The Blockchain Spectrum
Now, even if someone does not have the drawbacks of decades-long experience and mental models with a specific asset class, it is still very hard to understand Bitcoin.
Why? Because Bitcoin is the intersection of many, many different fields.
To truly understand Bitcoin, there is no other way than being a polymath.
Even if one has made it as far to (a) realize Bitcoin is something completely new and solely using existing heuristics and mental models will not work and (b) with Bitcoin, more than anything else, we do not know what we do not know — understanding still requires a very broad set of competences.
The correct approach to understand when one starts going down the Bitcoin rabbit hole is therefore to assume one knows nothing and any experience and insight one has from previous aspects of life brings
very little to the table.
First principles thinking is required.
We can, however, try to define a little deeper what Bitcoin is. Below is listed some different ways of wrapping one’s head around Bitcoin.
Not an exhaustive list.
A living organism
Bitcoin is Free and Open Source software. It is not a piece of IP owned by a centralized joint-stock company that needs to optimize for the bottom line of the next quarter and is incapable of cannibalizing itself. Since the Bitcoin whitepaper was released and the
genesis block was mined, we have seen an explosion of experiments, ideas and creative geniuses get involved in Bitcoin and crypto as a whole. To think of Bitcoin as a living, technological organism that adjusts, develops and constantly changes to survive can be useful.
Money, as many have learned and realized in recent decade, is just a social
construction we are all part of. The value therefore comes from the amount of true believers.
Continuing this line of thinking, one could describe the religion as consisting of:
- Prophet: Satoshi. No longer present. Impossible to ask questions.
- Convictions: Decentralization.
- Rituals: Running nodes. Mining. Hodling.
- Holy scriptures: Bitcoin whitepaper. As with all holy scriptures, people interpret them in their own way.
- Sacred objects: Genesis block, lowercase bitcoin
- Sects: Different interpretations resulting in different factions/sects: small blockers, big blockers, etc.
An emerging economy
- The consensus protocol can be thought of as the constitution
- The society as the constituency (users on the demand-side; miners on the supply-side)
- Core developers as the executive department who write the code and execute on the strategy, but amendments to the protocol (i.e., constitution) require approval from the constituency)
- The native token is the internal currency
- The investors underwrite the currency
Additionally, many one-liners and memes exist to describe Bitcoin. Not an exhaustive list.
- Sound money
- Digital gold
- “An insurance policy against an Orwellian future”
- “A tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme”
- Censorship- judgment & seizure-resistant money
- Peer to peer digital cash
- Swiss Bank account in your pocket
- Unstoppable and uncensorable hard money
- Bitcoin WhitePaper Daybitcoin, white paper
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- Edward Snowden on privacy“If you think privacy is unimportant for you because you have nothing to hide, you might as well say free speech is unimportant for you because you have nothing useful to say.” Edward … Continue reading Edward Snowden on privacy
- Bitcoin’s Store of ValueTo any intelligent observer, it has been apparent that bitcoin’s primary use has emerged to be store of value/investment. Yes, bitcoin’s decentralized/permissionless solution to creating an immutable cryptographically secured database brings a vast … Continue reading Bitcoin’s Store of Value
- Cryptocurrency Mining GlossaryCryptocurrency Mining Glossary If you are new to cryptocurrencies, you might find the topic a bit confusing due to the terminology involved. Just refer to this page when you see an unfamiliar word … Continue reading Cryptocurrency Mining Glossary