For those new to Bitcoin, there are much better ways to start understanding it than this article; I’d recommend Wikipedia for starters. This guide is designed for those who already assume they know what Bitcoin is, but haven’t yet traded in it. I was there – I thought I comprehended it, too, but having since dipped the toe of mine in the pond, I’ve discovered an unexpectedly enlightening experience. There are plenty of nuances involved in the trading of Bitcoin as to make it very educational. It forced me to give some thought to a great deal of the built in features which go unscrutinized and unrecognized in traditional currencies. In so doing, it made me assign my own values to those features, and allowed me to choose probably the most preferable ways of satisfying my various needs – choices that are usually taken from us.
There are aspects of Bitcoin which make it comparable to fiat currency, but it is not cash. There are aspects like gold, but it’s not bullion. There are aspects much like securities, but it’s not just a security. The question of “What is it?” is really far more complex than it appears. It exists solely as an entry in a distributed digital ledger; “having” Bitcoins really means having authority to transfer Bitcoins. Not any, in fact, that is not technically correct. It means getting a degree of authority measured in Bitcoins to transfer that identical authority. Make an effort to wrap your brain around that. In the years ahead, I will resort to referring to Bitcoins as the thing of value what is transferred, but understand that my doing this is solely shorthand to make this essay readable. Having Bitcoins is the authority to transfer authority.
Thus, upon deciding to acquire my first Bitcoin, the initial step was to figure out how to attain authority to transfer Bitcoins. One could theoretically print out the cryptographic code of a Bitcoin and hand the paper to someone else as a way of transferring the Bitcoin represented by the code, but the way would that recipient know that the printout had not been duplicated and already spent? For that matter, how would the recipient know the printout even represented some value in Bitcoin instead of only a string of random characters? Transferring printouts of Bitcoin on paper may work (albeit inefficiently) between folks who implicitly trust one another, such as for gifts between relatives, but the genius of Bitcoin is the distributed but authoritative nature of its ledger, and for that to work, transactions have to be subjected to its network.
If a Bitcoin printout is transferred around amongst a staff of men and women without being exposed to the network, none of them will know whether it was valid or counterfeit. It would be like passing around a bank draft made payable to “Bearer;” it might have been paid, or maybe it might never have been beneficial in the very first place. No one will know until they made an effort to present it for payment at the maker’s bank. As long as someone else is ready to accept a potentially hot potato for merchandise or services, perhaps it does not matter, but folks are likely to be wary of ending up with potatoes that are hot. ethlargementpill ‘m one such person, so I wanted the receipt of mine of Bitcoins to be validated by the network. This turned my focus to a study of digital Bitcoin “wallets.” Wallets are a digital place to store Bitcoin authority codes.