What is Bitcoin?

The ideas expressed here are far from original, but inspired by the vibrant and growing Bitcoin community. This website is intended as a brief introduction to Bitcoin: see the resources section for a list of books, podcasts, and websites if your curiosity has been piqued.

In the collective mainstream imagination, Bitcoin is, at best, a speculative and risky digital asset. At worst, it is scam, a ponzi, or a shady darknet currency used by criminals. It is no surprise, therefore, that when a bitcoiner babbles excitedly about how Bitcoin will change the world, they are often met with scepticism, and even looks of concern. So, what is Bitcoin, really? In a nutshell, it is a new form of money. Why is this important? Let’s ponder for a moment the significance of money.

Money is a pillar of civilisation. Because it fostered exchange amongst humans, it allowed the appearance of complex, prosperous and technologically advanced societies. Without money, we would still be bartering, which is very limited in the type and number of exchanges possible. Think of money as a store of human energy and time: every day, everywhere, humans expend energy and time to make a living. The time and energy you put into your work needs to be stored somehow, so that you can later exchange it for things you need or want like food, or save it for a rainy day. If you are a dairy farmer, you could say the milk you produce also represents your time and energy, but milk goes bad, and not everybody wants milk (the problem with bartering), so instead you sell it for money.

The money you make represents your time on earth, your blood, sweat and tears. It follows that you should be able to do what you want with it, right? Or even choose what you consider good money. Imagine if banknotes were batteries, storing your own, human energy: you could choose between Duracell batteries or cheap, generic ones. Which ones would you choose? You’ve stocked up a load of batteries to buy your dream car, or to pass on to your children. When the time comes, you’ve saved what you needed, and the Duracell batteries are ready to go. But if you chose the generic ones, you find out they have lost half of their charge, and you still need to save a lot more to buy that car, or you dismay because by the time you will pass on your life’s toil to your children, it won’t be worth very much anymore. Maybe you had no choice. Maybe somebody said: you must use the cheap, generic batteries.

Sound familiar? Why is it that forty years ago, one salary was enough to provide a house and food for a family (and savings), whilst two salaries today struggle to do the same? Consider this idea, put forth by tech entrepreneur Jeff Booth in his book, The Price of Tomorrow: technology has made us vastly more efficient at producing food and material goods, and it continues to do so at an ever faster rate. Why, then, is life not getting cheaper?