When I first started learning about Bitcoin, I found plenty of information, but nothing that directly answered the most burning question:
When you buy bitcoins… what is it that you own, exactly?
That’s the question I’ll answer in this post. Along the way, I’ll introduce several key Bitcoin concepts. You’ll see for yourself how bitcoins are secured and how they’re transferred.
First and foremost, a bitcoin is a unit of account, in the same sense that a gallon is a unit of volume, or a gram is a unit of mass. You can’t pick up a bitcoin and hold it in your hand like you can a dollar bill. But that’s OK, because that’s not what’s important. What’s important is that:
- Bitcoins can be possessed.
- Bitcoins can be transferred.
- Bitcoins are impossible to copy.
These three properties, combined, allow bitcoins to function effectively as a system of distribution of wealth. And fundamentally, that’s what makes bitcoins useful.