Understanding what bitcoin is is a progressive and gradual process, and it is easier to understand if it is explained according to the reality of each person. At first, understanding what bitcoin is is not an easy task. The technology is so innovative, integrates so many concepts from different fields of human knowledge, and, in addition, breaks down countless paradigms, explaining the phenomenon can be an "ungrateful mission". Curiously, bitcoin integrates two pillars that few know how to describe and interpret, but many use them daily. Money and the internet. It is as Nassim Taleb states in his book Antifragile: “Knowledge does not exclude use”. Having said that, and being bitcoin a recent and innovative technology, many want to understand it in order to use it.
How to understand what bitcoin is:
To the common citizen: Bitcoin is a form of money, like the euro or dollar, with the difference of being purely digital and not being issued by any government. Its value is freely determined by individuals in the market. For online transactions, it is the ideal form of payment, as it is fast, cheap and secure. It is an innovative technology. That is why it is said to be the money of the internet.
To Generation Y: Remember how the internet and email revolutionized communication? Before, to send a message to someone on the other side of the planet, it was necessary to do so by mail. Nothing more antiquated, there was a dependence on an intermediary to physically deliver the message. Well, returning to that reality is unimaginable. What email did with information, bitcoin does with money. With bitcoin you can transfer funds from A to B anywhere in the world without ever having to trust a third party for this simple task.
To the banker: Bitcoin is a currency and a payment system in which the user, owner of the currency, holds their own balance. This means that the user is their own bank, as they are both depositor and depositor at the same time. In this system, users can make transactions between themselves without the need for an intermediary, regardless of the geographic location of each one. Similarly to fiat currency, which is exclusively created by the banking system, bitcoin is a currency that aggregates.
To the Swiss banker: Bitcoin is like a numbered Swiss bank account that can exist on your own mobile phone. With it, it is possible to make online transactions with almost no cost. It is as if you had a bank debit card, even though there is no physical card and not even a bank behind it. Only bitcoins can circulate in this system.
To the central banker: Bitcoin is a currency issued in a decentralized manner following the rules of a non-discriminatory and highly rigid monetary policy. The main objective of bitcoin monetary policy is the growth of the money supply, which is predetermined and public knowledge. In addition, bitcoin is, at the same time, a unit of currency, a payment system, and a settlement system. In this way, users transact between themselves and directly, without the need for a third fiduciary element.
To the accountant: Bitcoin is like a large, unique, and shared ledger by all users simultaneously. In it, all transactions are recorded, being verified and validated by specialized network nodes (miners), in order to prevent double spending and users from spending balances they do not have or from third parties. This public, universal, and unique register cannot be altered. There are all the transactions already made in the history of bitcoin, as well as the updated balances of each user, duly protocolled. The ledger is a reliable record that is always up to date and consolidated. The name given to this ledger is blockchain.
To the economist: Bitcoin is a currency, a means of exchange, although still relatively illiquid compared to the other currencies in the world. In some regions of monetary oppression, it is increasingly used as a store of value. A peculiar characteristic is its limited supply of 21 million units, which will grow gradually at a decreasing rate until it reaches this maximum limit. Although intangible, the bitcoin protocol thus guarantees authentic scarcity. As a unit of exchange, it can be said that it is still little used as such, due especially to its volatility. Bitcoin is also a payment system, which means that, for the first time in human history, the unit of currency is allied with the banking and payment system and is an intrinsic part of it.
To the lawyer: Bitcoins as a monetary unit are more considered as an integrating asset that, in certain markets, have been accepted in exchange for goods and services. We could say that these transactions constitute a barter, and never a sale with payment in cash, since the currency, in each jurisdiction, is defined by force of law, being an exclusive prerogative of the state.
To IT professionals: Bitcoin is an open-source software, supported by a distributed computer network (peer-to-peer) in which each node is simultaneously a client and a server. There is no central server or any entity that controls the network. The Bitcoin protocol, based on advanced cryptography, defines the rules of operation of the system, to which all nodes in the network have access, ensuring a general consensus about the veracity of the transactions carried out and preventing any violation of the protocol.
To a physicist: Bitcoin is software that does not exist materially. A Bitcoin monetary unit is nothing more than an electronic accounting entry, in which the current account (the Bitcoin address or the public key) and the Bitcoin balance at a given time are registered. In this sense, a Bitcoin unit does not differ in any way from a euro or dollar unit deposited in a bank, as it is also a mere electronic accounting entry. But there is a big difference. In the case of Bitcoin, the space in which the records are made is unique, universal, and shared by all users (blockchain), while in the current system, each bank holds and controls its transaction log.
What Bitcoin represents can vary depending on the occupation and reality of each person. But, without a doubt, it is a revolutionary technology, and that does not depend on any personal interpretation.