Unlocking Knowledge: Bitcoin in Plain Language
This series continues to translate the original white paper by Satoshi Nakamoto to plain language. The goal is to have easily shared content, reacquaint bitcoiners with Satoshi's vision, and explain things in an accessible way everyone can understand. The original content will be posted, with the plain language below.
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10. Privacy Paragraph 1
The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the “tape”, is made public, but without telling who the parties were.
Plain Language
In regular banks, they keep things private by only sharing information with the people involved and a trusted third party. But with the way Bitcoin works, they have to tell everyone about every transaction. However, they still keep things private by not revealing who is behind each transaction. It's like when you see that someone is sending funds to someone else, but you don't know who they are. Stock exchanges share information about trades without telling us exactly who did them.
The special tools built into bitcoin, called encryption, create a unique number called a transaction hash. The only important thing to the bitcoin protocol is that everyone follows the rules of the system. It is not important to the bitcoin system to identify individual people, or their motivation for sending funds.
This method creates a system of money that can reach everyone. They can use it without banks, governments or third party persons having to spend resources to watch everything everyone spends money on, sometimes censoring or blocking transactions based on the decisions of people, rather than a system.
The bitcoin system itself cannot reveal a person. Third party services collect personal information about customers who use bitcoin. It is these third parties who sometimes require customers to reveal their personal information, otherwise the third party company won't let the customer exchange currency for bitcoin. The customer who wants to remain private has to acquire bitcoin in other ways.
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