The Definition of Bitcoin
Written Date: 24 April 2016
By Satoshi Nakamoto
- What is Bitcoin ?
Bitcoin is a peer-to-peer electronic cash system, for online payment on the Internet. Bitcoin is not a form of currency issued by any central bank or financial institution. Bitcoin is not a legal tendered currency by any nation-state government. Bitcoin is not a stock produced by a company as solid asset or shares of a company. Bitcoin is a non-perishable electronic digital cash system, which is reusable, transparent and efficient financial product and transaction mechanism. Bitcoin is a cryptographic hash based electronic cheque. Bitcoins are sets of software codes, where people can store economic value in it to make peer-to-peer transparent financial transaction with excellent efficiency.
2. Who issues Bitcoin ?
Any bank or any financial company or entity does not issue Bitcoin and circulate it. Bitcoin is mined and circulated by a decentralized computer network globally with computational CPU power. Bitcoin is mined by miners with their computers and transfer in the Blockchain network for secured transaction. A complex mathematical algorithm that is capable to solve problems with mathematical equation that determines Bitcoin mining and issuing of Bitcoin.
3. What determined the economic value of Bitcoin ?
Bitcoin has been nick named as virtual digital crypto currency in the Internet but literally Bitcoin is a computational software codes that has no monetary face value but it does have computational and electricity cost value added to it. Also it does have economic property value under the Ethereum Standard, which is a form of proof-of-work that is produced by the investment of time to invent and efforts to produce the final product. When someone buys Bitcoin with fiat paper money to use the Bitcoin codes for storage of economic value for transaction, it becomes a valuable digital financial property, which is electronic check. In another word a medium to transfer economic value one to another. When demand for Bitcoin increases, the value increased. Usefulness and demands determined the economic value of Bitcoin.
4. Why government should refrain from regulating Bitcoin ?
Bitcoin is not issued by any central banks and Bitcoin is not a legal tendered currency by any nation-state government. The commercial banks issue the paper check behalf of legal tendered fiat paper money deposited by their customers in the bank. Governments regulate the issuance of fiat currency when the central banks print and circulate the paper money. Commercial banks provide financial services and government can regulate the bank as financial service providing company under the government regulation criterion. Government has no responsibilities or reason to regulate paper check, which the commercial banks issue to their customers for making transaction. Bitcoin is not a legal tender currency; it does not mean Bitcoin is illegal tender. Bitcoin could be defined as electronic check under the financial legal codes and definition. So government legally cannot regulate Bitcoin as legal tendered currency or illegal tendered currency. By definition Bitcoin is defined as an electronic cash system or electronic check, which is a financial innovation in the financial service industry. Therefore government should refrain from regulating Bitcoin, as Bitcoin is not a legal tendered currency; which the government according to the financial legal codes cannot regulate.
5. Wrong Citation about Bitcoin
Bitcoin is a financial innovation for evolution of financial service to digital financial service (DFS). Wrong citation and wrong definitions are floating all around the Internet and also in the mainstream media by a group of anarchist who has no proper knowledge about Bitcoin. I have not designed Bitcoin to replace any legal tendered currency of any nation-state government.
6. Benefits of using Bitcoin
Bitcoin provide faster financial service, which is robust and virtually costless. Indeed I have designed the Bitcoin to facilitate and support the financial service industries for better financial services, from which the customers could get outstanding benefits. Also by adopting and using the Bitcoin electronic cash system the banks can save lots of money and time, and can provide better financial service to their customers.
7. Bitcoin and Blockchain Core Innovation
Bitcoin electronic cash system is run in the computer network and Blockchain technology provides the globalized public ledger service. Blockchain technology is the power behind the Bitcoin system software that is the core that is the financial innovation. Bitcoin and Blockchain are two components that link to each other for digital financial service.
8. Usefulness of Blockchain Technology
Blockchain technology has multi-features usefulness beside financial service. Thousands of Blockchain coders and developers are carrying out a greater research for other use of Blockchain. I have kept concealed the main data mining system with Bitmark Algorithm, which I am planning to deploy on the Blockchain Master Ledger. The financial industries particularly the central banks will be able to use the Blockchain Master Ledger to authenticate and systemized the creation and circulation of the next generation digital fiat currency. I have noticed that the wrong interpretation and wrong citation about Bitcoin by the anarchists have built up a wrong justification and wrong concept of understanding in the banking community. Therefore I have decided to produce full and perfect definition and publish it for correct understand what Bitcoin is and is not. Also how Blockchain technology could be a tools that central banks can use for better financial service. The central banks can use the GNiD produced by Bitmark Algorithm on the Blockchain to authenticate each unit of fiat currency, which is 100% counterfeit proof.
