Bitcoin is a system for electronic transactions without relying on trustSatoshi Nakamoto
Why is bitcoin revolutionary?
Bitcoin’s most important feature is that it’s a trust machine.
Bitcoin is a completely self running computer program, it does not rely on any trusted third party to operate. All of bitcoin’s functions are facilitated via computer programming and all of bitcoin’s security features are based in math, physics, and probabilities.
Unlike today’s currency which is maintained by banks and governments, bitcoin is open source software, a banking system that is instead run on top of the internet.
This is trust in math, trust in code, not in humans.
The whole point of bitcoin is remove the distribution, production, and control over money from humanity. And the corruption that comes with it.
While traditional banking and payment systems heavily rely on trust, Bitcoin offers a way out of this system…Such a framework allowed the creation and implementation of a system effectively disjoined from government control, delivering a revolutionary separation of money and state for the first time in history.Bitcoin Magazine
Bitcoin’s breakthrough was solving the byzantine generals problem, Satoshi discovered a way for people to coordinate without needing to trust each other. Transactions are facilitated through code and protected by cryptography. The source of truth is determined through a global competition which leverages the physical laws of nature and energy to keep it incorruptible.
Bitcoin was designed to be simple, have no loopholes, be incredibly secure, and do one job and do it better than anything else. It doesn’t have any bells or whistles and it doesn’t try to be anything that it’s not. Bitcoin is sound money, the best money humanity has ever had.
You can trust that bitcoin won’t cheat you. Bitcoin is code. It holds no national, political or institutional allegiance. Bitcoin doesn’t know your economic status, age, religion, gender, ethnicity, or political views. Bitcoin doesn’t know who you are, or what you are. It doesn’t know if you’re a car, a refrigerator, or a drone. All it knows is it’s code. It has simple rules. If you want to send a unit of bitcoin, you have to provide the keys. It’s that simple.
You may be wondering what makes this so special? We have tons of trusted institutions, built and refined over hundreds of years for the purpose of safeguarding people’s money.
In the wise words of Satoshi:
The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.
That’s it. That’s the revolution.
Bitcoin is a whole new monetary and financial system that’s based on uncontrollable money. The keys to unlimited wealth have been taken away from human beings and because of that society will flourish.
The Byzantine Generals Problem
How can I trust that when I send you a bitcoin, you won’t cheat me and just spend it twice? How can I trust that you will follow the rules? How can we both agree on how much bitcoin each of us owns? Information can just be copied over and over on the internet, in fact that’s the point.
If you have an apple, and I have an apple, and we exchange apples, then you and I will still each have one apple.
But if you have an idea, and I have an idea, and we exchange these ideas, then each of us will have two ideas.George Bernard Shaw
In order to solve this problem, Satoshi had to invent digital scarcity, he had to put physics into the internet, he had to recreate the law of conservation of energy, within cyberspace.
To accomplish this task, he created a decentralized ledger, the first accounting innovation in over 700 years. Decentralized ledger just means that everyone is checking every transaction at all times, and everyone has access to the entire history of the ledger, for a fully transparent and fully secure money system.
Bitcoin is special because this had never been done before, and has yet to be replicated since. Every other blockchain can be changed by some powerful special interests. Bitcoin is the only immutable unchanging immortal and invincible network in the world.
Therefore, bitcoin has value because you can guarantee transactions are legitimate. You can trust that the ledger isn’t fraudulent. You can trust that the money is really yours. You can verify for yourself that you are in possession.
A common motto of bitcoiners is “don’t trust, verify”. For the first time, we have a system of money where anyone can verify for themselves their money is real, and the rules of the monetary system are being followed. When it comes to money, people are incentivized to cheat. To take the easiest path possible. And for thousands of years humanity has faced this wealth confiscation dilemma, where we had to trust someone else with our savings.
When designing bitcoin Satoshi flipped the incentive structure on it’s head. Bitcoin ensures that everyone will follow the rules, because following the rules is what makes you the most money. Bitcoin’s neutrality as a code based computer software means the network is immune to changing, tampering, and fraud.
The Golden Tablet
I think it’s helpful to think of bitcoin as “The great excel spreadsheet in the sky”. Think of it like an ultimate google doc, a shared spreadsheet in the cloud which is just a list of transactions. That’s literally all bitcoin is, it’s just a ledger, a list of who sent money to who.
Ok that’s all well and good, but this great excel spreadsheet in the sky, why is that revolutionary?
Ok well let’s spice up the metaphor a bit, bitcoin is digital gold right? So think of it like the excel sheet in the sky is actually more like a golden tablet in the clouds, or on cyberspace mountain, this is some Moses shit, written into the tablet is a list of all of the bitcoin in the world, who sent it to who, who owns it, and who doesn’t.
Once you send some bitcoin to someone, a new line is magically carved into the tablet and it stays there forever. Anyone can see this golden tablet, it’s open and transparent and visible to all, but no one can change it. No one can actually touch this tablet, no one can change the rules. It exists beyond the clutches of humanity.
Because this tablet is immortal, it can’t be corrupted by humanity. You can trust what this tablet says because it’s impossible to corrupt.
The network is as unchanging and as automatic as the laws of physics, it’s the law of the conservation of energy written into computer software. You could also think of it like handing a piece of gold to someone.
There is no third-party involved when you hand a gold to someone. Gold is an element from nature, literally a rock, and physics governs the rules to hand a rock to someone else. Bitcoin is the money and the network, it’s both matter and the laws of physics that governs it. bitcoin is the gold and Bitcoin facilitates the transfer. Except of course this is all existing in cyberspace, a borderless and permissionless global network. A programmable and unstoppable money transfer protocol. The world’s most powerful supercomputer beaming value at the speed of light to anyone, anywhere, any time.
Bitcoin is Truth
Bitcoin is truth because all transactions are made without trust. All disputes are solved through physics and all ownership is enforced by cryptography.
You can trust bitcoin because it’s secured by math and by code, it’s not controlled by humans. This is an automated justice system programmed into software, software that can’t be changed. It’s incorruptible, it’s secure, and it’s eternal.
And not only is it decentralized and incorruptible, but remember the golden tablet magically updates itself. When you send bitcoin to someone, there’s no stopping the tablet from etching that transaction into itself for eternity.
Bitcoin is a Revolution
The purpose of bitcoin is to bring full sovereignty to the individual, and to remove all dependencies on trusted third parties. No rulers, no master, no hosts, only peersGiGi
Bitcoin is not a company, it’s not a corporation, or an organization. In fact it’s a dis-organization. It removes the need for humans to control money, it obsoletes the entire existing global monetary framework, it replaces a system of money that is manipulated, debased, and untrustworthy, to one that you can trust. A system where the rules can’t be changed to benefit the rich and powerful. A system where no matter how much bitcoin you have, you can’t alter the tablet. THAT is monetary revolution.