I hate to be one of those people, but I recently watched another Netflix documentary and my mind. is. blown. Until some 48-hours ago, I had been totally oblivious to the world of Bitcoin. I mean sure, I knew it existed, and that it was some type of currency, but my knowledge didn’t go much further than the word blockchain. Confused already? I feel you.

So when I stumbled upon Banking on Bitcoin on a rainy hungover Sunday, I thought, why not? My alcohol-induced guilt lead me to crave some knowledge and culture, and this seemed like a documentary that would actually teach me something. (Spoiler alert: it definitely did.)

If anyone is reading this, you should definitely watch it. But if you’re just trying to gain some surface-level knowledge to cover you ass at next Saturday’s dinner party, I’ve broken bitcoin down in a way that I could understand right here.

What is bitcoin?

Bitcion is an electronic cash system that is fully peer-to-peer, with no trusted third party (or bank).  By definition, it is a cryptocurrency. Crypto: using digital encryption, currency: a system of money. It is just money that doesn’t have a physical form. Transactions are made through a coded blockchain with no middle men.

What is the blockchain?

It’s an accounting system that keeps track of all transactions made using bitcoin. It is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block is a record. It doesn’t record your name, merely the passing-on of value.

How can I buy bitcoin?

It’s just like buying any other currency when you travel, you have to go to a currency exchange. Except in Bitcoin’s case, they are mostly all online. Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Check out GDAX.

Where do I keep my bitcoins?

Bitcoins would be stored in your “digital wallet,” which exists either in the cloud or on your computer. The wallet acts as your virtual bank account where you can send or receive bitcoins, pay for things, or save.

Where can I use bitcoins?

Many businesses accept bitcoin, just have a look at this real-time map of all the places in the world currently using the currency. That, or look for this little sign popping up at places near you:

Wtf is bitcoin mining?

Bitcoins are created through mining. This is when people (like you and I) compete to “mine” bitcoins by solving complex math puzzles online. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards. A winner might be rewarded with 25 bitcoins roughly every 10 minutes, for example. Every bitcoin is accounted for in the open ledger, so you know you are never getting a counterfeit bitcoin. It’s kind of the same idea as completing an online survey for cash.

How many bitcoins are there?

By 2140 there will be 21 million bitcoin, and that’s the cap. Just like there’s only x amount of gold, there’s only x amount of bitcoin. However every bitcoin can be broken up into pieces, so it can expand as the use expands.

Who made bitcoin?

Bitcoin was created on January 3rd, 2009 by an unknown person using the alias Satoshi Nakamoto. The debate continues as to who Satoshi Nakamoto was, whether it was one person, or a group of code contributors. His anonymity has been deemed a blessing, as people have been able to write their own dreams onto the technology without anyone there to dictate what it was meant to be used for.

Why would I want to use bitcoin?

There are many cases that can be made for bitcoin. A few top-level ones, it’s fast, it’s cheap to use, it’s private, and central governments can’t take it away. Bitcoins also make international payments easy and cheap, because they are not tied to any country or subject to regulation. Small businesses can benefit from having no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.

Is bitcoin bad?

Debatable. Because of the privacy and anonymity of bitcoin transactions, many government regulators fear it will be used for money laundering, terrorist funding, sex trafficking, and drug crimes. Which we can all agree sounds terrible. The argument can be made that it is just equivalent to someone taking cash out of the bank or ATM and using it for the same criminal activity anonymously.

Bitcoin vs. banks

Bank’s have one central deposit of information, bitcoin has thousands. Once something is recorded in the bitcoin ledger, it cannot be altered or changed. The identities of people and their digital wallets are encrypted and therefore anonymous, because bank’s have one deposit of information, data is vulnerable and can be hacked.

2.5 billion adults in the world do not have access to bank accounts, bitcoin has the capacity to bring them into the financial system and have a bank in their cell phone/pocket. This particularly appeals to workers who are in one country and send money back home. Western Union is currently serving unbanked customers, but remittances are really expensive. It costs high fees to send money back to your family. Bitcoin eliminates that. Bitcoin doesn’t care about borders.

The future of bitcion.

If you bought bitcoin in 2009, it was worth $27. Today, one bitcoin is worth $5524.56. As with most things, I am a little late to the bitcoin game. Apparently, ethereum is all the rage today. Find out about that on a beginner’s guide here.

A few quotes from Banking on Bitcoin:

  • “Bitcoin is the largest socioeconomic experiment the world has ever seen.”
  • “This is a monetary revolution, the honest currency.”
  • “Should people be as free in handling their money as they are with their speech, or relationships with each other?”
  • “Bitcoin is decentralized which means it can’t be controlled, no matter who you are, or how much money you have.”
Watch le trailer here: