First, let me introduce myself. My name is Gabriel and I am a computer Engineer. I am not a native English speaker so please bear with me. I have been in contact with “cryptocurrencies” for a bit over a year now and mostly in the shadows. No one knows me out there and therefore you will have no reference. However, all the knowledge I will put in this text can be verified if you are willing to do so. All you have to do is do your own reading.
I will explain here what Bitcoin is and why it matters. However, I will do it in simple terms, so that even those who have no technical background will understand it. So, let us get this started.
The first important thing to understand is what we call data or information. Everything that you see on the internet is data. That data is useful for people for different reasons. For example, one might want to share a video with their parents while others might want to share a message with their friends but in the end, it all comes down to sharing data.
We can extend the concept of data and information to our daily lives. For example, if I pay my credit card bill, the credit card company has to be able to see that the payment has occurred. If the credit card company does not receive a notification that the payment happened, they will charge me again, and more. Today most of the information of payments runs through banks. They keep a record of all of the transactions in their custody. The banks control all that data and it has suited us well so far. Nonetheless, in the end, it all comes down to information.
Ok, but what about Bitcoin? We will get there but first we need to understand a few more things. (Did you think Bitcoin would be in the news repeatedly if it were a simple thing?)
The second most important thing to understand is what we call control of the data. We just saw that in our daily lives, banks control our payment data but how does that happen online with videos and messages? Every bit of data out there is stored in what we call servers and the companies running those servers are the ones effectively in control of that data. You can imagine a server as being something like Dropbox or Google Drive. You can just put the things you want in there and it stays there. However, if by any reason your Google account is suspended it is likely that you will have a hard time recovering that data. Google is the one in control of your data.
The third most important thing to understand is what we call the value of the data. Let us imagine that I just made a payment for my electricity bill and it cost me $100. Well, if the information of that payment disappears and no knows I made the payment then I will have to pay it again. In this case, that information has a value to me of at least $100. However, we tend to ignore the value of the data we use online. I do not care if my parents lose the video I sent them. I can just send it again. After all, it is generally free.
However, if you have ever used Dropbox or Google Drive a lot, you probably noticed that there is a limit to how much stuff you can put in there free. If you want more space, you have to pay, a lot. Today, companies pay a lot of money to store their data and keep it available to users but they can afford to do so because they generate revenue using that data. You probably just do not know how they do it, but they do.
In contrast to Dropbox, social media websites like Twitter, Facebook and even YouTube allow you to publish unlimited data and sometimes they even pay you for it. These services can do so because they have unlimited control over that data, they can remove it any time they want and they can sell it to whoever they want which generates them more revenue than Dropbox would. Meanwhile, Dropbox has a limit on what they can do with the data because most of the data is private.
Which brings us to Bitcoin.
The more the technology evolves and people start using it, more difficulties arise. Today, some of us do everything online. We watch TV, we pay our bills and we even work online.
In fact, we are at the beginning of what people call the Internet of Things era. Soon every single machine out there will be using the internet just as we do. However, the internet is not ready for them. The model that we use today is not sustainable in ultra-high scale.
I am sure that you have been through this before. Saturday afternoon, you try to watch that TV show you love so much on Netflix or you try to play that online game you cannot live without and the moment when you really need it, the internet goes down. This happens because there is a limit to how much data can travel back and forth and in some periods of time there is just too many people using the internet at the same time. Yes, we get better at it every day but there is still a limit.
The main reason behind the limited speed for the internet is that, in the background, a very small number of companies in fact provides the data that you need and they cannot provide it to everyone all the time so they ration it. Why? Because storing and transmitting all of this data costs a lot of money and very few companies can actually do it.
So, how can we fix the broken model and make the internet ready for machines? Competition. That is why Bitcoin was born. We are creating a new way to store and transmit information.
Remember when I said: “I do not care if my parents lose the video I sent them. I can just send it again. After all, it is generally free.” Well, it turns out it is not actually free. When we send the video repeatedly, we are storing and transmitting it multiple times. All of this has a cost to the service provider.
What about if we never lose anything again? What about if every piece of data you generate could be associated to your identity whenever needed? Let us think about the implications of that for a moment.
For one, there would be a lot less redundancies and wasted space. This would make it a lot cheaper and more efficient to store and create new data servers around the world. Furthermore, everyone can know where the data originated and we can reward (or punish) that person accordingly. For example, many YouTube content producers have begun expressing their discontent with the platform for one reason or another. With Bitcoin, they could prove (in court) that they did not do anything wrong and that they should be compensated.
Wait. I heard Bitcoin was an investment and a way to make money. I do not understand what you are saying.
This is what most people get wrong. Bitcoin is not just money. Bitcoin is a protocol people are using to create a better internet. It just happens that we need to put money in the mix in order for that to happen.
For the data to be stored with Bitcoin, you need to pay the people who run the servers a little bit of money. However, the goal is to have every person and every machine using Bitcoin to store data all the time. To guarantee that the data belongs to the rightful person, we cannot bias the system. We cannot use money that someone else owns and controls. The only reason there is a coin is that this is the only way to make the system unbiased and achieve the goals we need. The coin is a commodity that fuels the system. There is nothing more to it.
Bitcoin is BSV.