Bitcoin is like…?
Sometimes the English language is silly. We use the same word to describe two different things. So, what is BITCOIN, you ask? Confusingly, uppercase-B “Bitcoin” and lowercase-b “bitcoin” mean two different things. Here’s how I think about them:
Bitcoin = a technological protocol, which I think of as globally-viewable spreadsheet, or the internet for money.
bitcoin = the first application built on the protocol, which I think of as digital cash, or email for money.
Bitcoin is like a globally-viewable spreadsheet. Imagine that my value is tracked in spreadsheet column A, and my mom’s value is tracked in spreadsheet column B. Now suppose that I have a total of $10 in column A, and I want to send my mom money to contribute to dad’s birthday dinner, so I authorize a transaction for $10 from column A to column B. Since this spreadsheet is globally viewable to the Bitcoin network, the entire network now knows that the value in column A is zero.
Next imagine that I try to authorize a transaction for $10 from column A to my roommate in column C, because she covered my glass of wine last night. The Bitcoin network would reject this transaction, because it detects that column A doesn’t have any value left to transfer. In this way, bitcoin is like digital cash , because I cannot spend the same ten dollar bill twice. Once I give it away, I no longer have it to give to someone else.
Bitcoin is like the internet for money. Before the internet, the primary way we exchanged written communications with people was through services like the U.S. Postal Service or FedEx. With the advent of the internet, we began using email, chat, forums, and social media apps to instantly engage in written dialog with people throughout the entire world. Similarly to snail mail, transferring cash takes days, whether across bank accounts or across currencies and borders; plus banks or other payment intermediaries take their cut for settling or processing these transfers. With bitcoin, I can transfer value from my column to my mom’s column from anywhere in the world — basically instantly, basically free, and basically without intermediaries.
So if I think of Bitcoin (the technology) as the internet for money, then I think “bitcoin” is like email for money. The internet revolutionized how we communicate with each other, but it offers much more than just messaging apps. As a digital cash, bitcoin is changing how we globally transfer value, but the Bitcoin protocol offers much more than just payment services apps.
