What is Bitcoin

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It seems almost impossible to explain ״What is Bitcoin” to someone who is new to it. After going through every possible tutorial I decided that the main reason people don’t understand what Bitcoin is, is due to the fact that the explanation is usually too technical. So I decided to create my own “What is Bitcoin for Dummies” video. 2:40 minutes of a completely non technical, simple explanation.

And here’s the text version:

Imagine for a second that you are in charge of the task of inventing money. But you get this task today, not in the 12th century when money was initially invented. You’re basically asked to find a way for people to exchange an agreed value between one another.

I know it’s hard, but try to think, if this was done today, would we really be using metal coins and paper for this ? Perhaps we can find a better way ?

What if we wrote down somewhere, maybe in an electronic ledger what value each person has. This way we can keep track of how much value every person can spend. So if I for example do some work for you, you would probably give me some of your value in exchange. Let’s name this value “Bitcoin”.

But how will people be defined in this ledger ? I mean, how will someone send me value or Bitcoins….I guess we will have to give each person a unique identifier or address. We will keep track of which address (or person) holds which value. These addresses are known as “wallets”.

So we’ve decided to write down in our ledger which address, or wallet, holds which amount of value. This ledger is called “The block chain” – and it keeps all of the transactions from the beginning of time.

Now it’s time to make sure that everyone follows the rules. How can we do this ? How can we insure that no one cheats and says that their address has more value then what they actually own ?

I know! We’ll spread this ledger around to tens of thousands of people, so whenever someone wants to transfer some of his value in order to get something we can check to see if his story adds up to what everyone else thinks. If he’s good for his value, we will let him spend it.

But why would these people want to carry this ledger on their computer, and who has time to verify all of this each time a transaction is made ?

Well, what if we rewarded people who did this with value, that could be a good idea. Hence the “miners” were born. Tens of thousands of people who get paid in Bitcoins for going through the ledger, making sure that everything is in order and that no one is cheating (including themselves).

You’ve just invented a modern solution for money!  And that’s exactly what Bitcoin is…A digital decentralised currency…

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Ofir Beigel

Owner at 99 Coins ltd.
Blogger and owner of 99Bitcoins. I've been dealing with Bitcoin since the beginning of 2013 and it taught me a lesson in finance that I couldn't get anywhere else on the planet. I'm not a techie, I don't understand "Hashes" and "Protocols", I designed this website with people like myself in mind. My expertise is online marketing and I've dedicated a large portion of 99Bitcoins to Bitcoin marketing.

6 Comments

  1. Excellent explanation about what Bitcoin is. i have one question about the ‘miners’. I understand their function but how would you describe the comparable role in the Non-Bitcoin world of financing? In other words who is responsible for maintaining the integrity of the Dollar, the pound the Franc etc.?

    • In the “fiat” world at the moment this would be the banks – their central computer does all of the validation and makes sure no one is breaking the rules. Which gives then ultimate power…

  2. What if the individual has no value? We live in a society were large portions of the society lives off of the government, food stamp, aid to dependent children, welfare, drug sales, under the table work the society of today is fractured, and a large portion of the community either has no real value, or has gone to lengths to hide any value they may have from the government structure? And, how is the value of those who don’t share their value with any or the amount or choose to want to remain off the grid, what then, what happens to those that are on the streets, hungry already, Not everyone plays by the rules any rules, or simply don’t have a value?

    HERCULE TRIATHLON SAVINIEN

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