An introduction to BitCoin and the meteoric rise of decentralized internet money, by Dale Westervelt.

1. BitCoin, Blockchain,
and Cryptocurrencies
Dale Westervelt
1
dswestervelt@gmail.com

2. Table of Contents
❖ Introduction [3]
❖ BitCoin [4]
❖ Satoshi Nakamoto [7]
❖ A Case for Crytocurrency [9]
❖ Who Supports BitCoin [12]
❖ Case Study [15]
❖ BitCoin Forks [20]
2
❖ BitCoin Price [21]
❖ Ethereum [22]
❖ Ripple [26]
❖ BitCoin Cash [29]
❖ LiteCoin [31]
❖ Conclusion [34]

3. Introduction
This ebook is an intentionally brief and cryptic document. What I’ve tried to do here is
lay out some of the most elemental aspects of BitCoin and a small handful of other
cryptocurrencies.
This work began as a series of personal notes that I was taking as I began to learn and
teach myself about this seemingly out-of-nowhere, freakishly profitable investment—and
increasingly appealing monetary alternative to the US dollar and other fiat currencies
around the world.
My highest hope is that this would serve as a primer for those who may be just starting
out, and trying to get their head around the first entirely internet-based monetary system.
If you find it helpful—and if this brief document spurs you to go and learn more, my goal
will have been achieved.
So, if you are ready for a swim in the deep end, let’s dive in.
Dale Westervelt
dswestervelt@gmail.com
3

4. BitCoin…
❖ Is a trust-less (no verification of
anything about the sender or the
receiver of monetary value), de-
centralized (no central bank or
government issuing entity)
internet-based money system
❖ Uses cryptography (public and
private key encryption) and a
public ledger called the
‘blockchain’ to complete person-
to-person transactions without a
third party… a “cryptocurrency”
4

5. BitCoin (Cont’d)…
❖ In the midst of the financial
crisis in 2008, was proposed by
Satoshi Nakamoto in a white
paper published in October of
that year; BitCoin: A Peer-to-
Peer Electronic Cash System.
❖ Was created when the first
BitCoin was mined on 3
January 2009.
❖ Market Cap = nearly $300B
December 2017.
5

6. BitCoin (Cont’d)…
❖ Is divisible to the one-hundred
millionth of one BitCoin.
❖ Solves the problem of ‘double
spending’ (ex. account has $100
and two $100 trans-actions occur
almost simultaneously).
❖Is a direct and efficient transfer of
BitCoin, with a debit and credit
on the public ledger in real time.
6

7. Satoshi Nakamoto
“It is one of the great mysteries of the digital age. The hunt for Satoshi
Nakamoto, the elusive creator of BitCoin, has captivated even those who
think the virtual currency is some sort of an online Ponzi scheme. A
legend has emerged from a jumble of facts: Someone using the name
Satoshi Nakamoto released the software for BitCoin in early 2009 and
communicated with the nascent currency’s users via email - but never by
phone or in person. Then, in 2001, just as the technology began to attract
wider attention, the emails stopped. Suddenly, Satoshi was gone, but the
stories grew larger…
7

8. Satoshi Nakamoto (Cont’d)
It may be impossible to prove Satoshi’s identity until the person or people
behind BitCoin’s curtain decide to come forward and prove ownership of
Satoshi’s old electronic accounts. At this point, the creator’s identity is no
longer important to BitCoin’s future. Since Satoshi stopped contributing to
the project in 2011, most of the open-source code has been requited by a
group of programmers whose identities are known…
Many concepts central to BitCoin were developed in an online community
known as the Cypherpunks, a loosely organized group of digital privacy
activists. As part of their mission, they set out to create digital money that
would be as anonymous as physical cash. “
New York Times, 17 May 2015 - Decoding the Enigma of Satoshi
Nakamoto and the Birth of BitCoin, by Nathaniel Popper8

9. A Case For Cryptocurrency…
❖ The Federal Reserve (for good
or ill) exists explicitly to
regulate the US money system.
❖ The Fed can increase or
decrease the value of our
national fiat currency however
and whenever the wish.
❖ Of the nearly $3.8T in the US
dollar supply, nearly 90% is
purely digital currency; only
approximately 10% exists as
hard cash.
9

10. Case For Cryptocurrency (Cont’d)
❖ Foreign central banks &
governments will purchase
$3.6T of US stocks in 2017.
❖ These foreign banks can
move the US stock market
any day they would choose
to do so.
❖ Swiss National Bank owns
more shares of Facebook
than CEO Mark Zuckerberg.
10

11. Case For Cryptocurrency (Cont’d)
❖ So, our nation’s fiat currency and
primary stock exchange are
manipulated by traditional power
structures of central banks and
governments
❖ Little wonder that the total market
capitalization for all
cryptocurrencies is over $350B in
December 2017.
❖ This is a massive capital flight
from traditional banks and fiat
currencies to de-centralized
money.
11

