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Much has been misinterpreted about Bitcoin over the years. And with its widespread use and increasing popularity as a worthwhile investment, there is a need to provide Bitcoin beginners, avid users and investors with correct information about Bitcoin and what it truly is. This is why the author himself, nChain Chief Scientist Dr. Craig S. Wright, has decided to dissect what he wrote in 2008 under the pseudonym Satoshi Nakamoto--to correct misconceptions and clarify definitions of terms and phrases and what they mean then and now. 

The “Theory of Bitcoin” is an online series hosted by Dr. Wright and Engineering Head of tokenization entity smart wallet at The Bayesian Group and Money Button founder Ryan X. Charles. The series aims to educate viewers about Bitcoin through conversations between the two aforementioned hosts. It is but natural for the Bitcoin creator to talk about where everything began--the Bitcoin white paper, which became the basis for the first ever application of blockchain technology and cryptocurrency in 2009.

In the first of a series of episodes featuring the Bitcoin white paper, one of the topics discussed is the true meaning of “peer-to-peer” as stated in the title of the white paper, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Dr. Wright explains that “peer-to-peer” does not actually mean users, but instead the nodes in the network.

“Peer-to-peer, people get it wrong because they think “users.” I explained this later in the white paper and tried to point out that nodes and users—they’re not the same thing. In a computer science-y type way of putting it, users exchanging with users are not truly peer-to-peer. The miners, the nodes are peer-to-peer. The broadcast mechanism between nodes is peer-to-peer. But only miners and other related commercial entities become nodes,” Dr. Wright clarified.

For Bitcoin beginners, the phrase “a peer-to-peer electronic cash system” can easily be misunderstood as individual users sending digital money directly to each other. “Although it is person-to-person exchange and originally it was an IP-to-IP-based exchange,” that is not how peer-to-peer is defined in computer science and not how it was used in the Bitcoin white paper. “Peer-to-peer” actually refers to nodes and how they communicate with each other.

Dr. Wright goes on to state that the first sentence of the abstract, "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution,” is often misunderstood. In theory, Bitcoin can operate as “purely peer-to-peer,” but only for a small group of about a thousand users. In practice, Bitcoin is not purely peer-to-peer as it has scaled to accommodate millions of users. Keep in mind that the Bitcoin white paper was written more than a decade ago, and it has since evolved into what it is now—something that has created a whole new industry.

Bitcoin beginners, investors and developers can learn more by subscribing to the Theory of Bitcoin Youtube channel.

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