of payments gets summarized as a hash after they have been recorded. The hash is a math function which takes all of those transactions, and that could be a lot of information, and compresses them into a really short, but unique text. It is very easy for a computer to summarize things into a hash, but almost impossible to turn a hash into the original data.

It’s like your fingerprint: All of your genes come together when you are born, resulting in hands with a unique fingerprint for each finger. It works in that direction for every human being, every time. Even identical twins don’t have matching fingerprints. But nobody can take your fingerprint and recreate your DNA from it.

But what does it do for a blockchain? Well, in one direction it makes it very easy to verify that all transactions in a blockchain are correct, but in the other it makes it super hard to unwind them and create an altered history.

And now that we at least know what hashing is used for, let’s look into the role the NSA played in enabling Bitcoin. It’s a pretty big one! Stay tuned for the next episode.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

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