ZoneBitcoin EditorialBitcoin was created in 2009 by giving individuals the ability to have complete control over their transactions. Without central authority, without censorship, bitcoin has come to disrupt the paradigm of classic finance in a surprising way.
However, it is not always easy to fully understand what it really is. This is even the origin of the many clichés and false ideas that circulate about it. Is it just a virtual currency? Is it a financial system as such? A speculative asset for a happy nerd? Why do some people think they could change the face of the world? What do bitcoin supporters see that others don't?
It would seem that what Bitcoin supporters see and understand is based on the fundamental principles of Bitcoin. These are concepts that define theethos of Bitcoin. Without these principles, Bitcoin would not be what it is.
Certainly, but what are the fundamental principles of Bitcoin? What makes the so-calledethos of Bitcoin? There would of course be a lot to say on the subject. However, to concentrate on the essential, because after all, that is what we are looking for when we talk aboutethos of Bitcoin, we will focus on the 6 fundamental principles.
We could develop more principles, but in all likelihood these are the strongest pillars of Bitcoin from which other “minor” principles flow.
Without further ado, here are the fundamental principles of Bitcoin that it is crucial to know to better understand the challenges of this invention.
1/ The principle of Open Source code (open source)
This is indeed a fundamental principle of Bitcoin that it is imperative to understand because it involves other considerations, particularly philosophical ones. Bitcoin is based on a principle of openness and transparency. Simply put, Bitcoin's source code is publicly available, meaning anyone can read, modify, copy, and share it. This is also what allows the protocol to continually improve with community input.
The Bitcoin protocol would have been completely different if it had been closed source code created by a company for example. We would then be in a commercial approach which is diametrically opposed to the idea of open access software and the philosophy of “commons".
By making it available to everyone, Bitcoin belongs to everyone and no one at the same time. This is a democratic and inclusive principle that is part of the very essence of Bitcoin.
2 / The principle of decentralization
Decentralization is indeed the major principle if not constitutive of Bitcoin. In fact, the expression has several definitions depending on the angle from which you look. Decentralization allows Bitcoin to not need a central authority or third party to control the network. Instead, the network is maintained by a decentralized network of nodes, which are computers involved in validating and verifying transactions. Likewise, decisions on the rules and changes to be made to the Bitcoin protocol are made in a decentralized manner by members of the Bitcoin community (see BIP).
3/ The principle of Non-Censorship (Censorship Resistance)
Here we touch on another key principle of Bitcoin which is resistance to censorship. Bitcoin's system was designed to avoid the need for an intermediary to complete transactions. There is no central authority that can control or prevent a transaction from taking place. Everyone obeys exactly the same rules on the Bitcoin network without anyone being able to control or manage control as they see fit. No one can prevent a transaction from taking place or force the declaration of identity.
This lack of censorship makes bitcoin an ideal tool for people looking for ways to escape controls of any kind.
4/ The principle of Limited Supply (21 Million units) and fungibility
This is certainly the main fundamental of bitcoin, the best known and the easiest to understand for the novice. The inventor of Bitcoin, Satoshi Nakamoto, designed the protocol with a limitation ofsupply at 21 million units. In this sense, from the angle of monetary creation, bitcoin is a deflationary currency. Unlike traditional currencies which can be issued in unlimited quantities, Bitcoin was designed to be rare and limited.
It is this same limitation on the number of bitcoins that will be forever issued that makes it closer to gold. Investors see Bitcoin as a store of value.
Likewise, we can add here the principle of fungibility which is decisive in the definition of what a currency is. This speaks to the fact that bitcoins are equivalent and interchangeable. It is fungibility that ensures that Bitcoin can be used as a universal medium of exchange, without discrimination or preference.
4/ The principle of Non-Permission (Permissionless)
Bitcoin was designed to be a currency accessible to everyone, without any restrictions. This implies that there is no personal identification required to own and use Bitcoin, allowing everyone to maintain their privacy and avoid the restrictions imposed in traditional financial systems. In this sense, a person living in Nigeria can establish financial transactions with a person living in Peru, without any restrictions. Bitcoin is a currency for everyone, without restrictions of gender, nationality or age.
This freedom of use is a key element of theethos of Bitcoin, which aims to offer everyone the opportunity to access fair and secure financial services.
5 / The principle of immutability
The principle of immutability is at the heart of the functioning of the Timechain Bitcoin. It is the characteristic that once information is recorded in the blockchain, it cannot be modified, erased or altered retroactively. This feature guarantees the integrity of transaction history and prevents attempts at fraud or double spending.
The Proof of Work mechanism makes it extremely expensive and difficult for a malicious actor to retroactively modify the blockchain, as this would require convincing a majority of nodes on the network (see “51% attack“). The principle of immutability then strengthens trust in the Bitcoin system and makes it more resistant to malicious attacks.
Final word
The fundamental principles of Bitcoin mentioned here constitute the essentials of Bitcoin without limiting it to the latter. Indeed, even more than these principles, there are approaches in different fields such as science, economics or even philosophy which allow us to better understand its contours. One thing is certain, that Bitcoin cannot be understood with a basic and simple explanation of what blockchain is or what a currency is. To understand Bitcoin, you have to concentrate and work on a real multi-disciplinary research work. And, this is where most people who refute Bitcoin are lacking.
Don’t make this mistake and continue to educate yourself 😉