12. Who Supports BitCoin?
❖ Bill Gates: Big fan of disruptive technology; also relishes
the implications for the ‘un-banked’ poor via the work of
he and his wife’s Foundation.
❖ Ben Bernanke: Former Fed Chair; ironic support for the
de-centralized money system; publicly critical 2-years
ago, now very publicly supportive - keynote at
blockchain conference Fall 2017.
❖ Warren Buffet, Richard Branson, Julian Assange, Ashton
Kutcher, Mike Tyson, and Jim Cramer.
12

13. Supports BitCoin (Cont’d)
❖ Accepting Payments: Target, Tesla, Overstock,
MicroSoft, Wikipedia, MIT’s Bookstore, RE/Max
London, Dish Network, PayPal, Intuit, Subway, Whole
Foods, Bloomberg, Gap, 1-800-Flowers, Apple App
Store, Dell, Home Depot, K-Mart, Virgin Galactic,
Victorias Secret, Zappos.
❖ US State Department hosting BlockChain conference in
October 2017.
13

14. Supports BitCoin (Cont’d)
❖ European Union declared BitCoin and other cryptocurrencies
can be exchanged w/o taxation in 2015; treated the same as fiat
currency.
❖ Countries: Vietnam, Japan, Switzerland, Papua New Guinea,
Estonia, United States, Denmark, Netherlands, Finland, United
Kingdom, Australia, Canada, Nigeria, S. Korea (massive use
and adoption, though recent state moves toward banning
exchanges.
❖ Companies Investing Resources: Walmart, IBM Global Services,
Nestle, Bank of America, Accenture.
14

15. Case Study: Response to JP Morgan
JP Morgan Chase’s CEO Jamie Dimon recently made statements deriding BitCoin,
referring to it as a fraud, and suggesting that if any of his firm’s traders bought the
cryptocurrency, he would fire them. He also said his daughter bought BitCoin, and then
added sarcastically, “and she thinks she’s a genius.” The following is a challenge to his
un-grounded comments.
———————————————————————————
BitCoin & The US Dollar: A Rational Response To Jamie Dimon, by Dale Westervelt,
published on LinkedIn, 19 September 2017 (http://tinyurl.com/ydgh6d2c)
A handful of weeks ago, Jamie Dimon, the head of JP Morgan Chase, took provocative
shots at BitCoin, calling it--among other things--a "fraud." It's reasonable to take an
apples-to-apples comparison of BitCoin and the US dollar to test the validity of his
claim--despite that he himself offered no substance behind it.
15

16. Case Study: Response to JP Morgan
Let's start with Dimon's apples, the US dollar and the banking system. Of the nearly $3.8T
in the US dollar money supply, only about 10 % exists in hard cash. Roughly 90% is digital.
This is to say that, when the Federal Reserve prints trillions more dollars for their
"quantitative easing" projects, they are merely typing several more zeros into their digital
ledger. This has the effect of increasing the supply and diluting the value of our currency.
Anyone saving their US dollars loses money--and spenders pay more for everything--when
the value of his or her money is decreased.
Consider our national debt, which doubled during both the previous two administrations
and is now over $20T. It's unlikely that this number will ever be paid down to a small fraction
of the total. So, it's not hyperbole to call it a somewhat phony number.
In other words, if the debt cannot and will not ever be paid down, what's the difference
between $20 trillion and $20 quadrillion? And remember, 90% of our money supply is
16

17. digital--and theoretically infinite. So… higher debt and zero interest rates? Add more zeros to
the ledger.
Is this a fraud?
(Note: Dimon's comments were just prior to the close of Q3, when his company looked to
show at least a 20% decline in revenues. Ironically, BitCoin was up--even after a brief 40%
pullback--more than 200% during the same period.)
Now consider BitCoin.
It's no more or less "digital" than all but 10% of the world's reserve currency, the US dollar.
Between 2011 and 2014, the number of "unbanked" people around the globe was reduced by
20%, from 2.5B to 2B, according to the World Health Organization's latest publicly available
online data.
Case Study: Response to JP Morgan
17

18. Case Study: Response to JP Morgan
Here's what this means: a poor Nigerian with a text-enabled Nokia phone, with proximity to
a solar panel and internet connectivity, can hold in their hand their own bank--the only one
they've ever known--and participate in economic society for the first time in their lives. Is
this a fraud? (Perhaps Chase could have offered them an account.)
Lastly, and straight to the point, when a BitCoin transaction is approved on the BitCoin
networks BlockChain, here's what happens instantaneously: the sender's finite BitCoin
supply is reduced and the recipient's finite BitCoin supply is increased by the exact same
amount--to the one hundred millionth of a BitCoin. The public ledger is reconciled by both
the debit and the credit. Maybe this is the fraud?
(Not so much!)
18

