What is Bitcoin? 🤔
💡 Daily Reminder: Stay humble, stack sats
Bitcoiners,
In its simplest form, Bitcoin is a software protocol and a digital asset.
Here is an overview of Bitcoin for beginners to help wrap your head around this revolutionary technology.
Bitcoin is Money
Bitcoin is money for the internet because it is fast, secure, and borderless.
Bitcoin takes on all the traditional functions of money including buying and selling goods, sending value to people, and extending credit. The digital asset "coins" are not physical or even digital coins, they are transactions that transfer value from sender to recipient. One must possess private keys often stored in a digital wallet in order to sign transactions and transfer value.
Bitcoin can be exchanged for any other currency such as US dollars at specialized currency exchanges.
Bitcoin is Software
Bitcoin is a software protocol compromised of a peer-to-peer (P2P) network and distributed computing innovation.
The P2P aspect keeps the software decentralized and distributed as nodes communicate all over the Earth. The blockchain is a public transaction ledger giving anyone the ability to audit the legitimacy of transactions at any given time. Lastly, the software combines consensus rules with a Proof-of-Work algorithm to reach global consensus every 10 minutes on average.
It is important to note that bitcoin the asset/money/currency is the first application of the software and there are many more applications being built upon this distributed computation innovation.
Bitcoin by Design
By design, Bitcoin was engineered to be decentralized in order to resist control from a central authority or centralized attacks.
Bitcoin miners expend energy in order to secure the network from attacks. Additionally, miners validate legitimate transactions every 10 minutes on average and are rewarded with a fixed amount of bitcoin for expending energy. The Bitcoin protocol includes a set of rules to limit how much bitcoin can be issued as well as how much can ever be produced.
The design of bitcoins distributed network security and economic incentives are what value the asset at around $20,000 USD per bitcoin today.
Happy Wednesday,
-Pod
PS. Most of today’s content was summarized from Saylor.org’s Bitcoin for Developers I free online course.
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Eric Podwojski
Founder, Bitcoin EDU
Twitter: @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.
