“What is Bitcoin?” You may have been one of the hundreds of thousands of people who search for this answer on Google (as of October 2017).
You probably wished you didn’t, as you were left more confused about Bitcoin than before.
Because, after landing on thousands of different answers, you realized that very few pundits could explain how Bitcoin works in a way that is easy to comprehend. It’s not supposed to be easy to understand because Bitcoin a paradigm shift.
How Bitcoin is a Paradigm Shift
Bitcoin is a paradigm shift because it is at the nexus of four distinct fields: computer networking, economics, game theory, and cryptography. The computer network lays the foundation for the Bitcoin network to be built upon while cryptography adds a layer of security and legitimacy to the network. Economic models of Bitcoin analyzes how the markets behave not so much different than the New York Stock Exchange and game theory studies how people act within the network, whether with good faith or bad intentions. These four elements constantly interact with each other in a symbiotic manner to create Bitcoin.
An example that illustrates another recent paradigm shift was the advent of the internet. In that case, the paradigm that was shifted was also in computer networking, as well as information distribution, and surveillance technology. It took nearly two decades from when the internet first began to enter the mainstream consciousness in the 1990s for the internet to reach its full potential with the development of social media. People can now stay connected and keep in touch with each other by being “friends” with them on Facebook or following them on Twitter/Instagram. Information from news events can be decimated in real time with witnesses posting pictures and testimonies of the event on their social media accounts. In addition, public and private entities can easily figure out an individual’s profile and interest by analyzing their social media accounts.
The lifeblood of the internet is information, which is being circulated faster and freely more than ever before relative to the previous paradigm of media conglomerates having monopolies over print, television, and radio. Bitcoin and other cryptocurrencies are the lifeblood of a new emerging paradigm that will allow money to flow faster and more freely without the need for central control of banks and governments.
When you invest in cryptocurrency like Bitcoin, you take your money out of the centrally controlled world banking system and into a grassroots crypto-economic one. Bitcoin has no ‘leader,’ rather it has different parties (miners, developers, users, merchants, node operators) who constantly communicate compromise with each other to advance the development of the Bitcoin client software. In the end, it is you who is in control of your money, and if you lose it, that’s your problem.
The Paradigm Shift Is Coming Here/Proof That Bitcoin’s Paradigm Shift Is Already Here
Bitcoin, cryptocurrency, and other blockchain technology is a paradigm shift in that there is a need to create a new vocabulary to describe the universe of it. This is nothing new in the evolution of technology, as one can say similar events happened in the past.
Take the Industrial Revolution, for example. When it was in full-steam (pun absolutely intended), new terms came into existence to articulate what was happening around new technology with factories, trains, cars, etc. A simple phrase such as “I took my car to the mechanic for an oil change” could never have been conceptualized by people who did not live that experience.
In blockchain, we see that words and phrases that have either not commonly used (hard fork, replay protection, proof of work) or words that already have a commonly agreed upon definitions take on entirely new meanings (wallet, address, smart contract).
This lack of conceptualization is only temporary. As more people learn about Bitcoin and cryptocurrency, then the discrepancy in education will get smaller.
Where Is Bitcoin Now?
So, what have the results been for Bitcoin? Well, Bitcoin has risen from being worth a few dollars to know worth $6,600 in a matter of seven years. In the past year, it has risen in value by over 800%.
The rise of Bitcoin has not been smooth, though. It has come with its fair share of bubbles and downturns, most notably in 2013-2014 culminating with the collapse of Mt. Gox.
However, even with nearly 180 articles declaring Bitcoin’s demise, it has still found ways to bounce back and show perseverance through times of adversity.