If you want the short thesis of Bitcoin, here you go:
1. Bitcoin is a decentralized monetary system. It is controlled by nobody. It was designed this way. This is significant because the main problem with money over the course of human history is centralized corruption.
2. Bitcoin has a predetermined set of rules that governs the functioning of Bitcoin as a monetary protocol. This hardcodes the rules in advance, rather than leaving them up to the ongoing discretion of a central authority, like a government or central bank, that can change the rules wherever they feel like it, while citizens are left playing a vague guessing game as to how their money is going to be manipulated.
Bitcoin’s rules are also fully open-source. Everyone can see the rules of the system. Anyone can inspect how the system functions. Whereas fiat money is vague, unpredictable, and manipulated, Bitcoin is transparent, predictable, and unmanipulated.
3. Bitcoin has a fixed supply cap of 21 million BTC. It was designed to never be inflated past that point. The decentralized network running Bitcoin’s predetermined rules protects and secures this supply cap. Bitcoin makes inflation, and all of its evils, go extinct.
4. Bitcoin removes the middleman from money because a middleman-model introduces the need for trust. Trust gives an authority power over the system. Power opens the door to corruption. This is the money-power paradox: If someone has the power to determine the truth of the money, they also have the power to corrupt the money.
For example, in the fiat banking system, when you send someone money, you have to trust that your bank will update the money ledger properly, and the other person has to trust that their bank will update their ledger properly. Both banks have to trust that the central bank will update the ledger held between banks properly. This trust enables banks and centralized powers to add and remove money from the ledger, censor transactions, remove people from the ledger, deny access to the ledger, seize or confiscate funds, conduct financial surveillance, and more.
As Satoshi Nakamoto says, “The history of fiat currencies is full of breaches of that trust.”
5. Satoshi solved the trust-based model by introducing a peer-to-peer cryptographic-proof model. Think of it like a cash transaction. When you give someone a cash bill, there is no middleman standing in between you and the receiver. It is a peer-to-peer transaction. Two parties come to a monetary agreement, you hand them the bill, they receive it, and the transaction is done. Satoshi created this dynamic in electronic form, which is why he titled the Bitcoin whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System."
Satoshi was able to create this by designing a system that used cryptographic proof to demonstrate and ensure participants were behaving honestly and that the predetermined Bitcoin rules were being followed. Tens of thousands of Bitcoin nodes (it’s more than that) all around the world independently and constantly verify that the system is running properly. Because they are all running the same rules, and because those rules define exactly how the global network reaches consensus, and because those rules are transparent, predictable, and unmanipulated in an open-source and decentralized network, the Bitcoin system is able to operate with verifiable consensus.
As the saying goes, “any sufficiently advanced technology is indistinguishable from magic.” What seems impossible or magical today becomes normal once people learn how it works. “Mastering Bitcoin” by Andreas Antonopoulos is a great resource if you’re interested in digging into the bones of Bitcoin’s underlying technology. The text of the book is available for free under an open license in the respective GitHub repository.
6. Proof-of-work is the heart of Bitcoin. It is what connects and aligns Bitcoin with natural law. As Satoshi Nakamoto designed Bitcoin, the only way for the Bitcoin ledger to be updated, and the only way new bitcoins can be created, is if a miner demonstrates “proof-of-work.”
In Bitcoin’s case, “work” means harnessing real-world energy — be it solar, wind, hydropower, nuclear, natural gas, or otherwise — that is then used to generate electricity to run Bitcoin mining computers that perform proof-of-work. A gasoline car must use real-world gasoline to power itself. The Bitcoin network must use real-world energy to power itself.
Miners gather unconfirmed transactions within the network into a block, and then try to find a specific number in order to “solve” that block. They run their mining computers using real-world energy in an attempt to guess that number. Once they guess the number, they announce to the network that they’ve found it. From there, the nodes verify that the number meets the predetermined Bitcoin target and that all transactions within the miner’s block adhere to Bitcoin’s rules. Once the nodes verify that the work is valid, the block of transactions is added to the official history of Bitcoin, and the ledger is updated. This is how the “work” of the miners is “proven.”
The Bitcoin protocol awards the winning miner with transaction fees attached to transactions within the block and a predetermined amount of new bitcoins. This is how Bitcoin's supply comes into existence. The more computational power a miner has, the more guesses they have, the more likely they are to win and be rewarded. This incentivizes miners to harness cost-effective energy from the real-world to perform proof-of-work. This is what connects the digital Bitcoin network to the physical natural world, but it is also what protects the Bitcoin network from attack.
