Gil, you’re a geek. Explain Bitcoin. (Also, there’s a problem with my computer, can you help?).
I’ve heard this question from countless friends since cryptocurrency became a buzzword a few of years ago.
But, as Blockchain has to do with economy, cryptography, computer science... It's kind of a complex idea to explain off the bat and as I don’t want to give that two hour "blockchain 101" speech to every inquisitive person I know, I'll try to point to a few of the best explanations I found out there, which I hope will help you grasp the basic concepts of the bitcoin buzz, without any preliminary technical background. Once you've caught on to the basics- I can give you the more elaborate two hour speech 🤓
Let's start by giving two simplistic definitions:
"Bitcoin is cash with wings",
A bitcoin is a token of value (coin). It behaves like cash in the sense that you can only transfer it if you have it, you can’t spend it twice, and you can easily prove that you have it. It has wings in the sense that it can be wired through the internet without requiring any intermediaries (banks, PayPal, etc).
Blockchain is a technology that allows many parties who don't necessarily trust each other to work together and reach consensus
Consensus means all the participants agree on a set of facts. One form of consensus is an agreement about how many bitcoins each account has. It can also facilitate self-enforcing agreements (contracts).
But more on that later.
Let's go deeper
Money as debt (47 mins)
While I don't necessarily appreciate the tone in this movie, and despite the fact it has some inaccuracies - it nonetheless helps grasp the basics of this monetary system. It helps unpack concepts such as inflation and fiat money, and points to many of the flaws in our current monetary system that Bitcoin aims to mitigate. It’s also a good place to start if you’re looking to deep dive into the subject and get into the mindset of the more hardcore crypto-heads.
Blockchain: Massively Simplified (23 mins)
This video explains the need for blockchain technology. It doesn't go into any technical details. It just explains what a blockchain is, as opposed to how it works. It definitely does not cover the entire range of possibilities blockchains enable, but it's a great place to start grasping the concept.
Still Don't Get Bitcoin? Here's an Explanation Even a Five-Year-Old Will Understand (6 mins read)
This short article explains Bitcoin using extremely simple terms. It helps understand the “double-spending problem”, how it is different from using a central ledger, and why using plain files to represent value is problematic.
Ever wonder how Bitcoin actually work? (26 mins)
OK, let's get technical! Might be a good time to grab a cup of coffee. This fantastic video by 3Blue1Brown explains the basic concept of blockchain, and how it democratizes consensus. It also demonstrates the use of blockchain to create a simplistic version of Bitcoin. After watching it, you’ll understand why cheating the Bitcoin ledger is practically impossible.
Blockchain demo (website)
This website is a fun (for me, don't judge) little app that allows you to create a blockchain of your own. Each block can contain any data (Bitcoin's blockchain data, for example, is the list of transactions), and it demonstrates how the blocks are chained. It gets a bit technical, but since you have already watched the previous video and are now a pro, you should be able to understand everything.
Decentralizing Everything with Ethereum (26 mins)
This interview with Vitalik Buterin, creator of Ethereum, explains a different kind of blockchain. While bitcoin functions as a ledger that every block in the chain has access to, Ethereum is a general-purpose blockchain, that enables both the transfer of tokens and the creation of self-enforcing contracts. This talk can be too technical for non-techies at times, as it explores the different possibilities of Ethereum.
If it lost you at some point, this is the one thing you need to take away from it: Smart contracts are like vending machines. They are beings that implement the conditions of an agreement. Pay enough money to get a snack, choose it, get the snack and appropriate change. It can get much more complicated, but that's the gist of it.
Now that you’ve spent approximately 128 minutes getting up to speed on the basics of blockchain - not including the valuable time spent reading this excellent article - you should be ready to fully geek out and dig even deeper. Up for the challenge? You know where to find me.