Bitcoin explanation which even the “Breezer Breed” can understand
Grab a Breezer and get ready to understand what a bitcoin is
“Hey buddy, Bitcoin is soon going to touch $20K. I’m waiting eagerly that when would our government legalize it and I can trade in it. Aren’t you?”
“I’m not interested in this Bitcoin thing. I find it too complex to understand.”
Haven’t we had such conversation in our life or found ourselves in such scenarios wherein it seems like being an outcast in a cocktail party by ordering a Breezer. For sure, we all have had…
Hence, today we simplify the concept of Bitcoin which even a six-year-old would be able to understand.
How exactly does Bitcoin work?
Imagine Adam and Eve are sitting under a tree in a forest. It’s a nice sunny day and Adam gives an apple to Eve. So, Eve has one apple and Adam has zero. Simple enough an activity! But if we observe closely this transaction, there are some intricacies involved. The apple was physically transferred from Adam to Eve where a physical touch was involved. Hence, there was no need for a neutral witness to verify this transaction. (Actually, there couldn’t have been one because these two were the first on our planet 😉)
So, Eve now is in full possession of the apple and can do whatever she wants with it. Adam is left with no other apple nor can exercise control over the given apple and hence the exchange ends between these two in a transparent manner.
This is what an in-person exchange exactly works. And it’s same whether you give a coconut, a pencil, a Breezer or a 100 rupee note!
But wait, before moving forward let’s come back to our old Apple.
Now let’s say we re-incarnate Adam and Eve today and hand them over a digital apple. Sounds interesting right?
How will you know that digital apple which is given to them is unique and only theirs? Let’s take a scenario where this Digital apple was sent as a Diwali Gift Card to your boss which then got passed on to Adam and then Eve. Infinite possibilities, right?
So, you see, digital exchange is more problematic in terms of authenticity when compared with physical exchange. But let us try to think of a solution for this problem on our own:
An Accounting Book or a Ledger!
Perhaps, these digital apples can be tracked in a ledger or in simple words – an accounting book. This ledger would again be digital only and someone would have to be an in charge of maintaining it – a neutral third person.
Just like Kindle, say. Amazon created Kindle and has a repository of all the books currently listed and delisted from its platform. So, similarly Amazon can also keep a track of our digital apples. Eureka – solution found!
But, hey, wait a minute! There are still a few problems which may arise.
What if some guy at Amazon adds a few more digital apples to his balance? And this he can do whenever he wishes to. Also, this Amazon thing doesn’t replicate our forest scenario where only Adam and Eve were present and in their physical apple exchange no third party was needed as verifier. So, that brings us to the most important question that is there a way to closely replicate the forest transaction digitally? Seems tough but there is:
What if we gave this ledger to everybody? So, instead of residing on Amazon’s system it will reside on everyone’s computers and all transactions that ever happened with respect to digital apples would be visible to all. You cannot cheat in it. Adam cannot send extra apples to Eve because then it wouldn’t sync with everyone else’s system. And most importantly it’s not controlled by one person who may choose the to add more digital apples to his account. Moreover, rules of this common ledger or network are defined beforehand only.
It’s an open and transparent network. You can also be a part of it wherein you may update the ledger and ensure that all its entries match out. And for this trouble, you maybe rewarded 25 digital apples. In fact, that’s the only way to create more digital apples in the already running system.
So, we’ve simplified this apple system a lot, but my friend this system exists which is called the Bitcoin protocol and all those digital apples are nothing but Bitcoins. Seems a fancy system isn’t it? But let us dig deeper to gauge the beauty of this system:
It’s an all-open network. So, the total number of digital apples available are limited (rather scarce) and known to all. So whenever, Adam makes a transaction in this system, he knows that the apple has left his possession and moved to Eve. Everybody else in the system would be notified about this transaction simultaneously making the count of apples still constant. And being verified by all, we didn’t need a third person to validate the transaction. In other words, it replicates the physical apple transaction. But the coolest part about it is that it still is a digital transaction. Adam may now send 1 apple, 1 million apples or 0.001 apples to Eve and that too not necessarily sitting together in the park. Also, Adam may attach some nice add-ons to it like a digital love message, a stock certificate or a marriage proposal. It’s all digital after all!
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Cheers for the weekend, but definitely not with a Breezer!
By: Anmol Gupta | Isha Garg
Such creative explanation!