Clearing up a few of bitcoin’s misconceptions

Bitcoin is more than just a currency. Here’s a look at what it is and what it isn’t.

Just what is bitcoin, anyway?

Conrad Barski and Chris Wilmer, authors of Bitcoin for the Befuddled, recently hosted a webcast discussing exactly what bitcoin is (and what it isn’t), how it’s used, how businesses can use it, and some of the disruptive opportunities that bitcoin offers entrepreneurs.

How traditional payment systems work vs how bitcoin works

They presented an overview that clears up some of the misconceptions about bitcoin. For example:

  • Bitcoin is not: a video game currency, a company, or a lot like Paypal.
  • Bitcoin is: the first currency that is both digital and decentralized. It’s also a disruptive opportunity for entrepreneurs in ways that look very little like currency. Think: time stamping for patents, smart contracts, multi-signature transactions, micro-payments or “tipping,” and stock market payments.

They also discussed some of the biggest questions that arise when you contemplate a financial system without bankers or middlemen. For example: if no one controls it, who guarantees it?

Barski explained that for every block of transactions, a member of the bitcoin community is selected by lottery to validate not only that block, but the previous block (which was validated by the previous guarantor). In exchange, they get a small amount of bitcoin. In fact, Wilmer noted, in some ways bitcoin may be more secure than other currencies. With dollars or euros or yen, the bank could close and keep your money. The government, terrorists, or thieves can step in and take your money. But in a decentralized system, those things aren’t possible. “For better or worse,” Wilmer said, “it’s not clear that there is anyway to shut down bitcoin at all.”

If you want to experiment with how bitcoin is used, you can get a few pennies worth of bitcoins at

If you’d like to dive deeper into the bitcoin world and explore some of the disruptive opportunities that bitcoin creates, you might want to look into the upcoming Radar Summit: Bitcoin & the Blockchain happening Jan. 27, 2015, in San Francisco.

You can watch Barski and Wilmer’s free webcast here.

Image: Slides from the webcast Bitcoin for the Befuddled, by Conrad Barski and Chris Wilmer.

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