What is Bitcoin?

<aside> 💡 Bitcoin is a unique form of trustless, digital money that allows users to directly and securely transact with each other over the internet.

In essence, the Bitcoin Network maintains a decentralised ledger that keep track of the movement of bitcoin.

To understand why it is important to have a trustless, digital, and decentralised monetary system, please review ‘Why Bitcoin?’.

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An easy but most holistic way to describe "Bitcoin" starts by looking at two concepts that most people are familiar with

  1. Money - Being a currency; something that participants agree is a ‘medium of exchange’.
  2. The Banking System - A network; a system that accounts for, and records the transactions of each participant.

We can briefly look at how Bitcoin is comprised of the two above concepts, how they are similar, and how they can differ:

The Bitcoin Currency

Bitcoin

Scarce

There is a known issuance schedule. Fixed supply of 21,000,000. - “Hard Money”

Divisible

Fractions of a bitcoin are called Satoshis. This is to 8 decimal places; eg. 0.00000001

Verifiable

Cannot be counterfeited.

Fiat Money

Not Scarce

There is an unknown supply of dollars. There is no maximum. - “Easy Money”

Divisible

Fractions of a Dollar are called Cents. This is to 2 Decimal Places; eg. $1.00 USD

Not Easily Verifiable

Can be counterfeited.

The Bitcoin Network

Bitcoin

Public Ledgers

Bitcoin's underpinning technology, referred to as "Blockchain", provides for a transparent monetary system - There is no fractional reserve banking on the Bitcoin Network.

Decentralised

The network is operated by volunteers and network participants. No permission is required, and you can not be excluded.

Portable

Fast and inexpensive settlements with everyone and anyone over a secure protocol.

Censorship Resistant

Can not be interfered with via a third party.

Fast Payment Finality

Transactions occur quickly and are easily verifiable. Can not be reversed.

Efficient

The Bitcoin Network results in payment finality in ~10 minutes, without the security and trust issues associated with third parties.