Hello Steemers! I've recently launched a blog called thebitcoinbullet.com with the intent to convince more people to jump on board the cryptocurrency train. It's brand new so I'm building now, and the first thing I'm trying to make is a resource for people who aren't technically inclined but want to learn about Bitcoin. It's also going to be helpful for recommending to people when you're trying to explain it to them and they're just not getting it.
I know there's stuff out there, but I figured one more perspective can't hurt, right? With that thought in mind, I'm putting them all up on Steemit first so I can gather feedback from you, the crypto-community. I'm really trying to put the cookies on the lower shelf here, so if something doesn't quite make sense, I'd like your feedback.
So, without further ado...
What is Bitcoin - Understanding the Blockchain
The first question most people ask when they hear about Bitcoin is, "what is Bitcoin?" What follows is often an excited explanation with a bunch of words you haven't heard before, and you're left wondering what the heck they are talking about. Well I'm here to help with that.
I'm going to explain Bitcoin in a way that makes sense to the average person who isn't a techno-geek, and doesn't want to be one. This isn't going to be a technical explanation, but one that will help you understand the concepts without having to learn programming or complicated math. Bitcoin is a totally new invention, like the internet was, and like the internet you don't have to understand exactly how it works to use it.
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So, what is Bitcoin?
Well, when we talk about Bitcoin, or BTC, we're really talking about three things;
Bitcoin
Basically this is digital cash. Just like the cash you get from the government, BTC can be traded from one person directly to another person in exchange for goods and/or services without a go-between like a bank or credit card company
Blockchain
A digital record of all transactions, stored on computers all over the world. Unlike paper cash or coins, BTC isn't physical. Because of this there has to be a way to make sure that people can't figure out a way to cheat the system and make fake BTC, or take their BTC back after paying someone. BTC accomplishes this with a copy of all transactions stored on millions of computers world-wide.
Network
Because it's digital and there has to be a ledger kept, there must be someone or something keeping the ledger up to date. BTC does this by giving people a reason to keep the ledger up and process transaction: they get paid. There are other computers checking their work making sure everyone agrees.
Lets break those down a little bit, one at a time.
Bitcoin
The idea of BTC as digital cash trips some people up because in this day and age we're all so used to the idea that money has to come from the government. There's a lot of games played with definitions about what makes money, but the reality is that anything people want to use as money, they can. BTC is cash because people want it, and they'll trade you stuff for it. You can trade it for gold and silver, U.S. Dollars, goods and services, and virtually anything you can think of. It may not be "money" but it's for sure cash.
Another reason BTC is like cash is because the transactions are irreversible. If you send someone BTC, the only way to get it back is for them to give it back to you. There's no calling Visa and having them cancel the charge. Similar to a five dollar bill, once it's handed over, it's gone.
A third reason BTC is like cash is because you can "make change." Well, technically you don't need to make change in Bitcoin, but for cash to work, you have to be able to break down larger denominations into smaller, so you can buy something worth a hundred bucks, or a quarter with the same bill. With Bitcoin, you just send fractions of a BTC in the exact value you want. So, you can buy something for one BTC, or .00001 BTC.
Blockchain
Image By Davidstankiewicz (Own work) [CC BY-SA 4.0], via Wikimedia Commons
When you spend paper cash, you just hand it to another person and the deal's done, but with Bitcoin, it's more like sending an email. Each person has a wallet which is kind of like an email program like Outlook or Thunderbird and an address, just like email. So, when you send bitcoin from one wallet to another, the record of that transaction is stored on the Blockchain. This record is millions of computers all over the world and they're all constantly checking each other to make sure they all agree.
How all this works is basically magic to most people. The short answer is that it's made possible by cryptography (think secret codes and passwords and math). There are more detailed explanations available for those interested, but most people don't need to know how all this stuff works. Bitcoin is open source, though, meaning if you are a programmer and you think it looks fishy, you can take a look under the hood and see how it works. In fact, that's how Bitcoin is still being developed!
The big innovation for Bitcoin, is that the Blockchain is decentralized, which means there isn't a central authority, or location where it exists. Instead, the Blockchain exists on a network of computers run by users all over the world sharing the responsibility. Being on computers all over the world makes it very resistant to being shut down or taken over because you have to actually shut down all the computers running the program to shut the Blockchain down. This means that even if a government makes Bitcoin illegal, it will still live on in other countries, and it will still have value.
Network
The Bitcoin network is all the parts of Bitcoin working together to form a world-wide economy. It takes a lot of real life time and effort, computing power, and money spent on equipment and utilities to make all this happen. This network is where Bitcoin derives its value, because real people have real money and time invested in it and they have a financial incentive to keep the network going.
The Bitcoin Network provides financial incentives to operate and maintain the network, so there will always be people willing to maintain the network as long as they can make money by doing it. Mostly this is done by specialty equipment and now there is a whole industry around creating these machines.
The network grows stronger with every person who uses Bitcoin. Some people just like to play with new tech so they buy a little to spend. Some people want to buy some in the hopes it will increase in value making them a nice profit. Some people actually work for Bitcoin. All of these people and businesses add to the strength of the Bitcoin network.
That's a basic overview of what Bitcoin is and how it works. There's definitely lots more to learn about this new technology, so stay tuned to thebitcoinbullet.com for more free info!!
