Bitcoin combines computing and cryptography with a clever system of economic competition and rewards that ensure it’s in everyone’s best interest to respect the rules without the need for a central authority. Instead, the network manages itself, and no single party controls the system.
Bitcoin rewards honest “work” that supports the network (validating transactions, as we’ll see below), while making sure that cheating is prohibitively expensive. This work is also the manner by which new bitcoin are programmatically introduced into the system, making sure the supply can grow in a predictable way – thereby achieving the key quality of scarcity.
These effects grow exponentially as the network grows. In fact, much of the power of Bitcoin comes from its diverse, robust growing network.
Bitcoin participants may have sometimes conflicting interests, but they all share the same ultimate goal – that Bitcoin succeeds. And the more parties are invested in Bitcoin, the more everyone has to lose if it “breaks” – this creates a symbiotic relationship, one where all parties benefit.
So who controls the Bitcoin ledger, and how does it achieve sound money? To answer these questions, it’s necessary to understand how the system is designed.
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