Bitcoin, the decentralised digital currency, seemed on the verge of disappearing after every scandal, crash or hack. But eight years later, it’s not only growing but accelerating, tripling in total value since January to over $59 billion. And it isn’t the only cryptocurrency; competitors include Litecoin, Dogecoin and Ethereum (a currency that supports “smart contracts”).
Illustration by Jason Benjamin
Bitcoin’s high volatility makes it terrible by traditional currency standards, fantastic as a risky investment vehicle, and fascinating as a cultural experiment. It’s a dramatic rethinking of how currency can work, and it’s very complicated and unfamiliar to the common person. Over the years, hundreds of news outlets have tried to explain it, which is lucky because it often takes several explanations to grasp. Here are some of the best, starting with the three most essential guides.
- How Bitcoin works, in five minutes: A straightforward guide that gets increasingly technical. Just hop off when the ride gets too fast.
- History of Bitcoin: Timeline of Bitcoin’s invention, growth and major hacks.
- A beginner’s guide to Ethereum: Describes a newer blockchain with applications outside of digital currency, including automatically executed contracts, identity management, computer usage sharing and DRM.
- Lifehacker’s guide to Bitcoin: A practical guide to mining, buying and using Bitcoin.
- How the blockchain makes digital transactions work like physical transactions: A maths-free guide to how cryptocurrencies such as Bitcoin track transactions with a blockchain. Explains how to “give” a digital object to someone instead of just copying it.
- How blockchains record transactions: A slightly more technical explanation of how cryptocurrency users handle transactions without a central authority.
- How smart contracts work: Compares cryptocurrency to a digital vending machine, where the “rules” of a transaction are built into the machine itself. A great explanation of blockchain’s uses beyond currency.
- “Smart contracts” for programmers: A more technical explanation of Ethereum.
- Why Bitcoin is useful even when the price is volatile: How to use Bitcoin as an online payment method for traditional currencies.
- How people steal Bitcoin: Explains how hackers have stolen millions of dollars’ worth of Bitcoin, over and over.
- How to keep Bitcoin safe: Pros and cons for the best ways to keep your cryptocurrency safe (which usually involves physical storage).
- How Bitcoin pays people for recording transactions: Explains the “hidden transaction fee” of transferring Bitcoin; also read the response post, “USD is a terrible way to pay for stuff.”