Bitcoin is a word that has started to creep into the mainstream public domain circa 2010, when the first transaction involving physical goods was paid for using Bitcoin on the 22 May 2010. The transaction involved exchanging 10 000 BTC for 2 pizzas from a Florida based pizza restaurant.
Back then there was no other way to exchange Bitcoin, other than to negotiate a transaction on the Bitcoin Forum. However, since then things have moved on rapidly and even sovereign nation states now accept Bitcoin as legal tender, with more states set to announce similar plans in the near to medium future.
Despite all this time that Bitcoin has been around and the recognition it gets, there are still vast amounts of the global population that still have no idea what Bitcoin actually. Bitcoin is still considered magic internet money or cryptographically secure digital money. Even the people who hate or diss Bitcoin don’t even really understand it and often refer to it as a Ponzi scheme or fools gold and much worse. The truth is Bitcoin is so much more, and it is still going to be a whole lot more.
Technical Aspects of Bitcoin
Just like you don’t have to understand the complexities of paper milling, printing or even plastic moulding to be able to use traditional forms of money via credit cards or bank notes. You don’t really have to learn about the software engineering aspects that Bitcoin is developed on to be able to use it. However, this can be really interesting depending on your interest in the subject.
As a software developer, I was always going to be drawn to the technical aspects of Bitcoin, and the software engineering behind bitcoin is really interesting. However, it is not even a small amount of what Bitcoin actually encompasses.
The simplest way Bitcoin has been described, is as follows
This computer code is separately run by many thousands of disparate individuals and organizations. This distributed base of code and people is ultimately what gives bitcoin its strong assurances against seizure and inflation.
This means it is the first money system ever created that has a monetary policy anyone can easily and simply understand and most importantly rely upon, because no individual or organization has the ability to change it.
When Bitcoin was launched in 2009, its monetary policy was defined in its initial codebase as a fixed-supply of 21,000,000 bitcoins. Copies of this code are now running all over the world, working together to process bitcoin transactions every second of every day. This is one of the most important aspects of Bitcoin in that this implements a concept of Digital Scarcity in that nobody can ever create more Bitcoin.
The other really important technical aspect is that unlike every other digital money system, there is no central point of control that can make changes to the money supply.