Inventing Bitcoin: The Technology Behind the First Truly Scarce Decentralized Money Explained by Yan Pritzker

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WHAT IS BITCOIN?
Bitcoin is a peer to peer electronic cash, a digital money that can be trans-

ferred between people or computers without any trusted middleman
(such as a bank), and whose issuance is not under the control of any
single party. 
Think of a paper dollar or physical metal coin. When you give that
money to another person, they don’t need to know who you are. They
just need to trust that the cash they get from you is not a forgery. Typi-

cally people do this with physical money using just their eyes and
fingers.
As we’ve shifted to a digital society, the majority of our payments are
now made digitally over the Internet by means of a middleman service:
a credit card company like Visa, a digital payment provider such as
PayPal or Apple Pay, or an online platform like WeChat in China.
The shift to digital payments brings with it the reliance on a central
actor that has to approve and verify every payment. This is because the
nature of money has changed from a physical thing you can look at and
touch and verify yourself, to digital bits that have to be verified by the
party that controls their transfer.

Bitcoin offers an alternative to centrally controlled digital money with a
system of three basic components. We’ll get into the motivations
behind this design in the next section.
1. A digital asset (typically bitcoin with a lowercase b) with a
supply that is limited, known in advance, and unchangeable.
This stands in stark contrast to the money most of us are used
to today, which are notes issued by governments or central
banks whose supply expands at an unpredictable rate
over time.
2. A bunch of interconnected computers (the Bitcoin network),
which anyone can join. This network serves to track ownership
of bitcoins and to transfer them between participants,
bypassing any middlemen such as banks, payment companies,
and government entities.
3. The Bitcoin client software, which is a piece of code that
anyone can run on their computer to become a participant in
the network. This software is open source, which means that
anyone can see how it works, as well as contribute new
features and bug fixes to it.

Where Did It Come From?
Bitcoin was invented by a person or group known by the pseudonym of
Satoshi Nakamoto around 2008. No one knows the identity of this

Inventing Bitcoin: The Technology Behind the First Truly Scarce Decentralized Money Explained by Yan Pritzker