How Bitcoin Works? The Long Road to Bitcoin

The path to Bitcoin is littered with the corpses of failed attempts. I’ve compiled a list of about a hundred cryptographic payment systems, both e-cash and credit card based technologies, that are notable in some way. Some are academic proposals that have been well cited while others are actual systems that were deployed and tested. Of all the names on this list, there’s probably only one that you recognize — PayPal. And PayPal survived only because it quickly pivoted away from its original idea of cryptographic payments on hand-held devices!

 There’s a lot to learn from this history. Where do the ideas in Bitcoin come from? Why do some technologies survive while many others die? What does it take for complex technical innovations to be successfully commercialized? If nothing else, this story will give you an appreciation of how remarkable it is that we finally have a real, working payment mechanism that’s native to the Internet.

There’s a lot of excitement about Bitcoin and cryptocurrencies. Optimists claim that Bitcoin will  fundamentally alter payments, economics, and even politics around the world. Pessimists claim  Bitcoin is inherently broken and will suffer an inevitable and spectacular collapse.

Underlying these differing views is significant confusion about what Bitcoin is and how it works. We  wrote this book to help cut through the hype and get to the core of what makes Bitcoin unique.
To really understand what is special about Bitcoin, we need to understand how it works at a technical  level. Bitcoin truly is a new technology and we can only get so far by explaining it through simple  analogies to past technologies.

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