Bitcoin 101 - Bitcoin For Beginners by World Bitcoin Network
“Sorry to be a wet blanket. But, writing a description
of Bitcoin for general audiences is bloody hard.
There’s nothing to relate it to.”
- Satoshi Nakamoto, July 5, 2010
How the Constraints of
Digital Define Bitcoin
(a Bitcoin parable by James D’Angelo)
“What is Bitcoin?” Harvard April 30, 2014
2008 – the story begins
it wasn’t just coincidence that
Bitcoin, as an idea, was born
in 2008 amid the turmoil of the
the average person focused
on the idea of money
bitcoin addressed similar ideas
• money creation • monetary control • quantitative easing
there were those who
thought the bailouts were
acceptable & fed acted
there were those who
didn’t. chaos, mistrust,
anger – focused on big
that wielded financial
One group turned to software to
address the problems that they
perceived with money. one
person in particular...
anonymous, but uses male japanese pseudonym
“The central bank must be trusted
not to debase the currency, but the
history of fiat currencies is full of
breaches of that trust. Banks must
be trusted to hold our money and
transfer it electronically, but they
lend it out in waves of credit
bubbles with barely a fraction in
reserve.” - Satoshi Nakamoto, Feb 2009
His view: inside software
there is a solution to the
His solution - turning ones
and zeros into money.
excellent writer. intimate history of finance & cryptography
was not new
IBM, Milton Friedman, others
cypherpunks (not cyberpunks)
cypherpunks advocate the widespread use of cryptography
as a route to social & political change.
inside the digital domain,
inside cryptography, they
could sidestep the
problems of money
created by politics, banks
and special interests.
Since 1980 a primary aim
was digital currency.
advantages of going digital
• fast (velocity of money)
• weighs nothing
• internet ready
• easy accounting
• cheap – no need for gov.
• etc. etc. etc.
BitTorrent’s coup de grace was
to flip the problem of file
storage on its head. Instead of
central servers, the BitTorrent
algorithm chopped all the
media files up into tiny pieces
and scrambled them on users’
never centralize again
Armed with his Napster story, he was determined to find the
centralized part of banks. But what was it?
a bank’s heart is not the vault, it is the ledger
Turn the Bank Inside Out
“what if I could turn a
bank inside out?
Instead of one central
party controlling the
ledger, what if every
user were recruited to
maintain a constantly
public ledgers - not so great
Bank ledgers are the ultimate tragedy of the commons. High
incentive to game the system. Result: centralization
The decentralized ledger (blockchain)
To create his decentralized ledgers,
Satoshi paired two main
technologies. Nothing was newer
• Proof of Work - 1997
(solves the double spending problem)
• Elliptic Curves - 1987
(solves unique access to the ledger)
digital’s weaknesses as strengths
Turn the weaknesses of digital
into strengths. The strength of
the digital was perfect copies –
okay – so copy the ledger,
everywhere, instantly. In turn, he
made the uniqueness the flaw –
any ledgers with even one
comma not agreeing with the
masses would be discarded,
leaving fraudsters powerless.
Eliminate cash to make currency.
the blockchain is a new form of public good
not state, not private, it is ‘other’ – truly public
fuel for permissionless innovation
smart contracts, mesh networks, notaries, voting, government, etc.
no need to ask to use it, no fees for employing the tech, no oversight
on provable transactions, contracts, etc
gangsters use it (optional anonymity)
a measure of any currency is amorality
dirty socks vs. the dollar
a strong currency is accepted by more people
its a baby currency
easy to steal, volatile, could disappear tomorrow
“If you don’t believe me or don’t get it, I don’t have time to try
to convince you, sorry.” Satoshi July, 2010
What is Money?
perhaps cash (gold, dollars) has always been just a placeholder
until we could finally decentralize the ledger.
does it need to have intrinsic value?
is mass a negative? we don’t know.
but bitcoin will help us learn.