Bitcoin is different things to different people. The first time I've heard this sentence, I immediately realized its profound truth. How you look at Bitcoin - and how you understand and describe it - depends largely on your view of the world. It depends on your level of understanding of numerous subjects: economics, money, technology, game theory, distributed systems, cryptography, physics, mathematics, even biology. But your educational background isn't the only variable. Your upbringing, your ideology, even your political views - all these will influence how you see and understand Bitcoin.
To some, Bitcoin is a once-in-a-millennium invention1: the greatest thing that happened to money since we started picking up yellow rocks thousands of years ago. To others, it is the greatest Ponzi scheme on earth: funny internet money that has no intrinsic value. To me, it is one of the most fascinating phenomena of our time. I see it as a combination of technology, monetary invention, computer network, social movement, silent revolution, and so much more. A piece of machinery that is both simple and extremely complex at the same time. A living, breathing, cybernetic organism that is more than its parts.
I'm convinced that Bitcoin will touch all of our lives at some point in the future, just like electricity did in the past and the internet does today. Most people are still unaware of this possibility, which is, at least in part, why I am writing this book. I hope that looking at Bitcoin from many different perspectives - explaining bits and pieces as we go along - will help some people to make sense of this strange thing. If you're thinking: "I still don't get Bitcoin," then this book might be for you.
"What is Bitcoin?" is the natural question to ask. Hundreds of thousands, probably millions of people, have asked themselves this exact question in the last couple of years. I was one of these people, and I still ask myself this question periodically.
I'm afraid there isn't a short and simple answer. Many smart people have tried to give one- or two-sentence explanations, but they all fall short in one way or another. They have to. The phenomenon in question is too big, too multi-faceted, and too nuanced to be condensed in a short paragraph or tweet. What these bite-sized explanations can do, however, is draw a sketch of the many ways that Bitcoin can be described and understood. Thus, let's consider some of the most memorable ones, starting with two that are both creative and cheeky:
Imagine if keeping your car idling 24/7 produced solved Sudokus you could trade for heroin.
[Bitcoin is] Math beanie babies that live in your computer created by your computer playing Numberwang with other computers to vote on which very giant excel spreadsheet we all have a copy of is correct.
What's amusing about these answers is how much truth they contain while also being absurd. Yes, you can trade bitcoin for heroin - if you couldn't, it wouldn't be good money. Yes, computers are kind of playing Numberwang with other computers, and yes, it is a little bit like having a giant spreadsheet on all of these computers. However, there is much more depth to Bitcoin than those answers would imply. Also: no, computers involved in Bitcoin are not idle - they do useful work. And no, bitcoin isn't "math beanie babies" - it's not just math, and unlike beanie babies, no company is behind it.
Now let's take a look at some of the more earnest attempts. Here is what serious people have to say when trying to answer "What is Bitcoin?" in a bite-sized way:
Bitcoin can be best understood as distributed software that allows for transfer of value using a currency protected from unexpected inflation without relying on trusted third parties.
[Bitcoin is] a global, neutral payment network that allows anyone on earth to transact a huge or tiny amount of value with anyone else within minutes, without needing to ask permission from a government, without disclosing one's personal information, and without the possibility of censorship.
Bitcoin is global, open, borderless, freedom money.
Saifedean Ammous, economist and author of The Bitcoin Standard, focuses on the economic aspect of unexpected inflation - and rightly so. It is difficult to say what properties of Bitcoin are essential since everything in Bitcoin is interwoven and not easily separable. However, protecting the system from unexpected inflation is undoubtedly one of the most important aspects. The strictly limited supply is an integral part of Bitcoin's soul. 21 million. Not a single coin more. This absolute scarcity is not only what lures most people in, but the promise of an unchanging monetary policy is what gives the system its integrity.
Alex Gladstein, Chief Strategy Officer of the Human Rights Foundation, focuses on the open and permissionless nature of Bitcoin. In a world where governments and corporations have immense power over the financial dealings of individuals, he is right to highlight these issues. Resistance to censorship might not be important to you, but for political dissidents, journalists, reporters, oppressed minorities, and people living under authoritarian rule, access to reliable and censorship-resistant money is essential.
Yan Pritzker, the author of Inventing Bitcoin and co-founder & CTO of Swan Bitcoin, combines many important properties of Bitcoin in his short, single-sentence answer. Like the internet, Bitcoin is global in nature. Yan also highlights the freedom-enabling aspect of this technology by calling Bitcoin freedom money. Not only are you free to use Bitcoin as you see fit, but Bitcoin ensures certain freedoms at the base layer of the protocol. Everyone is free to join the network, send and receive payments, store value, create accounts, audit the supply, participate in the mining process, and so much more. These freedoms are guaranteed through the nature of the system and will be guaranteed for as long as Bitcoin exists. I can say that with confidence because what Bitcoin is is a personal matter. If these freedoms disappeared, it wouldn't be Bitcoin anymore, at least not to me.
Before we dive deeper, let me quote two other gentlemen. I consider them friends, even though we've never met. (Bitcoin is weird like that.) Note, however, that I also consider them to be serious people, just like the authors, professors, and C-level executives above. The fact that I don't know their real identities doesn't diminish their contributions and insights. Bitcoin had a pseudonymous creator, so I think it is fitting that the Bitcoin space has an army of pseudonymous users, creatives, authors, and programmers. Here is what these two have to say about what Bitcoin is:
Bitcoin is the people's money.
Bitcoin is like early electricity. Raw, dangerous, seems very volatile and hard to use. With time it'll start to feel safer, easier, and normal. Like electricity, it will inspire and power new unimaginable industries. And one day we'll wonder: how did we live without it?
Money for the people, by the people. Bitcoin is a peer-to-peer electronic cash system, as Satoshi Nakamoto explained in the title of the Bitcoin whitepaper. Bitcoin already feels safer, easier, and more normal to some. I hope that after reading this book, it will also feel safer, easier, and more normal to you.
At last, let me share with you another quote I stumbled upon while digging through all the material that I have saved over the years: "Bitcoin is too rich in properties. It would be a waste to have the same pitch for different people." I wholeheartedly agree, which is why I believe that Bitcoin cannot be well-understood by concentrating on a single facet of it. Instead, I believe that one has to try to understand Bitcoin holistically, which is why I will show you 21 Ways to Look at Bitcoin.
Some people argue that Bitcoin can also be understood as a discovery, but more on that later. ↩
Consider sharing it, translating it, or remixing it in another way.