Basics of Bitcoin: What The Hell Is It? Why Is It So Important?

(image by Marco Djallo)

After over ten years of studying and promoting Bitcoin, I've found that by far the most important thing to be done with it - is to explain it to people in simple, basic terms, so that they can understand just what the hell it is, why it is so important, and how it actually works. Here are those basics, starting with the following fundamental premise of Bitcoin..

Bitcoin Is The Most Important Human Invention Since The Modern Printing Press Was Created In 1436

As the printing press took control of written language out of the hands of churches and kings and gave it to the people, Bitcoin is now taking the control of money out of the hands of private banks and governments, and putting it into the hands of the people.

How does it do this?

Bitcoin Is The First Form Of Electronic Money That Cannot Be Counterfeited (Sent To More Than One Person At The Same Time)

Bitcoin is created and made secure (so that it can't be counterfeited or confiscated) by computers successfully processing (aka 'mining') very difficult math problems, and then recording each success in multiple places publicly so it can't be denied or duplicated by anyone else. This process creates a Bitcoin every time it is completed. The owners of the computers crunching the math problems get rewarded by owning the new Bitcoin and also by being paid fees in Bitcoin for helping to transfer already existing Bitcoin from one owner to another. (The initial mining of new Bitcoin requires a lot of energy use, but Bitcoin is actually good for renewable energy and the climate. See below.)

Bitcoin is made fully secure and unconfiscatable by the fact that once it is created (or it is transferred from one owner to another) this is recorded in an uneditable public record (called a 'ledger') which is stored in duplicate on thousands of computers all over the world. The unalterable public record and the 'mining' process together make Bitcoin so secure that it has never been hacked or counterfeited. This makes it the most democratic form of money ever created, because no one has to depend any longer on banks or governments to validate money. Bitcoin validates itself without any institution controlling it.

Why Bitcoin Has Value

Much like gold, Bitcoin is strictly limited in supply. Only 21 million Bitcoin can ever be created. This makes it even more limited in supply than gold, and therefore even more valuable than gold as a way to store value and personal wealth. This is why the Bitcoin price has been consistently rising since it was created over a decade ago. The higher the number of people and institutions who buy a part of the limited supply of Bitcoin, the higher its value rises. But each Bitcoin is also divided into 100 million sub-units called Satoshis. This enables anyone who has even 10 dollars, to buy and save wealth in the form of Bitcoin, even as its value keeps rising.

Gold's high value does not come from its ability to be used to make things. The same is true of Bitcoin. The value of either gold or Bitcoin comes simply from people accepting them as forms of money that everyone knows and agrees are scarce, in a measurable way. People are willing to pay for and trade objects that have a proved, measurable, scarcity.

This kind of 'hard' money is a polar opposite to the US Dollar which loses value every year because of inflation. The Dollar is printed out of thin air by banks & the US government who give most of it to the rich, who in turn buy stocks & property artificially inflating living & housing costs exponentially. Bitcoin escapes the Dollar’s loss in value.

Because Banks & Governments Don't Control Bitcoin, People Can Freely Exchange It With Each Other

Profit, while it is a nice benefit, is not why Bitcoin is so important. Because it is publicly created and stored with no banks or governments holding it, Bitcoin can be easily and directly transferred from one person to another, securely and immediately, at very low cost, making it a better and more functional form of money than government currencies. Any two people with cellphones or computers, directly communicating with each other, even through simple wifi without a cell signal, can exchange and store Bitcoin.

So as the opening premise states, because Bitcoin is not controlled by any authority and can be easily exchanged between any two or more people, it is the most democratically and freely sharable form of money ever created, and can easily be spread out to everyone on Earth, without banks or governments stopping it.

Just as the printing press enabled the sharing of written ideas and information to everyone on Earth, with no rulers or churches stopping that sharing, Bitcoin enables the sharing of money to everyone on Earth, with no banks or rulers getting in the way.

How Can Bitcoin Impact The Global Economy?

The US government uses control of its inflationary Dollar to tyrannize, colonize & loan shark the entire planet. Nations like China, Russia, and India, are now using gold reserves as the backing to escape dollar hegemony and trade directly with each other in their own currencies. And countries like El Salvador are now leading the Global South to use Bitcoin in the same way. See "El Salvador’s Nayib Bukele promotes bitcoin adoption by emerging countries" at: https://www.wionews.com/world/el-salvadors-nayib-bukele-promotes-bitcoin-adoption-by-emerging-countries-480023

What About The High Energy Use? What Are The Environmental Impacts?

Here is the link to a comprehensive essay noting that Bitcoin requires less energy and pollution than gold (while serving the same purpose) and explaining how Bitcoin is a powerful tool for building new clean energy projects more quickly.
https://steemit.com/bitcoin/@ericbrooks/why-bitcoin-is-good-for-the-planet-and-climate-and-there-is-no-energy-limit-to-bitcoin-growth

Finally, here is a link to a great video by Andreas Antonopoulos, explaining in more depth the basics of Bitcoin:

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Eric Brooks is a full time grassroots environmental and social justice organizer, a keen student of economics and geopolitics, a Bitcoin investor, and an expert in clean energy and climate policy.