As Bitcoin approaches its 10 years anniversary, the world’s first and most successful cryptocurrency is still a mystery to many people in the market. Even as Bitcoin has made its way into the vocabulary of the masses, the average person still wonders “how does Bitcoin work and what makes this computer money so valuable?”
The Current State of Affairs
The crypto market continues to expand to new heights. Every week new blockchains, tokens, coins, and exchanges enter the market. Each of these products provides users with a valuable service. However, all of these technologies owe a nod of appreciation to the world’s original cryptocurrency – Bitcoin.
What is Bitcoin?
Per Satoshi Nakamoto, Bitcoin’s anonymous creator, Bitcoin is a “Peer-to-Peer Electronic Cash System.” Let’s examine this statement in depth to really grasp exactly what Nakamoto states here. Firstly, he states Bitcoin is a “peer-to-peer” network.
Peer-to-peer transactions are direct transactions. A great example of this style of transaction is when you hand cash to someone. When you hand your neighbor $5 cash, that is a direct transaction. There was no intermediary involved. There was no account validation, or central bank approving your transaction. You acted freely.
Inefficiencies in Today’s System
Now look at the same transaction, but this time you pay with your debit card or a payment App. While it may appear as