1. What is Bitcoin?
by Ryan Shea of onename.io
the simplest way to learn how Bitcoin works
(in under 5 min)

2. Let’s talk about Bitcoin

3. But rather than discuss what
Bitcoin is...

4. Let’s independently design
something that resembles Bitcoin

5. Yes,
we’re going to re-invent Bitcoin

6. Here we go...

7. Let’s imagine we’re playing
a board game like Monopoly

8. Where we have tradable assets
(such as houses and hotels)

9. To trade effectively, we need
mutually interchangeable tokens
that we all agree have some value

10. In other words, we need a currency

11. Now, with this currency, we’ll
want to easily trade in any
denomination, as getting exact
change can be a hassle

12. And we’ll also want it to be
immune to counterfeiting

13. So, we’ll avoid paper bills

14. And instead, we’ll give ourselves
“balances” and record them in a
notebook

15. Ali
Sam
Trevor
Arianna
100 tokens
100 tokens
100 tokens
100 tokens

16. We’ll refer to this list of balances as
our ledger

17. A book or other collection of
financial accounts of a
particular type.
ledg·er
/’lejer/
noun
e

18. This ledger is “law”

19. In other words, one’s balance is
whatever the ledger says

20. And that’s final

21. But what if we have a large
game with say 20 or 30 players?

22. Then who holds the ledger?

23. If only I have the ledger, I can
increase my balance and cheat

24. So... we give everyone a notebook
with a copy of the ledger

25. And when balances are updated,
the changes are propagated

26. Ali
Sam
Trevor
Arianna
100 tokens
100 tokens
100 tokens
100 tokens
Ali
Sam
Trevor
Arianna
100 tokens
100 tokens
100 tokens
100 tokens
Ali
Sam
Trevor
Arianna
100 tokens
100 tokens
100 tokens
100 tokens
Ali
Sam
Trevor
Arianna
100 tokens
100 tokens
100 tokens
100 tokens

27. Now, let’s say Ali sells something
to Sam for 7.5 tokens

28. On Ali’s copy of the ledger,
he decreases Sam’s balance by 7.5
and increases his by 7.5

29. Ali
Sam
Trevor
Arianna
107.5 tokens
92.5 tokens
100.0 tokens
100.0 tokens

30. Then Ali shows everyone his copy
and says “make these updates”

31. Ali
Sam
Trevor
Arianna
Ali
Sam
Trevor
Arianna
107.5 tokens
92.5 tokens
100.0 tokens
100.0 tokens
107.5 tokens
92.5 tokens
100.0 tokens
100.0 tokens
Ali
Sam
Trevor
Arianna
Ali
Sam
Trevor
Arianna
107.5 tokens
92.5 tokens
100.0 tokens
100.0 tokens
107.5 tokens
92.5 tokens
100.0 tokens
100.0 tokens

32. But wait!

33. If Ali walks to Arianna to show her
the update, how does she know that
Sam consented to the exchange?

34. Well, Ali simply has Sam sign her
paper to express approval of her
balance going down

35. But there’s another issue

36. Relaying changes to 20-30 people
every time an exchange occurs can be
time-consuming and impractical

37. Further, what if we want to have
even more players in the game?

38. And what if some of them are
halfway around the world?

39. How do we synchronize all of
these paper ledgers?

40. Well, we could just move from
paper records to digital records

41. We’ll have some fancy software that
does the ledger syncing for us

42. And fancy math to ensure that our
digital signatures can’t be forged, &
thus nobody can spend our money

43. And... we’ll have balances listed next
to account numbers instead of names
(our ledger needs unique lookup values, and names
are not guaranteed to be unique)

44. With these modifications, our game
will allow millions and even billions
of people to transact and trade

45. Come to think of it, we could
probably even use this system as
a real world global currency and
payment mechanism

46. Notice that with this system,
nobody owns it or controls it

47. Just as with in-person cash
transactions, only the sender and
recipient are involved -
there are no middle men

48. And because there are no middle
men, no fees are required

49. So for the 1st time, you and I can
trade directly online and from
anywhere in the world

50. We just record a
transaction amongst ourselves
and broadcast it to the world,
proving that it actually occurred

51. Our currency and payment system
is powerful but simple, and we
designed it together

52. And we’ll call it Bitcoin

53. Thank you
Ryan Shea
onename.io

54. P.S. To get started with Bitcoin,
you can create a Bitcoin
profile at onename.io

55. P.P.S. Remember that fancy sync-
ing software we glossed over?
That’s actually a big part of what
makes Bitcoin so innovative, and
it’s made possible by a process
called Bitcoin mining

56. Coming soon:
“What is Bitcoin mining?”