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Bitcoin is quite possibly the most misunderstood technology of the twenty-first century. Why? Although much of Bitcoin's documentation is aimed at people new to the concept, it can hardly be understood by the very people who wrote it. Through this inaccessibility, confusion results; through confusion, more inaccessibility follows. If, like many others, you are new to Bitcoin, perhaps a fresh look from the ground up would help matters. One doesn't need to know how something works to know how to use it. This introduction introduces the latter, not the former.

What is Bitcoin?

Before one can understand anything, one has to know what they are trying to understand. This is the first major obstacle for those new to Bitcoin: just what is, and what is not, Bitcoin?

Bitcoin can be confusing because the term has been overused so much. If I asked you what a date was, you might answer, "A date is a fruit." You could also answer, "A date is a palm", "A date is an appointment", or another of the many meanings of date. Bitcoin is similar in a way. It can refer to:

  • A technology. Technologies facilitate the use of tools to solve problems. The automobile uses engines and fuel to increase transport speed. Similarly, Bitcoin uses certain tools to solve certain problems; these will be covered later.
  • A protocol. "Protocol" is a fancy term for method of communication. Although people may talk about the "Bitcoin protocol", you probably don't need to worry about it.
  • A base unit of currency. People use currency all the time. You might be accustomed to the "dollar", "euro", "pound", "peso", "yuan" or something else of that sort. The "bitcoin" (spelt with a lowercase 'b') is similar; it can be used to make purchases because it has a value.

As if three distinct meanings weren't enough, many people mistakenly use "Bitcoin" to refer to something that is neither a technology nor a protocol nor a unit of currency. These usages are not correct, but commonplace anyways, so you better get used to them.

  • As a substitute for Bitcoin-QT, a popular Bitcoin client. We will cover clients at a later time.
  • As a substitute for Bitcoin Foundation, a non-profit organization that promotes the technology.
  • As a substitute for various organizations and businesses prefixed with Bitcoin. For example, Bitcoin faucet, Bitcoin central,, etc. are distinct from Bitcoin, though they share its name.

So, how can you tell the difference? The easiest way is simply to look at the capitalization. If the word is capitalized (i.e., "Bitcoin"), it probably refers to the technology, while if it is in lowercase (i.e., "bitcoin"), it is probably a unit of currency. If the word is pluralized (i.e., "bitcoins"), it is almost definitely referring to the unit of currency (akin to, for example, "dollars" or "pesos").


Any good technology must have a purpose. The automobile shortens transport times. The stove aids cooking. Bitcoin's purpose is unfortunately too often overlooked, and too often the media mistakes something else entirely for the purpose. A technology's purpose is the main problem it aims to solve, and Bitcoin solves more than one problem. But all the problems solved are derivatives of one unified purpose, which is unfortunately often overlooked.

Bitcoin enables fast, low-fee, and global monetary transfer.

That wasn't too hard, was it? Bitcoin's role is similar to that of PayPal or Visa: moving money from one person to another. What makes Bitcoin innovative is how it does that without a central business running it. Rather than a big business doing the work moving money from one place to another, every user works together to do that. This allows Bitcoin transactions to have a reduced fee, one of Bitcoin's greatest merits.

The client