What is Bitcoin?

Very simply, Bitcoin is three things: software , a network , and a unit of account (the currency). All this makes up what we know as the decentralized virtual currency Bitcoin.

The Software

Bitcoin is a payment software invented by Satoshi Nakamoto that anyone can install on their computer.

 

Nakamoto decided to make Bitcoin software open source; this is with source code and public rights. In such a way that the periodic updates were carried out by an open community of volunteer programmers around the world who work by means of consensus rules.

Therefore, Bitcoin works contrary to well-known software such as Microsoft's Windows operating system, which is closed source, non-public and subject to copyright.

 

“Being open source means that anyone

you can review the code independently.

If it was closed source, no one could verify the security.

I think it is essential that a program of this nature

be open source  

Satoshi Nakamoto

The Bitcoin software provides the protocol with the unalterable rules by which the payment system is governed. Examples of these rules are: approximately every 10 minutes a block with users' money transfers comes out, the number of new bitcoins mined by miners will be halved every 4 years, there will be a maximum of 21 million bitcoins, the blocks will have an average weight of 1mb to guarantee network security, etc.

 

We're not going to get into the technical details now, but it's important to realize at this point that Bitcoin has been around for over 12 years, without any errors!

 

Once we have understood that Bitcoin is an open payment software with pre-established rules, let's see a little more in detail what we mean when we talk about the "Bitcoin network".

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Network

Bitcoin is a network of computers (nodes) that have installed Bitcoin software.

But what special characteristics does the Bitcoin network have?

 

1. The nodes have all the information

Each of the nodes has all the payment information of the network. That is, if a node goes down, the network will not suffer, because all the information is in all the nodes.

In the same way, the entire network can be replicated from a single node. Therefore, we can say that the Bitcoin network is very robust.

2. Transparent and accessible while being anonymous.

Bitcoin is a pseudonym. This means that the funds are not tied to people but to addresses. However, all transactions are public. Anyone can view them. For example through www.blockchain.com/explorer

 

There is, therefore, unprecedented transparency (maintaining anonymity), privacy and ease of access to transactional information.

 

3. The information is written in strict temporal order and is unalterable.

Blockchain technology was popularized by Satoshi Nakamoto in 2008 when he invented Bitcoin. These are blocks of chain information that contain the money transfers made by users in chronological order. In other words: block by block, all payments are written in temporal order, forming a chain. This single chain with all the network information is also unalterable. In such a way that each node of the network has a copy of the entire and ordered chain of blocks.

We will say, therefore, that each node contains the same immutable history with everything that has been sent through the Bitcoin network to date. And you can add information to this history, but NEVER delete or alter the existing information.

So we have robustness, transparency, privacy, ease of access, and immutability of transactional information as characteristics of the Bitcoin network. Without forgetting that, as we have said before, Bitcoin is open software with pre-established rules. All this gives us something very valuable today in relation to our money: trust.

But there is a more trustworthy reason that no payment system has ever offered to date: the pure decentralization of the network that allows payments to be made from person to person without intermediaries. This peculiarity not only provides freedom and sovereignty for the user, but also efficiency.

4. Purely decentralized network

Just as the skin or the neurons work independently, that is, the skin cells of the arm are not more important than those of the ankle; or the neurons that order the movement of my fingers while I type are not more important than those that order the movement of my legs when I walk, in the Bitcoin network no node is more important than the others.

In a network of a purely decentralized nature, there is no central or intermediary authority that decides which nodes are more important than others; therefore, a horizontal structure is established that tangentially opposes the pyramidal structures.

One might think that the property of pure decentralization necessarily follows from the network concept. But it's not like that. This only happens in very few systems, Bitcoin being one of them.

 

Facebook, Instagram, YouTube, Twitter, etc they are, as we all know, social networks, but under no circumstances decentralized. There is a central authority (in this case the companies associated with the networks) that decides whether or not it wants to give you access to the network (permissioned), which can apply censorship to your content, delete your history, change the rules of the game whenever it pleases and force you to consume advertising that does not interest you.  

 

Let's also look at the Internet network. As our home connection is linked to a central data line and later to the operator's server, we are forced to go through that "center". This central authority (the carrier) could do whatever it wanted with our connection. Therefore, we depend on him in a relationship of trust.

 

The only way for the Internet to be purely decentralized would be if connections were made from router to router, rather than through the operator. In Bitcoin, the desired “router-to-router” communication is achieved in a purely decentralized system. The words used by Satoshi are "peer to peer" or from person to person.

 

Graphically, the image on the left would represent the Internet network and the one on the right the Bitcoin network. In the latter, pure decentralization is symbolized, since all the nodes communicate with each other without local centers and without central authority.

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Bitcoin is non-inflationary. The amount of bitcoin generated per year is known and decreasing, regulated by the halving. In the future there will be only 21 million bitcoin. Not one more. 

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In a parallelism with the Internet, it is said that the penetration of Bitcoin in society is in a period equivalent to the 90s, when the network of networks began its gradual adoption. The process of adopting a new technology is widely studied. In addition, a series of medium and long-term models developed by macroeconomic investors of various kinds are available. 

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Placing trust on your money in a third party is no longer necessary. You can save, save, pay, receive money from any person or company in the world without going through a bank. Privacy, sovereignty and trust are guaranteed by the system itself; in this case by the network and its protocol. This is why Bitcoin is so revolutionary.

 

The Bitcoin network is a purely decentralized network. Nobody controls her. It doesn't have an owner. It is not allowed because it does not belong to anyone. No one can censor anyone. There is no company behind it, nor a person, nor a group of people that controls it. The rules of the game were written in the Bitcoin protocol when it was created and it self-regulates automatically. Everyone can access it, without the need to ask for permissions. Everything that happens in it is archived forever in all nodes. No one can close or alter it. It is a purely decentralized digital payment network.

 

The coin

Lastly, the bitcoin currency (with a lowercase “b”) is neither more nor less than the unit of account for the amount of money sent over its network. Same as the euro, the dollar, the yuan, etc. They are units of measurement of the money that I have in the physical world, in the Bitcoin digital network, money is measured in bitcoin.  

 

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