Why Bitcoin Is Still so Confusing
After 10 years, Bitcoin isn’t any easier to understand - Here’s why:
For all the technical sophistication and intelligence gone into the masterminding and development of Bitcoin, it baffles the mind why the community continues to reinforce the use of bad synonyms and metaphors in the description of the operation and function of Bitcoin.
It’s the usage of these old, archaic and in many cases simply wrong terms that reinforce confusion among new users to cryptocurrency.
Cryptocurrency is very unique in form, function, and impact on society and as such, this technology deserves it’s own terminology to reflect this.
1. It’s a Virtual Currency, Not a Coin:
We’ve all seen photos of the illustrious Gold Coin Bitcoin, yet it does not exist.
What we actually see is an image of a gold plated collectible coin that resembled what we think a bitcoin would look like in real life.
Bitcoins are a virtual currency and do not exist in the physical world — these are only an artist's representation of what a physical bitcoin may look like if such a thing existed.
Offering a physical and highly realistic representation of what we may think a “Bitcoin” may look like does nothing but reinforce an incorrect narrative of the form and function of Bitcoin and cryptocurrency as a whole.
Understandably, the layperson upon hearing the word BitCoin would think there are coins involved. So, understandably a bitcoin would and should be interpreted as a coin — but this is plain wrong.
Coins are loosely defined as physical, flat, round pieces of metal with an official sovereign nation’s stamp.
Using the word coin within Bitcoin simply confuses the layperson as there are no coins involved, no physical currency or pieces of metal to speak of. Really, the only relationship that Bitcoin and money have is they are both used as mediums of exchange.
Maybe it would have been better to have called Bitcoin, Bitcurrency…and we would have avoided incompatible reference to coin altogether.
2. It’s an Authentication Device, Not a Wallet
We have all heard, the safest place to store your cryptocurrency is in your hardware wallet. But is it even possible to store cryptocurrency in a wallet?
Let’s first look at the general understanding of the word wallet — we think of a pocket-sized, flat, often leather folding holder for money and plastic cards.
A wallet is a physical container to store your physical money.
But we are talking about a virtual currency…
Since cryptocurrency is virtual, there is no physical money and no need for a physical wallet either.
What are we really talking about?
A cryptocurrency wallet is simply a device to give access to an individual to authenticate transactions on the blockchain by providing access to the private key.
What a cryptocurrency wallet is, is a safe place to store your private key. It’s access to this private key that gives the holder access to transact on the account (blockchain).
Rather than calling it a wallet, it would have been much better to call it PrivateKeySafe or CryptoKeySafe.
Maybe it would have been better to have just called it an authentication device and that way we could have avoided the word wallet and the confusion the word wallet instills.
3. It’s a Computational Contest, Not Mining
Guilty are all those illustrators, webpage developers, and marketers that litter the internet with images of miners with pickaxes and hardhats depicting something akin to mining for gold.
It’s not fully understood where this analogy came from, but it’s can’t be further from the truth.
For the uninitiated, one would think Bitcoin Mining involves…well, something to do with mining, or at least it would seem that the marketplace would lead you to believe that.
When in fact, bitcoin mining looks more like this:
In reality, Bitcoin Mining is simply clusters of computers competing with a network of computers to solve a specific problem. A reward is issued by the Blockchain to the computer that solves the problem the fastest.
It’s Not Mining, it’s the Biggest Lottery in the world!
A far more correct and apt analogy would be to look at Bitcoin Mining as participating in the largest lottery in the world.
It’s a lottery that pays out 12.5 Bitcoins every 10 minutes for the next 21 years (at a decreasing rate) to the first man or machine to solve its mathematical problems.
Put another way, every day the Bitcoin Blockchain generates 1,800 bitcoins (~$14.4 million) that are issued as rewards to its participants.
Although referencing Bitcoin Mining as the largest lottery in the world may be a more accurate perspective, it may not be a better choice for the community.
It’s for this reason that careful choice and use of words and terminology should be given as we move into greater worldwide adoption of cryptocurrency, especially when it transacts internationally in foreign languages.
Where to now Crypto Community?
If you are reading this, you are part of the community. Using old metaphors that describe an old paradigm for money is a poor substitute for probably the greatest technological and sociological achievement to ever take place on a worldwide scale.
For worldwide adoption, we need also need the adoption of terminology to better describe the unique features of Bitcoin and highlight how it is different than our traditional concept of Currency or Mediums of exchange.
Bitcoin offers a new perspective on how we identify with, define and ultimately use mediums of exchange. It’s up to all of us, as participants in this community to help it grow and develop its own unique lexicon as part of this process.
I’d love to hear your thoughts and suggestions — Reply below.