Bitcoin is a peer-to-peer payment system.
Born most likely in response to the 2008 financial crisis, Bitcoin can be seen as a currency, to be precise a crypto-currency, because bitcoins are produced thanks to a cryptographic system.
Bitcoin is fundamentally born from the union of three information technologies: asymmetric key cryptography, peer-to-peer network and distributed processing.
The Bitcoin revolution consists in the fact that for the first time in history a currency is not issued by a central bank, but it is produced by a peer-to-peer network.
As a result, Bitcoin is a payment system or a currency, not based on trust.
What does it means that Bitcoin is a system not based on trust?
For most part of people who use bitcoins every day, there is not much difference between Bitcoin and any other type of electronic currency, such as Paypal or credit cards.
Mostly you create a Bitcoin account because it is convenient to make purchases on the Internet, so you can pay with bitcoins instead of your credit card.
Actually there is a fundamental difference between Bitcoin and any other currency in circulation: that Bitcoin is not based on trust.
In fact, every time we receive a payment, we are making an act of trust towards a centralized banking institution.
When you receive a credit card payment, you are doing an act of trust towards VISA (for example).
The creditor knows that when passing the credit card it is certain that the debtor has that amount available.
And he also knows that the sum will be transferred from the debtor’s account to the creditor’s account.
There is not even the doubt that the financial intermediary can agree with the debtor to damage the creditor.
The same thing if we receive a payment with a bank transfer, we trust our bank the moment we receive the trasfer, it is not that we go there every time to count if there is money.
Even if we receive a cash payment, we are doing an act of trust.
This is because banknotes and coins have a nominal value much greater than the real one.
If you take a 2 euro coin, melt it in a blast furnace, and then go to the market to sell the obtained metal, they will hardly give you 2 euros.
And I challenge anyone to cut a 500 euro note into small pieces and then get 500 euros for those little pieces of paper.
Once the banknotes could be converted into gold based on the reserves of the Central Bank, which then served as a guarantee.
But, once the gold standard is abandoned, in a free market logic, a currency has a price that is formed at the meeting point between supply and demand, just like any other asset.
Therefore a currency is valid only in relation to what is its price expressed in another currency.
If in the whole world there was only one currency, this coin would be worth nothing!
On the other hand, the price of a currency inevitably depends on market games.
And it is based on these games that we pay more or less the electric current or gas.
Bitcoin thanks to its nature as a decentralized software, does not allow anyone to take control of the currency.
The protocol was designed to work autonomously in a certain way.
Since it is open source anyone can read the source and check that there are no tricks.
Then, since on January 3, 2009 Satoshi Nakamoto launched the c.d. genesis block by starting the Bitcoin protocol, the software went ahead according to its autonomous digital computation rules.
Imagine playing a videogame.
As you play, you have to adapt to the video game’s operation to make as many points as possible.
It’s not possible that – when the game has started – you can call the programmer and make you change the rules.
Now imagine that the whole world plays the same incorruptible videogame.
And now imagine that at some point you decide to exchange the score against goods and services.
You did the Bitcoin.
This nature of decentralized autonomous computing of Bitcoin has led to what at first sight would seem an absurdity.
Bitcoin, which in theory should be an intangible currency with no guarantee assets, has taken on a greater value than fiat currencies.
Some savers have decided to convert some of their savings into bitcoins because they feel their long-term purchasing power is more preserved.
In fact, if all the Central Banks were to disappear from the face of the earth tomorrow, we will find our wallets full of waste paper, while a bitcoin has its intrinsic value as such.