My Note
My highlights
45 highlights from Kindle. These are the lines I stopped at.
How does a digital payment made by your bank, PayPal, or ApplePay work? Very simply, these middlemen act as glorified ledgers of accounts and transfers.
Satoshi is describing that the participants of the Bitcoin network work together to timestamp (put in order) transactions so that we know what came first, and therefore we can reject any future attempts to spend the same money.
By holding Bitcoin, you hold the keys to your own financial freedom. Bitcoin separates money and state
Bitcoin does not rely on trust in a third party to secure your money. Instead Bitcoin makes your coins impossible for others to access without a special key that only you hold, no matter for what reason, no matter how good the excuse, no matter what.
Much worse things have happened, and are currently happening, in countries with less freedom, such as banks shutting down during currency collapses in Greece, banks in Cyprus proposing bail-ins to confiscate funds from their customers, or the government declaring certain bank notes worthless in India.
Our current systems of securing money, such as putting it in a bank, rely on trusting someone else to do the job. Trusting such a middleman not only requires confidence that they won’t do something malicious or foolish, but also that the government won’t seize or freeze your funds by exerting pressure on this middleman.
Bitcoin is immune to such discoveries and supply manipulations. It is simply impossible to produce more of it, and we’ll explain why in later chapters.
Imagine discovering an asteroid containing ten times as much gold as we have on earth. What would happen to the price of gold given such abundant supply?
Not even precious metals like gold have this property, since we can always mine more and more gold if it is profitable to do so.
Bitcoin is the first digital system which enforces scarcity without any middlemen and is the first asset known to humanity whose unchangeable supply and schedule of issuance is known completely in advance.
It is cheap and easy to copy a digital book, audio file, or video and send it to your friend. The only exceptions to this are digital assets controlled by middlemen.
Prior to Bitcoin, it was not possible to prevent a digital asset from being infinitely reproduced.
2.1 quadrillion satoshis in circulation around the year 2140.
There will only ever be 21 million bitcoins, though each bitcoin can be divided into 100 million units now called satoshis, producing a final total of 2.1 quadrillion satoshis in circulation around the year 2140.
Satoshi designed a system of money where the supply was fixed and issued at a predictable and unchangeable rate.
In order to prevent debasement, Satoshi designed a system of money where the supply was fixed and issued at a predictable and unchangeable rate.
Satoshi wanted to offer an alternative to fiat currency whose supply is always expanding unpredictably.
We must trust our governments not to abuse their printing press, but we don’t need to look far for examples of breaches of that trust
Although government-issued, redeemable for nothing, pure fiat currency is the money we all know and use day to day, it is actually a relatively new experiment in the scope of world history.
diluting the value of each note in circulation, known as debasement
If someone came along with superior technology for quickly creating lots of something, that thing lost value.
Any time something was used as money, there was a temptation to create more of it.
Historically, money was created from things that were hard to produce, easy to verify, and easy to transport,
Unlike using your bank account, digital payment system, or credit card, Bitcoin allows two parties to transact without giving up any personally identifying information.
Bitcoin uses cryptographic math throughout its design to allow participants to check the behavior of everyone else without trusting any central party.
To shut down Bitcoin would require shutting down tens to hundreds of thousands of computers around the world, many in undisclosed locations.
Bitcoin, on the other hand, is not run and controlled by a single company, but rather by a network of individuals and companies all over the world.
Such centrally controlled private money schemes were doomed to failure; people can’t rely on a money that can disappear when the company goes out of business, gets hacked, suffers a server crash, or is shut down by the government.
Satoshi mentions that the system is decentralized to distinguish it from systems that do have central control.
We can look at the code and verify how it works for ourselves.
We don’t need to believe anything Satoshi wrote in his post about how the software works. We can look at the code and verify how it works for ourselves. Furthermore, we can evolve the functionality of the system by changing the code.
The software is open source, which means that anyone can see how it works and contribute to it.
P2P stands for peer to peer and indicates a system where one person can interact with another without anyone in the middle, as equal peers.
Bitcoin's solution is to use a peer-to-peer network to check for double-spending.
It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.
We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.
The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.
The root problem with conventional currency is all the trust that's required to make it work.
It's completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust.
Bitcoin is a peer to peer electronic cash, a new form of digital money that can be transferred between people or computers without any trusted middleman (such as a bank), and whose issuance is not under the control of any single party.
My goal today is to tickle your brain, and to give you a taste of the computer science, economics, and game theory that make Bitcoin one of the most interesting and profound inventions of our time.
I recommend the seminal Mastering Bitcoin by Andreas Antonopoulos, and the newly released Programming Bitcoin by Jimmy Song.
Bitcoin will decentralize the production and consumption of money, which is the key to unlocking new ways for humanity to collaborate on a scale that was previously unimaginable.
If Bitcoin succeeds, it may prove to be as important as the printing press (decentralized production of information), the Internet (decentralized content and communication), and three-branch democracy (decentralized government).