CHAPTER 1: OVERVIEW
O |
n October 31, 2008, six weeks after the Lehman Brothers collapsed; while panicked debates about “how to save the banks” were rife, a white paper proposing a novel digital currency appeared on a little-visited web forum. The paper’s author, going by the pseudonym Satoshi Nakamoto, saw the global financial turmoil as the perfect opportunity to introduce a radically new approach to money and finance: Nakamoto’s proposed currency, named Bitcoin, removed the reliance on financial institutions as the trusted third-party in financial transactions.
“Bitcoin shows how cheap it can be [for transactions]. Bitcoin is better than currency.”—Bill Gates (CNBC, 2017)
Bitcoin opens the world as a truly global economy. For example, right now, if I were to take a twenty-dollar bill to buy something in Japan, the shopkeeper would not know what to do with the foreign currency I offer. Bitcoin eliminates that problem. It enables a single kind of payment to be used to purchase goods and services allowing transactions to be completed in a matter of seconds. Such a shift from traditional monetary systems has begun to change business transactions from a global perspective.
Let’s say you have $100 in your bank account. That $100 isn’t sitting in the vault of a bricks-and-mortar bank building downtown, as it might have in days of old. Instead, all it really means is that somewhere in your bank’s accounting system or the banking system’s ledger there is a number “100” associated with your account. That recorded value is a promise given to you by the bank that lets you pay people electronically for goods and services or allows you to withdraw little rectangles made of a linen-cotton mix that has $100 printed on them. If the bank fails or your bank account gets hacked or the government freezes the funds, your money just disappears. (If your bank is FDIC insured, you could potentially get back up to $250k)
Read unlimited
on Kindle® now
About the author
Shelly Henry is a renowned bitcoin analyst, public speaker and author of several published articles on Bitcoin and Blockchain technology.
Shelly is currently the Director of Engineering, AI and Cloud at Microsoft. He graduated with a Bachelor’s degree from Indian Institute of Technology, Madras and a Master’s degree from Univ of Illinois, Urbana-Champaign.
