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FIRST STEPS
BITCOIN BASICS

2-65′

Overview

Here’s our first overview of Bitcoin. We will start with two broad definitions, some basic terminology, and a video on Bitcoin discovery. Do not worry if you do not grasp everything yet. We are getting to know Bitcoin, little by little. 

Bitcoin in a nutshell...

Bitcoin is money no one can take without your permission. It cannot be inflated away or confiscated, because no one person, company, or government controls it.

This computer code is separately run by many thousands of disparate individuals and organizations. This high degree of decentralization is what makes Bitcoin censorship resistant and protects it against seizure and inflation.

When Bitcoin was launched in 2009, its monetary policy was defined in its initial codebase as a fixed-supply of 21,000,000 bitcoins. Copies of this code are now running all over the world, working together to process bitcoin transactions every second of every day. Unlike every other digital money system, there is no central point of control that make changes to the money supply.

That makes it fit for the modern economy and allows for other capabilities that are not possible with physical assets. Thinking of Bitcoin as “digital gold” is practical but remember that Bitcoin is much more than that!

What is Bitcoin. Casebitcoin

...and here is an alternative take:

On Feb 11, 2009, Satoshi wrote about an early version of Bitcoin on an online forum for cypherpunks, people who work on cryptography technology and are concerned with individual privacy and freedom.

Think of a paper dollar or physical metal coin. When you give that money to another person, they don’t need to know who you are. They just need to trust that the cash they get from you is not a forgery. Typically people do this with physical money using just their eyes and fingers, or using special testing equipment for larger amounts. As we have shifted to a digital society, the majority of our payments are now made over the Internet by means of a middleman service: a credit card company like Visa, a digital payment provider such as PayPal or Apple Pay, or an online platform like WeChat in China.

The movement toward digital payments brings with it the reliance on a central actor that has to approve and verify every payment. This is because the nature of money has changed from a physical thing you can carry, transfer, and verify yourself, to digital bits that have to be stored and verified by a third party that controls their transfer. As we give up our cash for convenient digital payments, we also create a system where we give extraordinary powers to those who would seek to oppress us. Digital payment platforms have become the basis of dystopian authoritarian systems of control such as those used by the Chinese government in order to monitor dissidents and prevent citizens whose behavior they don’t like from purchasing goods and services.

Bitcoin offers an alternative to centrally controlled digital money with a system that gives us back the person to person nature of cash, but in a digital form.

1 - A digital asset (typically bitcoin with a lowercase b) whose supply is limited, known in advance, and unchangeable. This stands in stark contrast to the paper notes and digital versions thereof issued by governments and central banks, whose supply expands at an unpredictable rate.

2 - A bunch of interconnected computers - the Bitcoin network, which anyone can join by running a piece of software. This network serves to issue bitcoins, track their ownership, and transfer them between participants without relying on any middlemen such as banks, payment companies, and government entities.

3 - The Bitcoin client software, a piece of code that anyone can run on their computer to become a participant in the network. This software is open source, which means that anyone can see how it works, as well as contribute new features and bug fixes to it.

Yann Pritzker (2019). Inventing Bitcoin: The Technology Behind the First Truly Scarce and Decentralized Money Explained. Download free pdf - Buy paperback edition - Yan Pritzker’s Bio

What is Bitcoin ? Excellent Intro videos

Bitcoin Terminology

This slideshow provides definitions of important Bitcoin-related terms. Have a look! 

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Anil @anilsaidso - Download his great presentations

Bitcoin History

In the age of the Internet, a group of computer scientists, the Cypherpunks, seek to code an anonymous and autonomous electronic money, free, direct, without intermediaries. All fail, except for a certain Satoshi Nakamoto who publishes the code of Bitcoin ₿ in the midst of the subprime crisis... Interviews are in English, put the subtitles on as needed.

Main use cases

Now that we’ve described it in broad terms, let’s look into Bitcoin use cases: let’s answer the central question: “What can Bitcoin do for us ?”

We already mentioned some of its advantages: its scarcity, inclusiveness, peer-to-peer nature, and resistance to censorship… Yet there’s so much to say about Bitcoin’s usefulness that a more structured approach is warranted. The following –  non-exhaustive – list presents key use cases for Bitcoin.

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The information presented on BTCTouchPoint and related social media accounts does not constitute financial advice. BTCTouchPoint.com is for information purposes only. Bitcoin is historically a very volatile investment. No one should invest more than they can afford to lose. Each investor has a different risk profile, and should conduct his or her own research to assess the suitability of any investment in the context of his or her personal circumstances.
Key points
  • Bitcoin is money no one can take without your permission. It cannot be inflated away or confiscated. No one controls it.
  • Bitcoin is digital gold and way more than that. Its supply is capped at 21M bitcoins.
  • Bitcoin is both : 1) the digital asset, 2) the network, and 3) the software
  • Bitcoin was discovered around 2008 by a mysterious Satoshi Nakamoto, building upon the work of cryptographers concerned with individual privacy and freedom.

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