"The First Bitcoin Body Step" | What Is Bitcoin 

It was an otherwise quiet news day in February when word got out that the niche online trading site Mt.Gox (mtgox.com) went offline. The difficulty for me then, as a technology and business reporter at CNNMoney, was to explain to the average reader how a website that few had ever heard of suddenly wiped out the savings of people around the globe. The loss totaled nearly $400 million at the time. And it was all in a currency no one understood, no less 

The First Bitcoin Body Step

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That was, for many people, the first time they’d heard of Bitcoin. The circumstances were less than ideal. But the occasion

was an appropriate wake-up call the first bitcoin body step

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The world was finally paying attention to the term digital currency. Put simply, it’s electronic money—nothing more than bits in a computer, be it your laptop, smartphone, or some faroff computer server in a chilly, climate-controlled data center.

Make no mistake. It’s real money. But it’s unlike anything we’ve ever seen. Although it has similar properties to the paper bills we all carry in our wallets, a digital currency like Bitcoin is not printed by a recognized authority like a government that determines how many are put into public circulation. Nor is it valued in a traditional sense like gold, whose limited supply is slowly extracted from the earth at great labor and expense.

You can’t feel or touch bitcoins. And it’s precisely that aspect of a digital currency that polarizes people. Bitcoin’s most idealistic  supporters celebrate it as something akin to a monetary messiah, a means of exchange that will let you buy anything, anytime without nasty roadblocks, like banks or law enforcement. On the other end of the spectrum are the conservative cynics who think Bitcoin is bogus, nothing more than a moneymaking house of cards that’s bound to fall as soon as the world wises up to the fact that zeros and ones on a computer are quite worthless.

They’re both wrong. Bitcoin won’t upend the world’s superpowers— not entirely, anyway. But it’s already leaving a lasting impact, because it represents a whole new way of thinking about money the first bitcoin bosy step. Therein lies Bitcoin’s promise. It has the potential to transform something that’s a pivotal element of human history—shaking us to our very core.

To understand the significance of something like Bitcoin, it’s worth doing a quick review of history. While economists and anthropologists disagree about the origin of money,1 this much is certain: It’s as old as human civilization. Money had already appeared by the time humans started jotting down the earliest surviving accounts of their actions in ancient Mesopotamia around 3100 bce. At the time, it wasn’t a medium of exchange in the form of gold coins or paper bills, though. It was merely a ledger of accounts, a running tally of who owes whom. But for all intents and purposes, the system of debt and credit served as a way to trade.

Some thinkers are inclined to say that money predates even government.2 That’s the argument put forward by free-market proponents like Adam Smith, widely accepted as the father of capitalism, and Austrian economist Carl Menger. Before the appearance of money, perhaps we bartered for goods. But bartering—or the credit system of ancient Mesopotamia—is a terribly inefficient way to trade.

The turning point came around 2000 bce, when money appeared in a fashion more similar to what we know today. People in Egypt and Mesopotamia used receipts that showed how much grain they kept stored in temples. More than a thousand years later, metal coins gained ground in nearby areas. It eventually became too much of a hassle to lug around heavy sacks of misshapen bronze coins, so people everywhere opted instead for paper currency that represented value stored elsewhere, such as a bank. In China, they first appeared with merchants during the Tang Dynasty around 900 ce.3 At about the same time in the medieval Islamic world, checks and promissory notes gained in popularity. Europe was the late bloomer, with paper currency making its first appearance in Sweden in 1661. 

But that’s just about where the story of monetary innovation ends. Surprising and disappointing, isn’t it? Since then, governments have strengthened their control over the money-printing process, and countries continue to struggle with the fact that paper notes have no intrinsic value. This makes them susceptible to inflation, as occurs when a government prints extra bills to pay off its debts. That devalues its currency relative to others and impoverishes its people.

Meanwhile, banking has evolved many times over. The concept of a bank as we know it began in Italy during the Renaissance as a simple provider of bills of exchange, financing trade. Over time, banking has morphed to include loans, quick transfers of wealth across great distances, as well as a means of investing and consulting on those very investments. Over the centuries, banking has squeezed itself into the world of money, in the United States becoming the first and only entity to receive newly printed government dollars. Banks have placed themselves squarely between the people who earn money and the governments that issue it. They have made themselves necessary middlemen.

Indeed, in the modern era, banks have become synonymous with money and necessary for a prosperous life. Have you ever tried to conduct an expensive transaction without a bank? In most cases you’ll get rejected or worse—a nasty glare from someone assuming you’re up to no good. Or have you ever tried to receive steady pay for work in cash? Professionals will most likely receive a paycheck that needs to be cashed out at a financial institution, and some employers even make direct bank deposits mandatory. But think about what that does to society at large. It puts banks at the top of the social pyramid. Even though money is a necessary part of human interaction, something as ingrained in our consciousness as the rule of law, there exists an entity that retains firm control of it.

They are the gatekeepers. But that need not be the case.

Enter Bitcoin. For the first time in centuries the fist bitcoin body step, we’re faced with a new kind of money. Because it runs on the Internet, this money can be sent across the globe in the blink of an eye with near anonymity. Anyone can receive it—and spend it—even if they live hundreds of miles away from their nearest ATM. And because it functions directly between one wallet holder and another, there are no banks that slow down the transaction process. No fees. No restrictions. 

It sounds too good to be true. Or maybe we just forgot how liberating money is supposed to be.