2 facts about Bitcoin that will blow your mind
Bitcoin, Bitcoin, Bitcoin. You’re hearing it everywhere these days, aren’t you? Whether it’s CNBC, The Wall Street Journal or The New York Times, everyone these days seems to be talking about the huge increase in Bitcoin’s value and the potential for long-term growth.
But aside from the amazing returns that investors have seen in 2017, have you ever taken a closer look at exactly what the technology is all about? Most people don’t know much about Bitcoin aside from the fact that it’s “digital cash”. The reality is that Bitcoin bears very little resemblance to “money, as we know it”.
So, now seems like a great time to share 2 facts about Bitcoin that will blow your mind!
1. Your Bitcoin wallet does not contain Bitcoin, and it will never contain Bitcoin.
When you purchase Bitcoin on Coinbase and then send it to your own wallet application, no Bitcoin is actually moving through the Internet. Coinbase never actually holds any Bitcoin, and neither do you.
Wait a minute — so what exactly am I buying here? How does this work?
All of the world’s Bitcoin exists inside of one giant ledger. The technical name for this ledger is the blockchain.
The Bitcoin blockchain contains a vast amount of virtual “drawers”, also known as Bitcoin addresses. Your Bitcoin is stored in a drawer in the blockchain, and it never leaves there until you send it to another drawer.
(For simplicity’s sake, I’ll be referring to Bitcoin addresses as “drawers” in this article because I think that it paints a clearer picture in the reader’s mind.)
Bitcoin only exists inside of “drawers” in the blockchain. It does not exist outside of those drawers. It just moves from drawer to drawer.
Each drawer has exactly one key that opens it. When you purchase and hold Bitcoin, your wallet holds the key to each drawer that you have Bitcoin in.
You never hold the Bitcoin. You only hold the key. Since you’re the only one who has the key, you therefore own the Bitcoin in the drawer.
Most wallet applications create a new “drawer” for every transaction in which you receive Bitcoin, so you may have several of them. However, newer wallet apps make this part of the process invisible to the end-user, showing them just their total balance and locking & unlocking drawers in the background as needed.
2. The number of Bitcoin drawers is greater than the number of seconds in the age of our universe.
When you receive Bitcoin into your wallet application, the app chooses a Bitcoin drawer in the blockchain at random, assigns it to you, and puts your Bitcoin into it. It doesn’t check to see if it’s empty, because it doesn’t need to. It already knows that whichever drawer it selects will be empty.
Huh? Millions of people are using Bitcoin. How does the wallet app know that the drawer it selects will be empty?
This is where the incredible power of numbers comes into play. This is how many Bitcoin drawers exist inside of the blockchain:
(this also can be written as 2¹⁶⁰)
This means that the odds of your wallet app choosing a Bitcoin drawer that has been used by someone else is 1 in 2¹⁶⁰.
I know what you’re thinking — it may be unlikely, but isn’t it still possible that two people could randomly end up with the same Bitcoin address?
Well, let’s compare this massive number to a few other things:
- Number of Bitcoin “drawers” in the blockchain:
- Number of atoms in the atmosphere of the Earth
- The age of the known universe, in seconds
- The number of seconds that a 95 year old person has lived
- The number of potential number combinations in the Powerball lottery
What does this mean? It means that it would take you longer than the age of the universe to randomly find a Bitcoin address that has been used before. When comparing the odds of choosing the winning Powerball numbers (already unbelievably unlikely, as most of us painfully know) to the number of Bitcoin drawers in the blockchain, you really start to understand the vastness of the numbers that we’re dealing with in Bitcoin.
If you’re having trouble wrapping your head around these mind-blowing facts about Bitcoin, you’re definitely not alone.
Bitcoin and blockchain technology is just as much of an intellectual revolution as it is a technological revolution.
Remember those pictures from the good ole days where you just had to keep staring at it until you could finally see it? Learning about Bitcoin is kind of like that.
Keep on consuming as much content as you can about these topics, and it will continue to come more and more into focus for you. The key is not to give up.
Don’t own any Bitcoin yet? Use this link to sign up on Coinbase and get $10 in free Bitcoin right now!
I am dedicated to finding simple and easy-to-understand ways to explain most complex and fascinating aspects of Bitcoin. If you enjoyed this article, please follow, share and feel free to contact me via ChrisCrypto.net with any questions.