Twitter explains Bitcoin
Understanding Bitcoin, crytocurrencies, and blockchain is hard. So when we came across a Twitter thread by @BryceElder it took us a minute to realize that their explanation was completely wrong.
But it's funny! So we wanted to share it with you.
Bitcoin is a decentralised currency that is backed by energy that is harvested from traffic on the world wide web, or internet.
—@BryceElderToday, Bitcoin harnesses energy from everyday web traffic and converts it into coin at a rate of about one block every ten minutes. the HTTP you sometimes in the browser address bar stands for "Hash To The Protocol". HTTPS is "Hash To The Protocol (Signed)".
—@BryceElderWhenever a hacker guesses the password, that block is put onto the ledger, or "blockchain", which is an Excel spreadsheet where all the bitcoins are kept. No single user can control the spreadsheet because it is shareware.
—@BryceElderTo own Bitcoin you have to pay a hacker to crack a password. The more demand for Bitcoin, the more the hackers will charge per hour. This is how Bitcoin's price changes with supply and demand.
—@BryceElderHere's where the story gets more complicated. And it's the story the MSM won't tell you.
—@BryceElderTether is controlled by a man from Ukraine called Dimitri Bolgakov, who is a hacker. He uses the dollars that are put on the Tether blockchain to buy Bitcoin, which involves paying himself to hack the passwords.
—@BryceElderYou will have seen the recent plunge in the price of Bitcoin. This was triggered by Bolgakov last week upgrading to an NVidia GeForce® GTX 1080 Ti, which can play Quake III in max resolution at 60fps with all the lighting and textures enabled.
—@BryceElderAs of this moment, Bitcoin's biggest investors are gathering in Quake III's Dungeon Zone to try and kill Bolgakov. However, environmentalists are also corralling there with the intention of protecting Bolgakov and suppressing demand for graphics cards.
—@BryceElderThe Bitcoin community awaits the return of Satoshi Nakamoto.
—@BryceElderBut of course, all of that is wrong.
Here's how it all REALLY works.
Bitcoin is what's called cryptocurrency. That means it's a currency that uses some of the qualities of encryption to keep track of how many "coins" there are, and who owns what. It's not "real", in the sense that you can't hold a Bitcoin in your hand. Instead it's a currency that exists entirely in digital form.
The transactions of people paying for things with bitcoin all go through a network of people called "miners". These miners collect records of all the Bitcoins exchanged on a network, and record that information on what is called a "block". Each new block is attached to the block before it, forming a chain going all the way back to the first block on the network. This record, or ledger, is call a "block chain".
These blocks are public, so everyone can see and agree that the transactions, and the money is "real". But they're also completely anonymous, so no one else can see what you bought, or who you bought it from.
To get the right to make one of these blocks, the miner needs to solve a complex computational problem, and then prove they solved it correctly.
It's kind of like solving a puzzle. It can be really difficult to solve, but once you do, it's really clear to everyone what the solution is, and everyone can clearly see that you've solved it. It can be hard to finish a sudoku puzzle, but once you do, anyone can see where those threes go, and they can tell if you fudged any numbers.
Now, anyone can buy and use bitcoin. You don't have to be a miner. But being part of a network of miners has some rewards. The miner that solves that cryptographic puzzle first and and gets to write the next block in the chain, is rewarded with a certain amount of created Bitcoin. This is also how new Bitcoins are created, since the that reward in Bitcoins for the miner is actually completely new money, created out of thin air.
The trick is that to solve the puzzle takes a lot of computing power, and uses a lot of electricity. And everyone else in your network is trying to find the solution before you. So just like real mining, it requires resources to go looking for the gold, and it's a gamble whether or not you actually end up finding any.
The system is basically impossible to hack or get around because each new block refers to the blocks before it. So if anyone tried to make a change to the information in a block, the later blocks wouldn't make sense and everyone would see that something is wrong.