By Nik Bhatia
Posted July 12, 2019
I have some upsetting news to all the naysayers, doubters, and obituary writers: bitcoin has recovered from yet another supposedly catastrophic price collapse. Bitcoin is now 10 years old and graduated long ago from shady internet drug money to full blown asset class and savings vehicle. The trouble with bitcoin is that it’s complicated to grasp. It took me months to half-understand and is so multifaceted only a rare individual could claim to fully understand bitcoin.
I tried to boil down three years of learning into a handful of analogies for the curious bitcoin beginner. This article is written for pre-coiners, a word used to describe people who don’t own or use bitcoin yet. I attempt to answer the fleeting question millions of pre-coiners around the world keep asking: what exactly is bitcoin? Bitcoin is money, bitcoin is a land grab, bitcoin is a game, bitcoin works like email, and last but not least, bitcoin is a human right. If you can absorb these five definitions of bitcoin, I have confidence it won’t take long to shed your pre-coiner status. And don’t forget, you can buy a fraction of a bitcoin!
Bitcoin Is Money
Despite unprecedented levels of price volatility throughout its young life, bitcoin has strongly demonstrated its ability to be used as money around the world. No, you won’t necessarily be able to buy a house, car, or meal with bitcoin everywhere you go yet, but you can buy the most useful good of all: US Dollars. Robust markets to exchange bitcoin for Dollars, Euros, and Amazon gift cards are currently flourishing around the world. If you have a gold coin, you might not be able to buy dinner with it, but you’re certain to find somebody who will exchange it for dollars. Bitcoin works identically. Several million people around the world already own bitcoin in order to store wealth. They are the early adopters of bitcoin as a new form of money.
Bitcoin Is a Land Grab
There are only 57 million square miles of land on earth. Similarly, there will only be 21 million bitcoin. Mark Twain once said “buy land, they’re not making it anymore,” and bitcoin should be thought of in the same way. Bitcoin is scarce, just like the amount of land on earth. As more people move from the world of British Pounds, Japanese Yen, and US Dollars to bitcoin world, bitcoin land will only get more expensive and harder to find. People who don’t own bitcoin in the future will face the consequence of having to borrow bitcoin in order to use it, much like people that don’t own property renting from landlords. The land grab for bitcoin will continue because people, companies, and governments will realize they cannot afford to be bitcoin renters and not owners. Bitcoin’s price has risen over the long term because people are treating bitcoin like prime real estate. There is no single gatekeeper in bitcoin world, making every human being a potential property owner. Ownership will become more difficult and expensive as bitcoin world gets more crowded.
Bitcoin Is a Game
But how does it all work? If bitcoin isn’t backed by any government, who controls it? These questions can be answered with the analogy of bitcoin as a game. Every game has a set of rules all players must follow. Bitcoin’s rules were created in 2009 and are continually enforced by thousands of players every ten minutes on average (one of the rules). Bitcoin’s rules for money creation and value transfer have proven extremely reliable over the years which encourages more people to join the game. You can play the game by downloading software to your computer or phone. Nobody is asking you to learn all the rules to bitcoin today, but you must understand that there are rules just like any sport or video game.
Bitcoin Works Like Email
Everybody uses email. You might not understand the computer science behind how it works, but the simple concept of sending and receiving email is universally understood. Email addresses can be shared with anybody, but only the password holder can access received messages. Bitcoin works in a similar way. You can share your public address with anybody sending you money, but only with your password, called a private key, can you spend it. Bitcoin receives criticism for being difficult to use, but in reality, people just aren’t used to it yet. In the near future, understanding and usage of bitcoin will be as ubiquitous as the understanding and usage of email: send and receive.
Bitcoin Is a Human Right
Buying coffee with bitcoin in California isn’t revolutionary, but buying food with bitcoin in Venezuela to survive is. With a savings vehicle like bitcoin, every person in the world can now store money safe from seizure and censorship by corrupt governments. Bitcoin is an alternative form of money, one that people should have the right to choose for themselves. Billions of people today have access to send and receive information via the open internet. Tomorrow, billions of people will have access to send and receive value via the bitcoin network. Access to both should be considered basic human rights: if communicating on the internet is freedom of speech, bitcoin is freedom of speech money.