FIRST STEPS
BITCOIN BASICS

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