What is Bitcoin Good For? (Simplified)

What is Bitcoin Good For? (Simplified)

Bitcoin is a settlement protocol for the management of scare assets, without counterparty risk, and in a decentralized peer-to-peer arrangement. Bitcoin has many of the features of currencies, distributed databases, and remittance systems. Value transfers can be performed using a variety of tokens and denominations on the Bitcoin network.


What's up, party people? Chris DeRose here, Community Director of the Counterparty Foundation. And today I wanted to have a little bit of a different take on the usual format. It's going to be a simplified explanation as to what is Bitcoin. So I've had a couple of you wanting to know just like in the simplest, easiest to use terms. Well, there's a couple of very easy answers . The first quick and easy answer is that it's a currency.

It's currency in the way that maybe a dollar is currency. Now, obviously it's a lot more complicated than that. It's a decentralized currency. It's a currency of the Internet. It's a non-government currency. It's a currency in the way that gold is a currency.

That's one simple explanation for Bitcoin. Another simple explanation for Bitcoin is a protocol to manage scarcity. So right now we have on the Internet a lot of non-scarce resources, things like YouTube videos or articles, music, things that we can copy around. And there's no real limit to how much we have. It's just bits. It's data, and that's done in many different ways.

We have things like HTTP. We have things like SMTP, email protocols, and things like that. And the theme has always been, on the Internet thus far, that the information is not a scarce thing. We'll copy it around everywhere. Well, Bitcoin is a departure from that. It's kind of the opposite.

It's a protocol for taking things like dollars, for taking things like identity maybe, like the token that you use to identify yourself. It's a protocol for resources like maybe you want to sell shares, like stock shares or something like that. You can't really copy a stock share around all over the place, so what you would do instead is find an asset for it and move it to the Bitcoin network. A lot of this stuff is new though too, so we really are just kind of exploring Bitcoin. A lot of the interest has come from programmers who are realizing that there's this amazing and powerful new tool that they've never had before. There's a whole history of Bitcoin.

It's really kind of a neat science, history. You name it. There's a lot of characters in the movement, a lot of shady individuals, and a lot of subterfuge. And all this made it into this great story, this great sort of Internet phenomenon. And so when you see it in the news and you're probably wondering why is this important. Well, it's got a funky past.

It's got a great potential, and really a lot of people, even themselves in the movement, don't really know what is Bitcoin yet. We found all these easy answers, and then some more complicated ones. And some things we thought it did, maybe it's not so good at, and things that we never thought it would be good it, it's turning out to be really useful for. But at its core, it's a protocol. It's a type of currency on the Internet that is unprecedented utility mostly because it's decentralized. So if you found this answer useful, it probably will lead to all kinds of other questions because there's a whole world to this thing.

So look at my channel, if you like some of the other answers that you've seen, then go ahead and subscribe. Certainly if you have more questions, feel free to ask me. You can tweet me @DeRoseTech or you can email me, Later, party people!