![]() What is important is that it is commonly said that this scarcity is what gives Bitcoin its value. There are more technical details which ensure the security of the whole system, but they’re not important to this discussion. Ownership of bitcoins (or parts of them) can be transferred easily, because a large network of computers keeps track of who gave what to whom. Bitcoins cannot be faked, because anyone can verify whether the mathematical property actually holds or not. The total number of bitcoins in circulation is fixed ahead of time by the algorithm, regardless of how many people are using Bitcoin and eventually no more bitcoins will be found. As time progresses, the property is designed to become more and more stringent, so new Bitcoin numbers become increasingly difficult to create. That property is what makes the numbers rare, and thus computationally time-intensive to find. You don’t need to know a whole lot about Bitcoin to understand its basic premise: You have an artificially scarce resource, which in this case happens to be very large numbers with a special mathematical property. In particular, I think the assertions listed above reveal some really interesting things about the way money actually functions, and what kind of value Bitcoin actually offers. I want to cast aside whether Bitcoin is Hot Right Now, as well as questions about implementation details (like the size and existence of transaction fees, the scalability of the blockchain, or transaction delays), and ask whether the fundamental idea is sound. At that time, it seemed like Bitcoin was a passing fad- I believed then, as I believe now, that Bitcoin’s merit (or lack thereof) doesn’t stem from its popularity (or lack thereof), though the mood around Bitcoin has since entirely reversed.īitcoin advocates back then would have dismissed Bitcoin’s slide in popularity as proof of its invalidity, though today they’d probably be just as likely to point to its popularity as evidence of its success. I originally penned this article nearly two years ago (before setting it aside). Bitcoin is like gold, and gold is good for counting wealth, therefore Bitcoin is good for counting wealth.The decentralized / algorithmic nature of Bitcoin makes it safer than “normal” currency. ![]() Bitcoin could one day supplant ordinary currency.I regularly hear these ideas repeated in seriousness: Not about how it works there are plenty of articles which explain that quite lucidly- it is confusion about what Bitcoin represents, and what its role could be. There seems to be some longstanding confusion about Bitcoin.
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