A brief summary of bitcoin
What is a bitcoin?
A “Bitcoin” refers to the reward that a computer receives for running some software that solves complex mathematical puzzles. This process of solving puzzles is also called “mining.” Miners allow their computers to run day and night solving the puzzles, or “mining,” opening up spaces with cryptographically unique addresses in an online database. This database system, however, is different from the traditional client-server model used most commonly today.
Anytime you access content on the traditional internet, you’re making a request for a copy of some content. In contrast, the infrastructure that Bitcoin and other cryptocurrencies operate on top of is what is called the Interplanetary File System, or IPFS. Instead of requesting and searching for a copy of web content, the IPFS protocol scours the network for content, and connects a user (you) to the user who’s hosting that content, much like file torrent software, like Napster, that hosts content and allows personal downloads. All Bitcoin users are connected and a part of the same blockchain network. At the basis of it all, it is a simple peer-to-peer network of nodes that all run a special piece of software that 1) stores data, 2) allows transactions to run in order to update that data, and 3) connects with peers to download and spread more similar data.
Bitcoin isn't just a “weird form” of PayPal, it isn’t just a new payment system. It takes an obscure branch of mathematics, called cryptography, and applies it to establishing trust amongst a neutral, peer-to-peer network of nodes using blockchain technology as its mechanism. When you receive a Bitcoin transaction, the software that you’re running can independently and authoritatively verify that it is real and unique. The network processes and checks the validity of all other Bitcoin transactions (this is the job of the consensus algorithm) against a public ledger called the mining ledger, in this case, the Bitcoin blockchain mining ledger. This ledger is a linear, time-stamped record of every coin ever created before yours. It is publicly accessible, meaning anyone with a computer can verify the validity of every coin involved in every transaction within the network. What this creates is a global, decentralized, immutable, public, borderless, and censorship-proof record of every transaction ever created within the network — a brand-new public utility for securely tracking ownership over virtually any object.
“The reason Bitcoin is so fascinating … is because bitcoin is not a company, it's not a product, it's not a service you sign up for. It is the concept of decentralization applied to the human communication of value. It is a platform of trust...”
-Andreas Antonopolus
