But just what is bitcoin?

How can there be digital money? Is it, like, some kind of

Internet money? Is it something you should even be concerned

about, or indeed should you shy away from it? In the news, bitcoin

coverage tends to be sketchy. You may have read articles about

people losing their money, or using bitcoin for illicit purchases on

the black market. Or you may have read amazing success stories of

people and businesses flourishing by using it.

Fear not, dear readers, I will patiently explains exactly what bitcoin is,

discusses some of the possibilities this wonderfully disruptive yet

inspirational technology holds, and lays out some of the potential

benefits for all of us. Bitcoin could change our lives in a similar

way that the Internet has done over the last few decades.

The Origin of Bitcoin

The most important aspect of bitcoin may be the concept behind

it. Bitcoin was created by developer Satoshi Nakamoto. Rather

than trying to design a completely new payment method to overthrow

the way we all pay for things online, Satoshi saw certain

problems with existing payment systems and wanted to address


The concept of bitcoin is rather simple to explain: During the

financial crisis of 2008, people from all over the world felt its

debilitating economic effects.

As the global financial system teetered on the brink

of collapse, many central banks engaged in quantitative easing —

or in simple terms, turned on the printing presses. Central banks

flooded the markets with liquidity and slashed interest rates to

near zero in order to prevent a repeat of the Great Depression of

the 1930s. The effect of this was large‐scale fluctuations in fiat currencies

and what has since been termed currency wars — a race

to competitively devalue so that an economy can become more

viable simply by its goods and services being cheaper than those

of its neighbors and global competitors. The response of central

banks around the world was the same as it always has been when

these things happen: Governments had to bail out affected banks

and they printed extra money, which further devalued the existing

money supply.

In bailing out the banks, there was a net transfer of debt to the

public purse, thus adding to future taxpayer liabilities. This created

a sense of social injustice among some quarters. Aside from

that, no one really knows what the long‐term effects of quantitative

easing will be. Perhaps inflation at some point in the future

and a further devaluation of those fiat currencies who engaged

in the schemes? What seemed clear is that central bankers, supposedly

acting independent of governments, were taking many economies

into the unknown and were prepared to devalue their fiat currencies

at will just to keep the wheels turning. In doing so, they bailed out the very same institutions and bankers whose reckless behavior had brought about this crisis in the first place.

The only other option would have been to let the whole system

collapse and be purged, as for instance happened in Iceland. That

country defaulted on its debt and endured great economic turmoil

in the aftermath of that event.

Therein lies the genesis of bitcoin: a decentralized financial system

taken out of the hands of a few elite global decision‐makers.

Satoshi Nakamoto decided it was time for a new monetary system,

one so different from the current financial infrastructure that you

could even call it a disruptive force. Whether or not bitcoin was

ever intended to completely replace the financial infrastructure

remains unclear, but we do know that multiple banks are looking

at the technology that powers bitcoin, because they see its potential

and want to adopt this technological power for their own use.

They are free to do so, of course, as the core bitcoin technology —

known as a blockchain — was open source from day one for everyone to see. Creating bitcoin as open source meant that anyone was allowed to come up with

their own improvements and build platforms on top of it.

Viewed from this angle, bitcoin could be said to have a driving


It is about so much more than just using the associated

coin as a payment method. It is about using the underlying technology

and discovering its full potential over time. How you decide to

use that technology is completely up to you. It can be adapted to

fit nearly any financial need you can imagine. All you really need

to do is be open to the technology itself. Even though you may not

grasp the entire concept from the start, just keep an open mind.

Let’s face it: The intersection of finance and technology is plagued

with troubles. All of us have been affected by the banking crises

of the 21st century, and quite a few countries are still struggling

to recover from that financial fiasco. Bitcoin developer Satoshi

Nakamoto was a victim of this mismanagement by central banks

and thought long and hard to come up with a proposed solution.

The mainstream financial infrastructure is flawed, and a viable

alternative is more than welcome. Whether or not that alternative

will be bitcoin remains to be seen.

When Satoshi Nakamoto came up with the idea of bitcoin, one

key factor was destined to play a major role: decentralization.

Decentralization means we are all part of the bitcoin ecosystem,

and we all contribute to it in our own ways. Rather than relying on

a government, bank, or middleman, bitcoin belongs to everyone,

in a system called peer‐to‐peer, and we all make up the bitcoin

network. Without individual users, there is no bitcoin. The more

people embrace bitcoin, the better it works. Bitcoin needs an

ever‐expanding community who actively use bitcoin as a payment

method, either by buying goods and services with bitcoins or offering

goods and services in exchange for bitcoins.

Due to the digital currency’s free market spirit, anyone in the

world can set up their own business and accept bitcoin payments

in a matter of minutes. Plus, existing business owners can offer

bitcoin as an alternative payment method, with the potential to

expand their customer base on a global scale. It’s easy to do your

bit(coin) and get involved.

Read next: Top 5 Advantages of Blockchain Technology
tony brown
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