Bitcoin is the worlds first decentralized peer-to-peer digital currency. What this means is that for the first time in history, people have the ability to transfer money from one person directly to another person without going through a central hub, like a Bank.

The original creator of Bitcoin (a person or group who used the pseudonym ‘Satoshi Nakamoto‘) chose to remain anonymous and then disappeared after unleashing this highly disruptive technology to the world in 2009.

A superior computer network

Bitcoin is made up of a global network of computers which all run the same software. It’s based upon a mathematical formula that nobody owns. There is no company that owns it, no central server, and no CEO in charge. The power of the network is delegated out to the end users of the network. This is what we mean when we say its “decentralized.”

The image shows a depiction of centralized systems (like Facebook) which have a single point of failure; as opposed to decentralized systems, made up of nodes and masternodes. In this model, there is no center to the network.

All nodes contain a complete copy of the entire digital ledger, and the nodes individually verify the transactions in the ledger based upon a complex consensus algorithm. Nodes can join and leave the network at any time, but when they rejoin they must “catch up” to the other nodes by re-downloading all of the transactions so their copy of the entire ledger is also complete.

Each node needs a complete copy of the digital ledger (or blockchain) before they can have a share in the process of verifying transactions. This verification process is called mining, but we will discuss that another day.

Fake copycats

There is only ONE true Bitcoin, and it looks like this.

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But as with any kind of valuable asset, there will always be cheap imitations that are made by others who try to either mirror, improve upon, or steal money from uninformed investors who think they are buying the real thing, and Bitcoin is no exception, there are dozens of fake Bitcoin look-alikes but there is only one true Bitcoin.

Here are a few examples of fake copycats:

Bitcoin SV (BSV), Bitcoin Cash (BCH), Bitcoin Interest (BCI), Bitcoin Gold (BTG), Bitcoin Diamond (BCD), First Bitcoin (BIT), BitcoinX (BCX), Bitcoin Atom (BCA), Bitcoin Private (BTCP), Bitcoin Fast (BTCF), BitcoinZ (BTCZ), Super Bitcoin (SBTC), Lightning Bitcoin (LBTC), eBitcoin (EBTC), Bitcoin Red (BTCRED) and the list just goes on and on and on. If you put your money into buying any of these, you might as well just take that money and fling it out into the street.

What about hackers?

If one node contains a falsely injected transaction from an external attacker, the other nodes will not reach consensus and they will all reject that malicious transaction, therefore effectively killing that transaction from ever happening.

The larger the bitcoin network grows, the more resistant it becomes to attack. Because the larger the network is, the more computer processing power is needed to bring it down. To even try a 51% attack on Bitcoin today would cost somewhere around $60 billion dollars, so its just not feasible for most hackers.

Even though the amounts that are transacted can be publicly seen, the identities of the buyers and sellers are hidden, and all public and private keys are encrypted. All instances where people lost money was due to introducing a centralized 3rd party, or from using unsecured digital wallets.

But so far, the Bitcoin network has been running for 10 years without a single successful attack. Many have tried, but all have failed.

Why its groundbreaking

Bitcoin doesn’t close on weekends. It doesn’t care what country you live in and it knows no borders. You can send $10 dollars or $10 million dollars. For countries where the national currency is worth less than USD, Bitcoin is divisible up to 8 decimal places, so you can send micro payments (smaller than a penny.)

You can do all of this instantly, without anyone’s permission, from anywhere in the world, day or night, and the network fee is only pennies.

Bitcoin is also non-custodial, meaning that your Bitcoin can be stored in a digital wallet that no one else can access except for you. Therefore, many banks view Bitcoin to be a threat to their existence. The idea of someone else holding your money (and charging a fee for this service) seems obsolete.

Some say that Bitcoin is a the dawn of a whole new age of money. Where the value of everything is tokenized into digital currencies and trust in banks is no longer needed. But whether or not Bitcoin really does lead to the end of centrally-controlled fiat currency, remains to be seen.

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Disclaimer: This article was written for educational and entertainment purposes only. This is NOT financial advice. Always do your own research and please consult with a licensed attorney before making any serious investment. We are not responsible for any investment decisions that you choose to make.