Nov 26, 2017
Bitcoin: Why is it so difficult to explain when it’s easy to understand?
Alex had just moved to his new flat, four months earlier, his wife Iris had given birth to Arthur and the two young parents felt more and more tight in their old Parisian 2 rooms, so for their housewarming they invited all their friends.
Around his new coffee table freshly purchased from IKEA, and very comfortably seated on his modern sofa, we were six around Alex, including Martin. Ah! I have not presented him to you yet, it’s our friend who loves talking but we hate listening to.
I was admiring the green decor in the living room, it’s the trend, and the mix of colors seemed to me strangely homogeneous when suddenly Alex disrupted my eyes pleasure, screaming with his mouth half full of chips : “But guys, what is it exactly is the Bitcoin?”
“It’s simple !” Replied the one that I do not need to introduce again, then he continued : ”Bitcoin is a digital currency which is quoted at nearly 7000$, it made me rich, but it will decrease, because investors are moving to Bitcoin Cash, personally I bet all my money on the Ripple because IBM …“. Fortunately, Sonia, Iris’s childhood best friend, crossed the living room, which distracted his attention. But let’s go back briefly to Martin’s ‘bullshits’, if it proves anything, it is that car salesmen earn quite well their living to invest some of their savings elsewhere.
Meantime, Alex’s blank stare described the trauma his brain suffered, so I had to provide an accurate and easy definition to explain what was simple and clear in my mind, but hard to describe such its vocabulary is technical.
The good thing about this IKEA coffee table is that it has a discreet drawer where you can drop useful household objects without spoiling the decor, and that’s precisely where a notebook and his pen were hidden.
“Could you tell me what comes up in your mind when you hear about Bitcoin?” My sentence broke the awkward silence that was starting to settle between the guests, giving way to a shower of proposals — yes’ I turned a deaf ear to Martin — whose most common words were: Bitcoin, BlockChain, LiteCoin, Dash, Crypto Currency, Transaction, Ethereum, Fork, Miners, Node, Satochi Nakamoto, Cryptography, ICO, Miners,
I proposed to provide an explanation containing all the words noted, and in order to focus all the public attention, I suggested them against a 5$ bet, to pay 10 to all those who have not grasp the principle of Bitcoin, and on the other hand to take money from those who had indeed understood.
I knew that French people liked gambling, I could easily count more than $60 on the table, even Martin participated. I waited for the end of the hubbub created by the newcomers and then began my speech hoping that everyone would be attentive and honest:
“Satochi Nakamoto is the pseudonym of the person or group of people who created in 2009 a software called Bitcoin Qt, allowing people who setup it on their computers, to be part of a network and thus to send transactions to each other using a digital currency called Bitcoin.
Nakamoto had just invented the Blockchain, a technology that inspired many people after him to launch their own digital currencies that are obviously completely independent of each other, which means, each one is in its own network. The main digital currencies or Crypto currency, Crypto currency, Ico … are LiteCoin, Dash, Etheruem, IOTA, Ripple, Zcash … etc. It’s as if you were asking me the names of the currencies and I quoted you: Dollar, Euro, Pound, Dinar, Dirham … etc.
So how do these Blockchains work?
A BlockChain is above all a communication protocol that manages transactions within a network, which means, it is a software setup on several machines, which, thanks to its specific rules, defines the ways in which these machines communicate with each other.
This network is composed of three main entities: the users, the nodes and the minors.
• Users use the network to send transactions to each other.
• Nodes can be represented as a database backed up on multiple sites in the network. They store the transactions and their relative information: (in particular the sender, the recipient and the amount sent) by grouping them in registers called blocks which follow one after the other.
• The miners are the validators, they group all the new validated transactions in a new block, then they validate it before sending it to the nodes in order to attach it to the old blocks already validated. This operation requires great computing power, so in order to thank them, the network pays them a reward. This is how digital currencies exchanged by users are generated.
If you’ve understood me enough until now, you probably have the following questions: Who owns BlockChains? Who decides on their rules? Who is responsible for their maintenance and upgrades?
Within each Blockchain, no one has the right to decide, but the whole community chooses by vote according to a democratic scheme, however no vote is unanimous, it is always frustrating for the losing minority. Thus, in some cases small minorities decide to take their independence and separate from the winning majority, this is called a Fork, it can be defined in practice as a division of the main BlockChain from a certain block, in two independent Blockchains:
• A new one mined by the miners who setup the new version of the software
• And the old one mined by minors who have not updated their software. Moreover, the two main Crypto currencies have not escaped, since the Ethereum gave birth to the Ethereum Classic and Ethereum and more recently the Bitcoin Cash separated from Bitcoin.
So if you too want to acquire a Crypto currency legally, choose the one that interests you, then you have the choice between three ways:
• Install its BlockChain on your computer and start mining to validate blocks and thus earn rewards from the network.
• Using a private key, generate your public address and communicate it to another person in the network who agrees to send you an amount of the crypto currency.
• Open an account at a currency exchange platform and buy what you desire with your Dollars.
Recently, currencies exchange companies have largely prospered, and they democratized Crypto currencies thanks in particular to their not very constraining registration conditions. Individuals at first and then investors settled there and turned these platforms into speculative tools, this caused large price variations and created a financial bubble. thanks to it, many became millionaires and probably because of it, many will go bankrupt.
Sitting comfortably in the back of an Uber, I was counting my Dollars well deserved, with the certainty that Martin was really a bad loser.
