Bitcoin: an explanation for mere mortals

The popularity of Bitcoin is growing rapidly around the world. However, some users, faced with this phenomenon for the first or tenth time, seek to understand deeper what this unique phenomenon is. Lets try to dot all the is.

If you compare Bitcoin with a modern car, then the technical component of the second of them will seem more complicated with each opening of the hood. However, as in the case of a car that can be repaired in a specialized car service, also for using Bitcoin, it is not necessary to know the entire technical component of its functioning.

It is noteworthy that Bitcoin has two functions:

1. International payment system.
2. A monetary unit that is a means of payment within a payment resource.

To send and receive cryptocurrency, you need to use a single tandem of the above two components. Lets draw an analogy between the functioning of a decentralized network with cryptocurrency and PayPal with American national money. It is known that PayPal is not a currency, and the US dollar is not capable of replacing a payment system. The use of EPS implies sending transfers in US currency. In addition, PayPal is centralized, and the US currency is controlled by the Fed. Thus, we got to the consideration of one of the most important properties of cryptocurrency.

What is Bitcoin?

Bitcoin has a decentralized nature, thanks to which neither world powers nor large companies can take over it. The advantage of this property becomes clear on the example of a computer network, where there is a continuous exchange of file packets that interact with each other and do not affect the processes occurring in the network. It turns out that there is no central server here.

Bitcoins are generated within the network according to the algorithm specified by the developer. To extract the next block in the network, miners use expensive equipment, in return for which they receive a reward in the form of new virtual coins. It is the cryptocurrency miners who support the functionality of the system.

It is worth noting that Bitcoins will not be mined forever, since the number of crypto coins is limited to 21 million units.

If you do not dive deep enough into the technical arguments, then Bitcoin is a payment system with its own currency, endowed with freedom and not amenable to government control.

It is logical that experts in the field of cryptography, mathematics and computer technology find the technical details of Bitcoin revolutionary, but most ordinary users perceive such details more indifferently.

It is noteworthy that there are practically no fees for transactions within the network (they can be set manually), and their execution takes place in a short time. The phenomenal nature of Bitcoin lies in the implications that it entails.

The decentralization of the cryptocurrency and the payment system is of fundamental importance for many economic processes. At the same time, Bitcoins are created for all users and belong to them with full rights. This is its strength.

Holders of cryptocurrency wallets can send payments anywhere in the world in the absence of any limits. There is no way to introduce censorship into the work of Bitcoin and put the generation of crypto coins under control. The sender and the recipient independently establish the rules for each financial transaction made without intermediaries. Therefore, the regulatory authorities do not have the right to prohibit or permit the performance of certain financial actions within the payment resource and charge a fee for this, like banking institutions.

It is known that it is impossible to interfere with the financial life of Bitcoin, however, if necessary, it can be improved. At the same time, the countrys authorities or banking institutions will not be able to block the likelihood of such updates. Even a teenager under the age of 18, but with entrepreneurial skills, can start their own blockchain-based business project, and a farmer from Africa can get paid for his labor even without a bank account.

Thanks to the advent of Bitcoin:

1. Any person who does not want to declassify their own income can hide this fact from unauthorized persons and, thereby, protect money from being arrested.
2. Everyone can become financially independent.
3. Only the owners of private assets have control over them.
4. Economic relations are regulated by the market, not by government agencies.
5. Savings on the virtual wallet are not affected by inflation and, accordingly, depreciation.
6. The transaction process depends on the agreements between the two parties (sender and recipient).

In all the theses listed above, one can find contradictions, but they affect public life today. It turns out that Bitcoin was able to separate money from the government, and also allowed individuals to live a financial life without censorship. A unique phenomenon deprives the government and the banking sector of power over monetary units, transferring it into the hands of every adherent of the cryptocurrency. He brought privacy to the technogenic age and raised Bitcoin above any fraudulent manipulation.

So what exactly is Bitcoin? Cryptocurrency advocates believe that the unique phenomenon is an economic breakthrough. You can also hear that Bitcoin is an experiment that, if successful, will be able to maximally strengthen financial relationships between people and make their own adjustments. Therefore, one should not neglect the study of the essence of Bitcoin, from the point of view of economics, mathematics and technology.