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LESSONS

What is Bitcoin?

Bitcoin is digital money with a fixed supply, run by a network that anyone can join and verify. There is no company behind it.

6 MIN READ
COURSE · Bitcoin explained: what it is and why it mattersSTAGE 2 · UNDERSTAND BITCOINLESSON 1 OF 8
A stack describing Bitcoin as a fixed-supply digital money, a rule-checking network, a public ledger, with no company behind it.
LEVEL · Beginner
IN THIS LESSON · 1 OF 8
BY THE END YOU WILL BE ABLE TO ANSWER
  • Which statement is true?
  • How many bitcoin will ever exist?
  • What problem does the whitepaper open by naming?
  • Write your own one-sentence definition of Bitcoin. How many words did it take?

Then prove it: a 3-question quiz · a challenge. The lesson marks itself complete at 100%.

After this lesson you can: explain Bitcoin in a paragraph with no jargon.

Bitcoin is a digital money. You can send it to anyone in the world, at any hour, without asking a bank. There will only ever be 21 million of it. Nobody owns the network, nobody can print more, and anyone can check that both statements are true.

Three things in one word

Three meanings of the word: the network of computers, the blockchain record, and the unit of money.
One word, three things.

People use the word for three different things:

  • Bitcoin, the network: thousands of computers running open-source software and agreeing on one shared record.
  • The blockchain: that shared record, a list of every transaction since January 2009.
  • bitcoin, the unit: the money itself, divisible into 100 million satoshis.

What it is not

Two columns: what bitcoin is and what it is not.
A bearer asset, not a company, a bank or a promise.

It is not a company; there are no shares and no earnings. It is not a bank; no one holds your money for you unless you choose that. It is not a promise; it does not pay interest and nobody guarantees its price. It is a bearer asset, like cash or gold, that exists only as entries in a ledger that no one controls.

Why it exists

Quotation from the whitepaper introduction on cryptographic proof instead of trust.
From the whitepaper’s introduction.

The 2008 whitepaper opens by naming the problem: online payments rely on trusted third parties, and trust has costs. Bitcoin was built to let two people transact without one.

Bitcoin Explained Simply · Short explainerWatch on YouTube ↗
give me 9 minutes, and you'll finally understand bitcoin · The Exit ManualWatch on YouTube ↗
MINI CHALLENGEThe one-liner

Write your own one-sentence definition of Bitcoin. How many words did it take?

words
CHECK YOURSELF
1/3 Which statement is true?
2/3 How many bitcoin will ever exist?
3/3 What problem does the whitepaper open by naming?
pick an answer for each question

SOURCES

  1. Bitcoin: A Peer-to-Peer Electronic Cash System (Satoshi Nakamoto, 2008)
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