Part 1, Bitcoin analogies
Bitcoin is special. While not exactly like anything that has existed before, it can be compared to things you already know by using
analogies. They aren't perfect. This video isn't about defining Bitcoin, but about making it a little bit more understandable.
Bitcoin is like digital gold
Bitcoin is scarce. It is expensive to produce. It is highly divisible and uniform. It can be transported cheaply through space and time.
For these reasons, people treat it as a hard asset and store wealth in it.
Bitcoin is like digital money
Bitcoin has only a digital representation. It doesn't have any particular physical form. Its integrity is maintained by cryptography and
consuming a lot of electricity.
Bitcoin is like the internet
Bitcoin consists of many thousands computers, called, nodes, communicating together, using the same protocol. Anyone can connect, there are
no technical restrictions to participate in the network.
Bitcoin is like a central bank
Bitcoin maintains a database that represents a ledger. This ledger records all the Bitcoin that were ever created and all the transactions
that were ever made.
Bitcoin is like an auditor
The Bitcoin nodes are verifyng the ledger all the time. They use transparent and neutral rules. If someone tries to sneak in bad data into
the ledger, such as creating new Bitcoins outside of the schedule, or transferring someone else's Bitcoins, the nodes will immediately
notice it.
Bitcoin is like the law
The nodes aren't merely verifying, they are also enforcing. Invalid data is not just immediately spotted, it is also immediately rejected.
Any record that doesn't follow the rules will end up in trash. What is written, that happens.
Bitcoin is decentralised
Unlike everything mentioned so far, Bitcoin is also decentralised. It is probably the most decentralised system we know. There is noone
that can break the rules or change them.
Bitcoin is a decentralized hard asset that can be used for storing wealth.