The System of money transactions began to change. A paper published by an individual going by the name Satoshi Nakamoto was made public on the internet in October 2008. The article, frequently referred to as a whitepaper, proposes the development of Bitcoin, a decentralised money system. This method purported to generate digital money capable of resolving double-spending without a central authority. Bitcoin is a decentralised ledger that is not controlled by a central authority at its core, but what does this vague statement actually mean? Consider how Bitcoin compares to a bank. Since most money in circulation today is digital, the bank is ultimately responsible for maintaining its ledger balances and transactions. While the bank's ledger is not totally transparent, it is stored on the bank's central computer, which is not accessible to the public. Access to the bank's ledger is impossible, and the bank retains complete control over it.
On the other hand, Bitcoin is a decentralised ledger that is totally transparent. I can look into the ledger at any time and view all of the current transactions and balances. All that remains is to ascertain who manages these balances and who is responsible for each transaction. This means that Bitcoin is pseudo-anonymous; everything is open, transparent, and trackable, but you cannot determine who is sending what to whom since everything is open, transparent, and trackable. Let us illustrate what we mean with an example. On your computer screen, you can observe a few rows from the Bitcoin ledger. In May 2010, we can keep that a particular Bitcoin address sent 10,000 Bitcoins to another Bitcoin address that was subsequently monitored. This transaction was the first time Bitcoin was used to make a purchase, and it was made by a man named Laszlo, who used it to purchase two pizzas.
In 2010, Laszlo posted a request for someone willing to sell him two pizzas in exchange for 10,000 Bitcoins. Someone did, and the value of these two pizzas has risen to well over a hundred million dollars due to others' efforts. Additionally, Bitcoin is decentralised; no single computer is responsible for maintaining the ledger. In the case of Bitcoin, computers that participate in the system keep a copy of a record, known as Blockchain. Therefore, to bring the system down or hack the ledger, you must bring down thousands of devices that are constantly copying and updating the data. Bitcoin is a digital currency, as is the bulk of money in circulation today. This means that Bitcoin is not a physical asset that you can possess in your hands. Instead of actual coins, rows of transactions and balances are displayed. When you "possess" Bitcoin, you acquire the legal right to access a specific Bitcoin address record in the ledger and transfer funds from that address to another on the Blockchain. So, what does all of this mean?
What is it about Bitcoin that has generated such excitement?
We finally have a viable alternative to the current system for the first time since the invention of digital money. Bitcoin is a decentralised digital currency that is not governed by any government or central bank.
Consider how centralised information flowed before the internet's inception. If you wanted information, you could obtain it from a few significant sources such as the New York Times, The Washington Post, and others of comparable stature. The internet has decentralised information, enabling you to communicate and consume knowledge from anywhere in the world with a single mouse click. Bitcoin is the internet of money, and it aims to provide a decentralised alternative to traditional banking. There are numerous benefits to utilising Bitcoin instead of the current system.
To begin, it gives you complete control over your finances. Bitcoin ensures that you and no one else will have access to your funds. How to accomplish this will be explored in further detail in a forthcoming video. You cannot be compelled to surrender your property as a result of a government or bank decision.
Additionally, Bitcoin eliminates a sizable portion of the middlemen from the money-transfer process. As a result, Bitcoin is frequently less expensive than traditional wire transfers or money orders, as illustrated in the figure below. Furthermore, unlike fiat currencies, Bitcoin was designed from the start to be digital. This means that it can be strengthened by adding more layers of programming to make it into "smart money," as explained in further depth in subsequent videos. Finally, Bitcoin enables 2.5 billion people globally who do not have access to the current banking system to engage in digital commerce through a cryptocurrency. These individuals are unbanked or underbanked as a result of their origins and circumstances of birth. Today, they can begin interacting with Bitcoin with nothing more than a mobile phone and the click of a button, without requiring permission. These days, an increasing number of retailers, both online and offline, accept Bitcoin. Alternatively, you can use Bitcoin to book a flight or a hotel room.
There are Bitcoin debit cards available that enable you to spend your Bitcoin balance at virtually any shop.
On the other hand, the road to acceptance by most people continues to be lengthy and twisting. The following section will continue this video series by describing how Bitcoin works and how to use it. We'll learn about Bitcoin mining, Bitcoin wallets, and how to obtain Bitcoins, among other things. The money revolution began in 2009, and we are now witnessing how it is altering our perspective on money.