19. Case Study: Response to JP Morgan
PS Google his statements from 12 September 2017 ... and then find out how much institutional
money his firm poured into BitCoin over the past several months HERE. His statements
moved the markets, so possibly the statements themselves were fraud?
** NOTE: A little over a year ago, one BitCoin was worth about $600. As of this posting, BitCoin
hit another high today of more than $11,400. This is a 1,665% increase in a year and BitCoin
now has a $350B market cap. Yeeesh!
Dale Westervelt
Originally published on LinkedIn, 19 September 2017
dswestervelt@gmail.com
19

20. BitCoin Forks
❖ Cryptocurrency Hard Fork: Software developers change a
cryptocurrency’s code, causing an incompatibility between the
previous coin’s code and the new code; in BitCoin’s case, this
created 2 new coins.
❖ BitCoin Cash: Happened on 1 August 2017; purpose - group
of miners (particularly in China) wanted a larger block size
than 1 mb, so BCH has 8 mb’s capacity
❖ BitCoin Gold: Scheduled for 25 October 2017; purpose is to
de-centralize mining, allowing anyone who holds BTC to be
a miner; sometimes referred to as “the people’s fork”
20

21. BitCoin price chart 2010 through Q2 2017. Price surged to $5,000 in September,
pulled back to $3,000. Price $10,635 in late November, up 1,665% from October 2016
BitCoin Price
21

22. Ethereum (ETH)
❖ “Ethereum is a decentralized
platform that runs smart contracts:
applications that run exactly as
programmed w/o any possibility
of downtime, censorship, fraud, or
third party interference.”
(ethereum.org)
❖ “These apps run on a custom built
blockchain, an enormously
powerful shared global
infrastructure that can move value
around and represent ownership
of property.” (ethereum.org)
22

23. Ethereum (Cont’d)
❖ Launched in June 2015; 9-months later had a $1B market cap
❖ MicroSoft launched Ethereum Blockchain as a Service (EBaaS) in
November 2015 - partnered w/ ConsenSys and use MS’s Azure
(cloud-based) network
❖ Integrated an all-purpose programming language with its own
blockchain
❖ “Ethereum is a worldwide distributed decentralized computer with
theoretically unlimited power.” (CoinTelegraph.com, “What is
Ethereum?”
❖ Market Cap = nearly $46B in December 2017
23

24. Ethereum Hard Fork
❖ Planned change to atheneum’s underlying source code
to enhance the network’s functionality
❖ The planned enhancement phase is called “Metropolis”
❖ The first fork occurred on 16 October 2017 and is called
“Byzantium.” Internet reports are that it is running
smoothly.
❖ The second fork in the Metropolis phase is
“Constantinople,” planned for sometime in 2018
24

25. Etheum price went from $10 in January to current
price of $476, an increase of nearly 4,660% in 2017
Ethereum Price
25

26. Ripple (XRP)
❖ Connects banks, payment
providers, digital asset
exchanges, and corporations
via RippleNet to provide one
frictionless experience to send
money globally
❖ Proposed to solve the problem
of global payment systems:
inefficient (low speed); non-
transparent; and too costly.
❖ Exclusively selling to banks for
remittance transfers
26

27. Ripple (Cont’d)
❖ Used by MUFG (Bank of Tokyo), UBS (Union Bank of Switzerland),
and RBC (Royal Bank of Canada), YES Bank of India, BBVA (2nd
largest bank in Spain)
❖ xCurrent software “enables banks to differentiate themselves by
offering new cross-border payments services while lowering the
cost of settlement.” (ripple.com)
❖ Created a “global graph of liquidity” called Interledger, which is the
conduit for sending payments efficiently.
❖ Market cap = over $9.7B in December 2017
27

28. Ripple price was $.008 a year ago and is
$.27 today, an increase of 3,275%
Ripple Price
28

29. BitCoin Cash (BCH)
❖ Result of BitCoin’s hard fork on 1
August 2017
❖ Everyone who had BitCoin
received BCH on the same day
❖ Proposed to solve a perceived
scalability problem with BitCoin
block size (1 mb) with an 8 mb
block size
❖ Compatible with a dozen wallets
and traded on 20 exchanges
❖ Market Cap = $26B in December
2017
29

30. BitCoin Cash price opened at $278 on 1 August 2017
and is $1,596 in early December, an increase of 474%
BitCoin Cash Price
30

31. Litecoin (LTC)
❖ “Litecoin is a peer-to-peer
Internet currency that enables
instant, near zero cost
payments to anyone in the
world.” (litecoin.org)
❖ “Litecoin features faster
transaction confirmation times
and improved storage
efficiency than the leading
math-based currency
(BitCoin).” (litecoin.org)
31

32. Litecoin (Cont’d)
❖ Technology is mostly identical to BitCoin, but adopted
Segregated Witness (SegWit - process of increasing
block size by removing signature data) and the
Lightening Network—allowing greater transaction
volume & reducing bottlenecks
❖ Was released on 7 October 2011 on GitHub by Charlie
Lee, a former employee of Google
❖ Market Cap = $5.6B in December 2017
32

33. LiteCoin’s price 1 year ago was $3.79 and is $103.31
in early December 2017, an increase of 2,626%
LiteCoin Price
33