Bitcoin and chains · 06 / 86 · 3 min

Bitcoin

Bitcoin is a public list of transfers, aimed at moving value without a bank's permission. It is not a company, and it is not a promise of price.

A worked case

Someone sends bitcoin to an address a stranger gave them in chat. They ask for a reversal. There is no reversal. The record moved because the keys signed. That is the design, including when the design hurts.

What it is for

You can hold the keys yourself. No help desk can reset them for you. That is the point and the danger. There is no head office to reverse a payment you did not mean.

What it is not for

It is not anonymous by default. It is not fast or cheap at every moment. It does not stop you buying a worthless other coin that happens to be sold next to it.

People say Bitcoin when they mean the whole industry. Those are not the same thing.

A bug, a rollback, and no customer service

Bitcoin's own early history shows both the point and the limit. On 15 August 2010 a bug let someone create about 184 billion bitcoin in a single transaction, far above the 21 million cap. Developers patched the software and the majority of the network abandoned the bad chain. The value overflow incident is written up in the bitcoin wiki. It is the rare case where the living operators of the software did edit history, because the alternative was to pretend 184 billion coins were real. After that, the culture and the money at stake made another quiet edit much harder. It did not create a help desk.

There is still nobody to call if you send coins to the wrong address. The white paper is explicit that transactions are not reversible in the way a card payment can be. That is how a transfer can happen without a bank. It is also how a mistake, or a theft you signed, becomes permanent. Exchanges sometimes refund their own customers. The chain does not.

People say bitcoin when they mean the industry around it: the funds, the lending desks, the tokens with other names. Those can fail, freeze, and lie while bitcoin the list of transfers keeps adding blocks. Holding the keys yourself protects you from one kind of firm. It does not protect you from a payment you did not mean, or from a different coin sold next to the word.

Read it yourself

• Value overflow incident (15 August 2010)
• Bitcoin white paper

These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.

Apply the check

Open a question. The line is about this topic. It is not a verdict that anything is safe.

Check yourself