What is Bitcoin ?


Bitcoin is a peer-to-peer electronic cash system which allows online payment without going through a financial institution. When you send money from your bank account, the bank itself should accept your payment before it is actually sent. Bitcoin removes the third-party between transactions in order to reduce control and censorship, improve security, speed and lower costs.
But what about a easier way to explain it ?

A bit of imagination

Imagine yourself in the middle of a bank, this bank is called Bitcoin, there is no employee or boss just a lot of people like you, some have white helmets and some have orange helmets. You are there and the only thing you see is an unlimited number of transparent vaults through which you see the contents but to which you only have access with a private key. 

In order to get a private key, you just have to create a vault, also you can create as many vaults as you want.

With your private key you are allowed to send the contents of your vault to another. This principle is called blockchain, the mechanism where all the transactions that have taken place through the different vaults are listed. It is the white helmets who make sure to notify the orange helmets about the transactions so that they can certify and secure them.

If you wish, you can wear the helmet of your choice. 

The white helmet is also called validator and his role will be to check yourself whether the transactions are compliant or not. To become a white helmet, you simply need to have a hardware device which can run the Bitcoin software and therefore, a real-time copy of the blockchain. 

The orange helmet, also known as a miner, is different since it must secure transactions. Because of their absolutely essential role, the orange helmets are getting paid. Every 10 minutes, a lottery is launched where all miners can play and win the reward. Rather than traditional gold mining, bitcoin miners compete with their computing power to find the number sequence. The winner gets the reward and the right to validate the next block of transactions on the blockchain.

The vaults in the bank are called wallets and when you add up the total content of these wallets, the amount can never exceed 21 million units because of the Bitcoin protocol and the fact that all members of the network have agreed on this rule. In fact, the rewards of miners is divided by two for every 210,000 validated transaction blocks, this happens more or less every 4 years. It also means that the last bitcoin will approximately be mined in 2140. After this, the reward of miners will be the total transaction fees of the block.

If you wish, you can change the rules because the Bitcoin software is open and can be changed by anyone, but you won’t be able to trade with members of the network who have not agreed to your change.
Since there is no third-party involved when you make transactions, no one can censor or control you. There are no employees to pay, so transactions fees are reduced. All members of the network can also see the vaults and the transactions that have taken place. Nothing can be hidden, everything is transparent and decentralized.
You finally hold pieces of something that is limited so you know that your assets will increase in value as more and more people join the network. It is a store of value that can be compared to gold except that it is more portable and can easily be divided.
Unlike bitcoin, central bank currencies are printed regularly and new money is injected into the market. This action pushes up inflation, or the increase of prices. It is a strategy to push consumption. Since money loses value every year, citizens are tempted to use it or risk losing purchasing power.
It was Bitcoin in a non-technical approach.