What bitcoin is and how it could change everything
Confused about what bitcoin is? I don’t blame you. Bitcoin is difficult to understand, because that single word has actually layers of meaning. To grok Bitcoin and what it means, it helps to look at Bitcoin through three different lenses.
Bitcoin as technology
Bitcoin is the most popular application of a software invention known as the blockchain. Blockchain is a protocol that allows two people (or machines) to transact, even if they don’t trust each other or the network.
It gets complicated, but imagine this. You buy something online from an anonymous person halfway across the world. You deposit money into his or her account and trust that you’ll get your product. The person takes your money and trusts that you’re real and the money is legitimate.
Online transactions like this take place everyday, with intermediaries like banks and corporations like eBay to enforce accountability. The blockchain allows trusted transactions like these to happen without any middlemen.
That’s because the blockchain is a secure database that’s scattered across multiple computers. These computers maintain the database, keeping tabs on assets as well as transactions. The computers verify this distributed ledger, and each completion of this verification gets rewarded with cryptocurrency. On the bitcoin blockchain, the payments are in bitcoin. This process is also known as mining.
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