Bitcoin 101: A Rollicking Introduction (Part 1: The Beast, Stripped and Naked)
Bitcoin lives in the ether. It is suspended in cyberspace, hugging it out with the electrons, space elves, and other wayward creatures. It is nothing but wisps of 0’s and 1’s. It is sheer imagination underpinning lines of esoteric code, englishable only to elite hackers and computer punks. But this mysterious thing called Bitcoin, with […]
Bitcoin lives in the ether. It is suspended in cyberspace, hugging it out with the electrons, space elves, and other wayward creatures. It is nothing but wisps of 0’s and 1’s. It is sheer imagination underpinning lines of esoteric code, englishable only to elite hackers and computer punks. But this mysterious thing called Bitcoin, with all its strangeness and subtlety, represents a major turning point in technological prowess and advance for humankind. It is probably the greatest invention of the modern age alongside the internet; but right now, people either do not understand it or they are threatened by its power and potential.
So what REALLY is this beast called Bitcoin?
There is no simple, heuristic, or mechanistic way to explain it. Even its enthusiasts and evangelists have trouble demystifying it in a clear and straightforward fashion; but throughout this series I am going to attempt to illuminate BTC and hone in on its true nature so that everyone can peer beneath its skirt, and get a taste of what its undercarriage looks like. A flamboyant and lively explanation is thus necessary so that the technology becomes more accessible and less frightening. This, then, is my ultimate goal: take away fear and turn it into pleasure; turn death anxiety into euphoria for life–make Bitcoin sexy. Disrobe the monster and expose its fleshy bits.
BTC is Money—but not JUST Money.
It also is referred to as cryptocurrency. It is based off of cryptographic protocols that were originally invented by government, and later assimilated by the cypherpunks in order to protect people from government. You are thinking, “how ironic, government builds shit to spy on people, and people take it and use it to protect themselves against that spying.” Indeed, these government constructed cryptographic codes were commandeered by geeks and mavericks. Then the geeks and mavericks turned these lines of code into anti-government currency and other privacy based technology–a beautifully devilish and furtive tale, truly. It reminds one of The Matrix meets the Godfather meets virginal college boys.
Yep. Bitcoin is just an algorithm brought to life by strings of code and sweaty palms. The protocol is set up so that Bitcoin contains a ledger with units that work as measurements of value, like individual dollars or coins, except entirely digital. Imagine a paper with marks and names indicating what people owed and have paid to other people. Bitcoin is essentially a digital version of this ledger. The idea is very old. It is simple account and debt keeping. But Bitcoin is also a payment processor. It is like having money, ledger, and a bank rolled into a single platform. It is a beast with many appendages, useful for all sorts of things.
A Clear View of Bitcoin Functionality
Here is a basic example of how Bitcoin works when compared to a bank, so that everyone has a clearer understanding.
Imagine you have dollars in a bank. Now imagine that you ARE this bank, so you have sole private access to it. No one else can enter it without your permission. You control what money flows in and out. You have the master key. You don’t have to travel to a third-party bank or call them to have money sent to someone or to make a payment. You do it yourself, by yourself, with yourself (I know, sounds dirty). External banks are now obsolete; they are virtually unneeded for the bulk of transactions. You can send your own dollars, as well as receive money from others and keep track of all the transactions. You also do not have to fear someone seizing or freezing your accounts, like governments. These characteristics of Bitcoin put the power back your hands, away from banksters and other hungry political vampires. There is literally nothing that ignites the loins like the idea of keeping money as private as your sex life.
BTC is Programmable
How does Bitcoin differ from credit cards? Can’t credit cards and online banking accomplish the same thing as cryptocurrency? These are a few basic concerns people have when thinking about current money. The answer is that Bitcoin far exceeds the versatility of online banking and transacting. Cryptocurrency is a creature that knows no bounds.
Unlike centrally controlled processing and online banking, Bitcoin is fully programmable on the individual level. This allows for personalized control of money like never seen before. Bitcoin wallets could potentially be set up for multi-signature authentication, where more than one person has to sign off of a private key before sending money. It can be set up so that certain criteria have to be met before a key is unlocked and the money spent. There could even be ways to create a digital currency based lottery, among tons of other programming ideas that have not even been thought up yet. The options are limitless, but include everything from contract arrangements, escrow services, and remittances.
The centrally controlled payment systems and fiat monies cannot establish this level of versatility, because their centrally controlled and institutionalized nature disallows for much innovation. The fact that Bitcoin is decentralized and based on a consensus network allows for this type of programming. Plus all the engineering nerds can get their rocks off by making the money do what the hell they want. Nothing beats it.
Monster in the Nude
The elusive beast called Bitcoin should be thoroughly disrobed. However, things are still unclear. How the hell does Bitcoin keep a ledger for all these units? How does one make sense of that? What does it mean to be decentralized and peer-2-peer? In part 2 I will delve into some of the specifics of Bitcoin, including decentralized networks and the Blockchain which acts as the public ledger for Bitcoin. But for know, rest assured that that nature of the monster has been stripped naked, and he is not all that intimidating. He is gentle, albeit he can be somewhat shy. But he has one hell of a personality, especially when you get to know him and he divulges more secrets…
Did these ideas help clarify Bitcoin for you? What other ways can you envision to help teach cryptocurrency to the masses?
Image Sources: moneysedge.com, ibtimes.co.uk, insidebitcoins.com