Schemas of Bitcoin

I was five or maybe six-years-old when I begun to understand what money means. First we had Finnish markka and Estonian kroons. Then we had euros and kroons, and later only euros. I remember as a little kid thinking myself why the world does not have money that everybody would use: a global money. Well now there is. It is called Bitcoin.

Edits: blog structure fixed, cover art removed, strike throughs added, and rabbit holes modified

What exactly is this about? Bitcoin is a network and bitcoin is money. Whereas the Internet is an information highway, Bitcoin is the highway of money. Instead of myriad blogs, cat videos and memes social media, video streaming and whatnot, Bitcoin is a place to build programs that deal with money and value.

With Bitcoin, one can send billions of euros worth of value effortlessly and lightning fast.² You can transact value between Finland and Antarctica provided you have a smartphone with internet connection.

In the current system this is not possible, or at least not without hefty costs. This is because banks do not share the same ledger, and updating the ledger takes time and trust. With Bitcoin sending money is frictionless since there is no third-party between you and me.

Ergo, there is no “Bitcoin company” that would be responsible for the network and its users. You are.

Bitcoin has potential. Although, for Bitcoin to become a global phenomenon, it should be easy to use without much hassle. At the moment, this is not yet possible.

First, not everyone has the time to learn all the intricacies of the Bitcoin protocol. Second, some people do not even have the interest to learn the beautiful yet hard interdisciplinary aspect of Bitcoin.

However, lack of time and interest should not be a barrier for a smooth and widespread use of bitcoin. For example, a large majority of people do not know, or to be frank, are not even interested in knowing how the Internet works. The most important thing is that it works.

Many other things may be more important than a thorough understanding of Bitcoin. This is understandable.

Bitcoin requires knowledge in programming, mathematics, cryptography, game theory and economics; would you be ready to learn it all? Maybe if you were a Bitcoin developer but not as a common-or-garden user.

Be that as it may, even as an ordinary user we still need to be aware of what Bitcoin actually is. Otherwise we are in danger to fall into swindle (especially when talking about money).

Bitcoin gives you great power, and with great power comes great responsibility.

Bitcoin has been described in many ways from many perspectives. These different approaches can be explained with schemas.² Schemas are mental models of the world, of situations and of everything in between. All of us have schemas.

In social sciences, these mental models are said to organize knowledge, guide cognitive processes and behavior. New knowledge is processed according to how it fits to the pertaining schema.³

When we rely on our schemas, sometimes we are like the “blind men who describe the elephant”: We believe something to be true and argue for it based on our limited personal experiences. Rarely do we try to see the whole picture before our conclusions. We form opinions based on incomplete knowledge.

This is why we have different narratives on Bitcoin. As we try to understand and explain the new and weird attributes of Bitcoin, we try to assimilate them to the existing schemas.

Even the mysterious inventor, Satoshi Nakamoto, did not have a clue as to what to compare Bitcoin to:⁴

Sorry to be a wet blanket. Writing a description for this thing for general audiences is bloody hard. There's nothing to relate it to.

There simply is not a thing that would akin to Bitcoin. Bitcoin requires you to build a whole new schema.

I have collected a catalogue of varying descriptions of Bitcoin. For each description there are certain conditions and context for it to be accurate. (Kind of like everything in life.) Some descriptions are more true than others. However, each description needs time to understand where it stems from.

If one description sounds insignificant for you, the other person might shout eureka. Bitcoin means different things to different people in different parts of the world.

I believe Bitcoin represents a new beginning.


Warning: Bitcoin is a rabbit hole. You may never come back once you fall. Build your own schema from Jameson Lopp's page. He is a Bitcoin advocate. He updates his page constantly.

Alternatively, take a look at my GitHub page where I uploaded my bookmarks that I have collected over the years. The texts and videos are sorted alphabetically based on literacy.

#bitcoin #essay


[1] Reason: blog's initial structure was too thick for readers, cover art did not fit the theme of the essay, and rabbit hole is now more easier to access. [2] [3] [4] The term “mining” is used in Bitcoin terminology to describe the process of securing the network where a reward is earned if a solution is found. In reality, there is no “mining” going on in Bitcoin; it just fits the existing schema of a miner (who secures the network) that finds gold (block reward). [5]

#bitcoin #essay