Tech

The Invention of Bitcoin for Dummies

Inventing Money

So you’re given the opportunity to invent money. Sounds pretty cool right? But with all that power comes great responsibility, especially for a dummy like you.

Fortunately for you though, we’re here to guide you through the process, step by step. You’ll soon have a basic understanding of Bitcoin, and how it came to be, even if it kills us.

We’re talking about the here and now remember, the 21st century, a digital age. Not the 12th century when money was first invented. Let’s not get into the debate about how and where money was first invented and used, by the way, we haven’t got time for that.

Bitcoin is a bit like being given that opportunity all over again or taking part in it at least. From conception and initial buy-in, to where we are today, the Bitcoin revolution has been pretty rapid, taking the world by storm and giving more than a few scares to shot callers and money men the world over. See, people fear what they don’t understand. They also fear change. For a lot of people, Bitcoin is just that, a change. A leap into the unknown towards something that is misunderstood.

There are some common elements with money in general, that make Bitcoin all the more understandable and recognizable. If you’ve kept up so far, read on to find out a little more about those common elements.

Agreed Value

It all starts with agreeing on a value, think you can do that? This agreement is pretty essential to the process if people are going to be able to trade with each other, especially if they’re trading with people halfway around the world. Without an agreement, the new currency would become a free for all. Anarchy is pretty cool in theory, but in reality, well, it’s just plain anarchy.

First things first, let’s forget about coins and paper notes. They’re dead in the water.

Agreed System

Bitcoin is an agreed system for trading value, in a digital format. It just makes sense in this digital age to do it like this. Using the word coin will help your little brain remember we’re dealing with money here. You’re welcome.

Every person who trades using Bitcoin has their own personalized address, ID or rubber stamp even, which identifies and defines them as an individual and allows them to send and receive this new form of ‘money’. Getting it yet?

Wallet

To make matters a little easier to understand for you, an individual’s address, ID or rubber stamp is referred to as their wallet. Kind of neat really isn’t it? How it all ties in with the money theme, almost like that’s the whole point of it.

The Block Chain

Now with everyone holding their own value in their own little wallets, how is anyone supposed to keep track of anything? This is where the Block Chain comes in. By monitoring crypto signals, The Block Chain keeps track of all Bitcoin transactions ever made. It’s like a great big huge book of ledgers. Kind of similar to how folks went about their business in the Old Testament, but kind of different too. Forget that reference actually, no one wants to confuse you.

The Miners

Now, where’s there money involved, there’s inevitably going to be people trying to operate in the shadows, or trying to claim that they have more value than others. Pesky internet robbers. You can imagine them dressed up with black and white prison-issue sweaters and a swag bag if you like, but it’s probably some kid in his Iron Man pyjamas. So how do you stop these would be thieves? How do you ensure that they operate within the rules? The internet can be a pretty shady place at times, and now there’s money involved, it could potentially be a bit of a minefield. So this is where we get the miners in.

Miners are real people all over the world, who are paid in Bitcoin for trawling through the ledger, in order to make sure that each and every transaction is conducted fairly and that every trader is as worth as much as they claim to be worth. Miners do not necessarily need to wear hard hats and carry torches, although perhaps some of them choose to do just that.

Decentralized Digital Currency

Once the miners are set to work, monitoring the transactions, you’ve just about cracked it. That opportunity to invent money you were hypothetically tasked with? You’ve cracked it. That’s what Bitcoin is, a decentralized digital currency. Now, go make some money, dummy.

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