In order to overrun the Bitcoin network, you must harness at least 51% of all the energy in the Bitcoin network, but that energy is massive: as of this writing, the computing power of the Bitcoin network does 988 quintillion calculations per second. In 2013, global Bitcoin computing power was already 256 times faster than the world’s top 500 supercomputers combined. Computing power is over 211,000 times more powerful today than in 2013.
In terms of computing power, there is no computer network remotely close to Bitcoin. All this to say... You would have to harness a ridiculously absurd amount of energy to 51% attack the network, but, as Satoshi says in the whitepaper, the incentives don’t play out in favor of the attacker anyways, “The incentive may help encourage miners to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest miners, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favor him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.” Incentives are why Bitcoin works.
7. The significance of proof-of-work is that it ensures that the Bitcoin network is constantly in harmony with nature. If natural energy is not used in a verifiably honest way, the Bitcoin network cannot function. Every bitcoin ever created has come from the harnessing of real-world energy. Every Bitcoin transaction ever confirmed has been processed through real-world energy. All activity within the Bitcoin network comes from the processes of nature. Whereas fiat breaks the laws of nature, Bitcoin harmonizes with them. Bitcoin *is* nature in digital, monetary form.
8. Bitcoin is superior money. It transfers value most effectively across space, scales, and time, because it fulfills the requisite properties of money better than anything else. Most especially, it finally introduces an impenetrable network to protect the money from corruption, which is something humanity has never seen before. All other attempts at cryptographic money, an industry referred to as “crypto,” are inferior to Bitcoin because, at best, they can match the properties of Bitcoin (which is all we need for money), but they will never have the computational power of Bitcoin. This means that all of “crypto” is, at best, a less-secure version of Bitcoin. Forms of intelligence do not choose that which decreases their chances of survival, which is why humanity will choose the most-secure version of superior money, which is Bitcoin. This is why many say, “Bitcoin, not crypto.”
9. Bitcoin separates money from State. The monopoly between money and State is the root corruption plaguing today’s society, thus, the separation of money from State is the most important technology that can exist.
10. Bitcoin is money that progresses forward — its value goes up over time. Fiat is money that progresses backward — its value goes down over time.
Backward money → backward society. It is antithetical to individual and collective progress to denominate our energy with something that loses value. Money that moves in a negative direction is not a positive thing. Money that moves in a positive direction is a positive thing.
11. Fix the money, fix the world.
1. Bitcoin is a decentralized monetary system. It is controlled by nobody. It was designed this way. This is significant because the main problem with money over the course of human history is centralized corruption.
2. Bitcoin has a predetermined set of rules that governs the functioning of Bitcoin as a monetary protocol. This hardcodes the rules in advance, rather than leaving them up to the ongoing discretion of a central authority, like a government or central bank, that can change the rules wherever they feel like it, while citizens are left playing a vague guessing game as to how their money is going to be manipulated.
Bitcoin’s rules are also fully open-source. Everyone can see the rules of the system. Anyone can inspect how the system functions. Whereas fiat money is vague, unpredictable, and manipulated, Bitcoin is transparent, predictable, and unmanipulated.
3. Bitcoin has a fixed supply cap of 21 million BTC. It was designed to never be inflated past that point. The decentralized network running Bitcoin’s predetermined rules protects and secures this supply cap. Bitcoin makes inflation, and all of its evils, go extinct.
4. Bitcoin removes the middleman from money because a middleman-model introduces the need for trust. Trust gives an authority power over the system. Power opens the door to corruption. This is the money-power paradox: If someone has the power to determine the truth of the money, they also have the power to corrupt the money.
For example, in the fiat banking system, when you send someone money, you have to trust that your bank will update the money ledger properly, and the other person has to trust that their bank will update their ledger properly. Both banks have to trust that the central bank will update the ledger held between banks properly. This trust enables banks and centralized powers to add and remove money from the ledger, censor transactions, remove people from the ledger, deny access to the ledger, seize or confiscate funds, conduct financial surveillance, and more.
As Satoshi Nakamoto says, “The history of fiat currencies is full of breaches of that trust.”
5. Satoshi solved the trust-based model by introducing a peer-to-peer cryptographic-proof model. Think of it like a cash transaction. When you give someone a cash bill, there is no middleman standing in between you and the receiver. It is a peer-to-peer transaction. Two parties come to a monetary agreement, you hand them the bill, they receive it, and the transaction is done. Satoshi created this dynamic in electronic form, which is why he titled the Bitcoin whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System."
