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How to explain what bitcoin is like a boss.

“What is Bitcoin?”, asked Sam my good buddy who has a killer instinct for good investments. After my brief explanation, I left not only him, but also myself confused as to what bitcoin was, meaning I didn’t really understand it. A few weeks has passed since this incident, so here is my attempt to explain what bitcoin is to Sam and anyone else who has found this topic rather perplexing.  

When you hear bitcoin the first word that should pop into your head is decentralization. As the name implies, this simply means there is no central controlling system, e.g. central banks, governments, middlemen in charge. Rather bitcoin exists in a peer to peer system, that is all bitcoin users make up the bitcoin network and contribute to it in their own unique way. Just think of the world’s most popular search engine, Google. As you read this it is being accessed by millions of people at the same time, but it never fails or slows down. This is because google runs on so many servers in a decentralized manner, that is somewhat similar to how the bitcoin ecosystem works.

The very next thing after decentralization is that bitcoin is considered to be digital currency. It is a valid payment method for various goods and services, which is what a currency does. As to its digital nature, one can clearly see bitcoin is not comprised of physical notes or coins but strictly on servers and systems.

The third and final thing to remember about bitcoin is blockchain. To understand what a blockchain is you would first need to understand the concept of a block. Imagine that blockchain were a ledger, then the first block would be the first page of the ledger. Every subsequent page of a ledger contains summaries of previous page or pages likewise every subsequent block contains a sequence of letters and numbers of the previous network block. Hence since the first block called Genesis appeared in 2009, there has been a chain of transactions, all of which are included in various blocks. And through those blocks, any transaction taking place today can be traced back all the way to the Genesis Block. Bitcoin’s blockchain records all bitcoin transactions of the past, present and future.

So there you have it folks, the next time someone asks you the question “what is bitcoin?” Simply respond by saying “bitcoin is a decentralized digital currency powered by blockchain technology.” That is how to explain bitcoin like a boss!

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