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Bitcoin
Article

Bitcoin

A Peer-to-Peer Electronic Cash System

Satoshi Nakamoto
www.bitcoin.org, 2008
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Editorial Rating

8

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  • Innovative

Recommendation

This founding document of the bitcoin movement lays out why a “purely peer-to-peer” electronic payment mechanism is necessary and how bitcoins answer that need. Bitcoin enthusiasts claim that the new currency will replace intangible trust in paper money and in financial intermediaries with tangible code. But unless you’re a software expert, you’ll need to trust that the system’s code is safe. Meanwhile, media reports of price swings, spurts and crashes risk painting bitcoins as just another e-speculation. getAbstract recommends this technospeak-laden paper to IT and finance professionals and to anyone eager for a glimpse into what could be the future of money.

Summary

Money exchanged anywhere depends on the “trust-based model”: A payment is never final because a bank can reverse that sum if it’s in dispute, even if it’s for an already rendered service. Because banks’ involvement has a cost, low-value transactions end up being uneconomical. Also, fraud is inherent in the system, so checking for creditworthiness adds even more expense.

A “peer-to-peer” system that doesn’t need a third party operates on “cryptographic proof” rather than trust. A bitcoin, a unit of electronic money, is “a chain of digital signatures.” These...

About the Author

Satoshi Nakamoto is the alias for the anonymous developer or developers of bitcoin.

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