Satoshi was able to create this by designing a system that used cryptographic proof to demonstrate and ensure participants were behaving honestly and that the predetermined Bitcoin rules were being followed. Tens of thousands of Bitcoin nodes (it’s more than that) all around the world independently and constantly verify that the system is running properly. Because they are all running the same rules, and because those rules define exactly how the global network reaches consensus, and because those rules are transparent, predictable, and unmanipulated in an open-source and decentralized network, the Bitcoin system is able to operate with verifiable consensus.
As the saying goes, “any sufficiently advanced technology is indistinguishable from magic.” What seems impossible or magical today becomes normal once people learn how it works. “Mastering Bitcoin” by Andreas Antonopoulos is a great resource if you’re interested in digging into the bones of Bitcoin’s underlying technology. The text of the book is available for free under an open license in the respective GitHub repository.
6. Proof-of-work is the heart of Bitcoin. It is what connects and aligns Bitcoin with natural law. As Satoshi Nakamoto designed Bitcoin, the only way for the Bitcoin ledger to be updated, and the only way new bitcoins can be created, is if a miner demonstrates “proof-of-work.”
In Bitcoin’s case, “work” means harnessing real-world energy — be it solar, wind, hydropower, nuclear, natural gas, or otherwise — that is then used to generate electricity to run Bitcoin mining computers that perform proof-of-work. A gasoline car must use real-world gasoline to power itself. The Bitcoin network must use real-world energy to power itself.
Miners gather unconfirmed transactions within the network into a block, and then try to find a specific number in order to “solve” that block. They run their mining computers using real-world energy in an attempt to guess that number. Once they guess the number, they announce to the network that they’ve found it. From there, the nodes verify that the number meets the predetermined Bitcoin target and that all transactions within the miner’s block adhere to Bitcoin’s rules. Once the nodes verify that the work is valid, the block of transactions is added to the official history of Bitcoin, and the ledger is updated. This is how the “work” of the miners is “proven.”
The Bitcoin protocol awards the winning miner with transaction fees attached to transactions within the block and a predetermined amount of new bitcoins. This is how Bitcoin's supply comes into existence. The more computational power a miner has, the more guesses they have, the more likely they are to win and be rewarded. This incentivizes miners to harness cost-effective energy from the real-world to perform proof-of-work. This is what connects the digital Bitcoin network to the physical natural world, but it is also what protects the Bitcoin network from attack.
In order to overrun the Bitcoin network, you must harness at least 51% of all the energy in the Bitcoin network, but that energy is massive: as of this writing, the computing power of the Bitcoin network does 988 quintillion calculations per second. In 2013, global Bitcoin computing power was already 256 times faster than the world’s top 500 supercomputers combined. Computing power is over 211,000 times more powerful today than in 2013.
In terms of computing power, there is no computer network remotely close to Bitcoin. All this to say... You would have to harness a ridiculously absurd amount of energy to 51% attack the network, but, as Satoshi says in the whitepaper, the incentives don’t play out in favor of the attacker anyways, “The incentive may help encourage miners to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest miners, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favor him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.” Incentives are why Bitcoin works.
7. The significance of proof-of-work is that it ensures that the Bitcoin network is constantly in harmony with nature. If natural energy is not used in a verifiably honest way, the Bitcoin network cannot function. Every bitcoin ever created has come from the harnessing of real-world energy. Every Bitcoin transaction ever confirmed has been processed through real-world energy. All activity within the Bitcoin network comes from the processes of nature. Whereas fiat breaks the laws of nature, Bitcoin harmonizes with them. Bitcoin *is* nature in digital, monetary form.
8. Bitcoin is superior money. It transfers value most effectively across space, scales, and time, because it fulfills the requisite properties of money better than anything else. Most especially, it finally introduces an impenetrable network to protect the money from corruption, which is something humanity has never seen before. All other attempts at cryptographic money, an industry referred to as “crypto,” are inferior to Bitcoin because, at best, they can match the properties of Bitcoin (which is all we need for money), but they will never have the computational power of Bitcoin. This means that all of “crypto” is, at best, a less-secure version of Bitcoin. Forms of intelligence do not choose that which decreases their chances of survival, which is why humanity will choose the most-secure version of superior money, which is Bitcoin. This is why many say, “Bitcoin, not crypto.”
9. Bitcoin separates money from State. The monopoly between money and State is the root corruption plaguing today’s society, thus, the separation of money from State is the most important technology that can exist.
10. Bitcoin is money that progresses forward — its value goes up over time. Fiat is money that progresses backward — its value goes down over time.
Backward money → backward society. It is antithetical to individual and collective progress to denominate our energy with something that loses value. Money that moves in a negative direction is not a positive thing. Money that moves in a positive direction is a positive thing.
11. Fix the money, fix the world.
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