Bitcoin is the first-ever digital money and successful application of blockchain technology, and it has since given rise to a whole new industry and technology. The concept of Bitcoin was first introduced to the world through the Bitcoin white paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System,” written by Dr. Craig S. Wright under the pseudonym Satoshi Nakamoto.
A lot has happened since the Bitcoin white paper was released in October 2008; and almost 13 years later, many terms and concepts written in it are still being misunderstood. In order to educate people about the original Bitcoin, Dr. Wright and engineering head of tokenization entity smart wallet at the Bayesian Group and Money Button founder Ryan X. Charles shot a series of videos that discuss line by line the Bitcoin white paper. Starting off with the title, Dr. Wright explains the term “peer-to-peer” to mean the communication between nodes, and not the direct sending of digital cash between users as it is more commonly interpreted.
“Peer-to-peer, people get it wrong because they think “users.” I explained this later in the white paper and tried to point out that nodes and users—they’re not the same thing. In a computer science-y type way of putting it, users exchanging with users are not truly peer-to-peer. The miners, the nodes are peer-to-peer. The broadcast mechanism between nodes is peer-to-peer. But only miners and other related commercial entities become nodes,” Dr. Wright clarified.
Next up, Dr. Wright proceeded to define what cash and electronic cash mean. “Cash is “something that is purely yours,” and creates a more finalized transaction than electronic cash. The electronic cash people use in banks for wire transfers and other online transactions are actually debts owed to you by the bank. In this sense, the bank is holding your cash, and what you have is a guarantee that the bank owes you that specific amount of money. However, the “electronic cash system” does not mean that Bitcoin intends to replace banks or that it is anti-bank.
“Number one, it’s a cash system. And that doesn’t mean money system that replaces banks or anything like that. It means cash, and that’s an incredibly important distinction…. Cash doesn’t replace anything. Cash doesn’t replace the world’s money…. Now, you can tokenize and build things on top of Bitcoin, but that is completely separate, that’s something else, that’s another layer on top of Bitcoin” Dr. Wright explained.
Explaining the title alone already took up this entire article. There is a such a wealth of knowledge that can be gleaned from dissecting the Bitcoin white paper. And what better way to learn about the original Bitcoin that from the inventor himself. Subscribe to the Theory of Bitcoin YouTube channel here to further your knowledge about Bitcoin and blockchain technology.