Bitcoin Basics #001 – What is Bitcoin?

By Albert Szmigielski Quite often I face the question: “What is Bitcoin?” And it comes from people who have not heard about Bitcoin. When I try to come up with a short answer, I usually reply: it is digital, programmable money. However the counterpoint always gets raised: “Digital money already exists, paypal, visa, e-transfers, etc.”. So let’s try to pin down what Bitcoin really is. To that end we started a Bitcoin Basics series, this is part #001. In short Bitcoin is software, a digital currency, a payment system, a decentralized, permissionless network, and an evolving organism with an immune system. Software, Digital Currency, Payment System It is noteworthy that Bitcoin is ever evolving. So the way we will define it today

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Distributed vs. Decentralized Networks

  Reading current (and past) literature, articles, and blog posts it appears that some confusion exists about the distinction between distributed and decentralized networks (and other entities). We will attempt to shed some light on this topic. The first to describe the structure of decentralized and distributed networks was Paul Baran, a Polish-American engineer working at the RAND corporation in the 1960’s. [1]. His paper is worth reading. However, let us start with at the beginning. What is a centralized network? Centralized A centralized network is depicted as a star. Every node is connected to a central node.     It is clear that by taking out the center node, the network breaks down. Examples could include any structure where

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