What Is a Cryptocurrency
Bitcoin didn't digitise money. It removed the bookkeeper.
Accounts, cards and online banking were already digital in 2008. What nobody had was a way to stop the same digital coin being spent twice — without a bank standing in the middle to check.
The problem
You hold one digital coin. Send it.
It's a file. Nothing more. Press send and watch what a computer actually does with a file.
One coin, three holders
IN EXISTENCE 1You
Ana
Ben
You hold one coin. Press Send to Ana.
Copying is what digital data does. A banknote can only be handed over once, because handing it over is the same act as losing it. A file is never lost by being sent — so the same unit can be spent again, and again. That is the double-spending problem, and until 2008 every digital money system solved it the same way: a central body kept the register and checked each payment.
The keeper fixed double-spending and created something else in the same move: a single switch. Earlier digital-cash projects such as DigiCash and e-gold had exactly that — a central operator who could be closed down, sued or hacked. Their weak point wasn't the cryptography, it was the fact that one address existed at all. Bitcoin's answer was a network with no switch to press.
The definition
Three things people get wrong about 2008.
Tap each card for what was actually being proposed.
Hands on
Bitcoin did not appear overnight.
Three stations, from the crisis to a running network. Step through them in order.
The financial crisis
2007–2008The bridge
Four things that make up the answer.
A problem, a trigger, a shift, and a rule that can't be argued with.
That is the claim Bitcoin was built on: digital money without central bookkeeping, running on fixed rules instead of a politically steered money supply. Whether it actually delivers on that — and what it plainly does not solve — is what the next lesson takes apart.
Check yourself
Five questions.
Answers come straight from this lesson. Submitting completes it.