9. Truth, Doubt and Logic of Bitcoin and its Usefulness
The true nature of Bitcoin needs to be understood according to the motto of Bitcoin. Bitcoin has a motto. The motto is care and share. The principles behind Bitcoin invention are to raise funds to reduce poverty and support charity. This was my true motive to create Bitcoin. The Bitcoin project went through some process to all around the world within a very short time. Because of unprecedented rationale and acts of malevolent. It has created a doubt among the banking industries about its invention, origin and motive. There are hundreds of speculations and gossips are floating all over the Internet regarding the invention of Bitcoin. Such as, the Russian government thinks Bitcoin is the invention of CIA to destroy Russian and Chinese economy. The Japanese government thinks that British government has invented the Bitcoin. The US Government thinks the Bitcoin is invented by Japanese secret service. The ECB thinks that the Bitcoin is invented by Israel. These kinds of conspiracy theories are baseless. To eliminate doubt about the invention of Bitcoin, I have decided to publish the Bitcoin Official Definition Papers. This will provide the accurate understanding all about Bitcoin.
10. Trust in a Non-Trust Based Cryptography of Bitcoin
Bitcoin is an electronic digital financial service method. Which record all the transaction data in to public ledger called Blockchain. I have designed the system to detect any kind of illegal financial transactions; the government’s financial conduct authority can trace and combat any types of money laundering or illegal money transmission easily. The fundamentals of Bitcoin are faultless and trustable in a non-trust based cryptographic proof of work, which provides greater safety measures to the owner of Bitcoin to trust its multi- features credibility with confidence and simplicity.
11. Bitcoin and its Security System
First I designed the Bitcoin in a system called Graphic Bitcoin that is an electronic virtual check that can be store and transfer electronically. The numerical economic value is embedded in the Graphic Block from which the digital numerical algorithmic value could be mined with computation power. This digital numbers must be created by the Bitmark Algorithm only to justify its authenticity. The Bitmark Algorithm Formula produces the reliability with Cryptographic hash based Proof of Work. To combat counterfeiting, I have created five security system with full code based defence system that is based on ECDSA a kind of digital signature that provide greater security.
13. Finite Units and Next Generation Cryptographic Cash System Bitcoin QS V3.0.1 (Graphic G++)
For book keeping in the Blockchain public ledger the Graphic Bitcoin turns in to digital numerical unit that is mathematically countable with code based software system to provide digital financial service under tokenization of the Bitcoin with QR code and GNiD. For micro transaction this digital accounting Bitcoin system is limited to a specific numbers, which is 21000644 units of Bitcoin. The Graphic Bitcoin for macro investment is 100,000,000 units, which I have designed first but have not yet release it. When the Bitcoin System will required the Graphic Bitcoin for scaling the Bitcoin System as the market grow, I will release them for the Macro Investment purpose under the Bitcoin QS V3.0.1 in the near future when the mainstream banks will adopt the digital financial system to provide next generation digital financial service.
14. Legal stand of Bitcoin
In some country Bitcoin has been defined as illegal currency created by the drug dealers and computer hackers; this is untrue. Bitcoin is not a currency at all. Bitcoin is a method of cash system and secured transaction. Bitcoin is not illegal. The anarchists have cited wrong definition over the Internet. Bitcoin is super method of electronic cash traction over the Internet and telecommunication network. Banks or any financial institution does not need to fear Bitcoin because Bitcoin is for better digital financial service. Banks can adopt the Bitcoin and Blockchain to save money and make more profits. Bank can combat all sort of financial fraud using Bitcoin and Blockchain technology.
15. How Governments will benefit using Bitcoin and Blockchain technology ?
Bitcoin is counterfeit proof, secure and transparent. Government can collect tax from the citizen automatically using Blockchain based digital GNiD linked to Bitcoin system software. Also if any government wants to use Blockchain for other governance purpose they can do it to provide various kinds of services like issuing passport or storing government data in the Blockchain.
16. Bitcoin and Blockchain is compliance with KYC and AML
While Bitcoin and Blockchain provide full financial security in digital financial service with excellent transparency and efficiency, the government can use the Blockchain system to track down any illegal transaction using GNiD mechanism in the Blockchain transaction codes. Cryptography will provide digital electronic target oriented code that can be automated to act as a cyber robot to detect any wrong or unprecedented transaction, which could alert the government agent to investigate.
17. Concluding Comments
Bitcoin literally does not transfer any cash from one country to another. Neither has it made any illegal money transfer. Bitcoin has its own economic value system, which is produced computationally for storing economic value. Therefore Bitcoin is an electronic economic property. As the demand of Bitcoin grow, the Bitcoin value increase. Government does not need to regulate Bitcoin because Bitcoin is not a currency but is a decentralized electronic check useful for transparent financial service. I hope the banking community and Financial Conduct Authority will find this paper useful to understand and comprehend fully the nature of Bitcoin and Blockchain technology and will facilitate and support the Bitcoin start-up business.
Copyrights: By the Publisher- 2016