introduction to Bitcoin - what you really need to know
To truly understand what Bitcoin is, one must first understand the innovation behind Bitcoin, and the players in the community that support its ecosystem.
What is Bitcoin
Bitcoin is a software protocol that allow for peer to peer exchange of value on the internet. It behaves like money on the internet. Encrypted digitized money can be sent directly to anyone, anywhere, anytime, semi-anonymously, instantaneously with negligible cost and with no control by a central authority. Bitcoin transactions are validated and stored permanently and securely on a decentralized and distributed public ledger - the Bitcoin Blockchain.
Bitcoin Users
Bitcoin users manage their Bitcoins through a software wallet running on their phone or computer or a hardware wallet for best security. Bitcoin users may transfer Bitcoins to other Bitcoin wallets, purchase products or services where Bitcoins are accepted. Users can perform fiat/Bitcoins transactions using online cryptocurrency exchanges, over-the-counter (OTC) establishments or through individuals. Many transactions are also done between other cryptocurrencies and Bitcoin using online cryptocurrency exchanges.
Bitcoin Developers
The Bitcoin blockchain software run on thousands of computers across the world wide web. The software is open source with software developers across the world contributing, reviewing and agreeing on s/w fixes, upgrades and feature developments.
Bitcoin Miners
Bitcoin mining (creation of Bitcoins) is based on the game theory incentive mechanism. Miners are individuals financially incentivize to utilize their computing power to run Bitcoin hashing algorithm to mine coins. Individuals and organizations usually join or form mining pools for better cost-benefit results.
The miners are also involved in the process of validating and adding Bitcoin transactions onto the Blockchain.
Bitcoins innovative revolution
Although Bitcoin software uses encryption for security and privacy, the revolutionary aspects of Bitcoin innovation is in the mining and consensus algorithms.
The mining algorithm caps the number of Bitcoins into existence at 21 million, as such Bitcoin can be considered as deflationary money.
The consensus algorithm follows programmed consensus rules to protect the blockchain from malicious attacks and manipulations. This makes Bitcoin Blockchains distributed ledger transparent and immutable with the ability to ensure that no single entity (miner) can enforce majority control of the blockchain. Therefore, not only are Bitcoin transactions stored on the blockchain verifiable and secure, they also do not require the “trust” of a central authority for oversight.
Unless you can fully comprehend the significance and impact of a decentralized, immutable and secure system of money can have on our lives – you will not be able to understand nor foresee where Bitcoin (nor any other decentralized crypto) is going.
The promoters of Bitcoin are highly driven and competent tech savvy innovators and investors. Most of them are millennials who have grown up with the internet and computers. Many are self taught, are great hackers & programmers. Some individuals have also moved onto the crypto space because of their disappointing experience working in the corrupt world of finance. They all have the following in common – understanding of economics and history, awareness of the present unethical global monetary/financial system, and a complete distrust of governments. Some label themselves as libertarians, while others just disrupters, visionaries, or altruists. Their movement can be seen as a revolution - using social media platforms to promote Bitcoin and supporting the evolution of decentralization to combat censorship and control from institutions and governments.