Bitcoin’s most important property is arguably its censorship resistance, which means it can’t be controlled by any single government or corporation.
Bitcoin is able to be censorship-resistant because Bitcoin transactions are not processed by a bank or a credit card company. Instead, they are processed by independent bitcoin mining groups that are spread throughout the world and are continuously competing against each other to be the one to process your transaction first.
Companies like VISA, Bank of America, and PayPal are centralized corporations that are headquartered in the US, and thus they can be pressured, sued, subpoenaed, or even forcefully shut down by the US government at will.
On the contrary, Bitcoin operates as a global decentralized network of independent miners, and the more decentralized something is, the harder it is for any one person or group to control it or shut it down.
For example, even if the Chinese government were able to successfully shut down all bitcoin mining companies in China tomorrow, you would still be able to make bitcoin transactions as long as there are enough miners outside China who are willing to process your transaction.
What is mining? And how does it make bitcoin censorship-resistant?
It’s not out of the goodness of their hearts that those bitcoin miners are willing to process your transaction. Rather, processing your transaction is simply a means to an ends, and the ends they are after is the mining reward of 12.5 BTC (worth about US$125,000 at Feb 2018 prices) that accompanies every new block that is added to the blockchain.
The blockchain is the undisputed permanent record of every Bitcoin transaction that has ever happened, and at any given time more than 10,000 volunteers’ computers are maintaining an identical copy of the blockchain for even more security and censorship resistance. Each “block” in the blockchain is simply a collection of transactions (up to 1MB in size), and a new block of transactions (along with the 12.5 BTC reward) is “mined” and added to the blockchain once every 10 minutes, on average.
You can think of the mining of each block like a competitive lottery. The 12.5 BTC mining reward from each new block is a “jackpot”, and the more computing power and electricity a miner expends to process transactions for the bitcoin network, the higher their chances of winning each new block’s mining reward. This process of expending computing power and electricity to process transactions and secure the network is part of a system called “proof of work”.
The rising price of Bitcoin over the years has attracted more and more new miners, which in turn helps to make the Bitcoin network even more decentralized. As the number of independent mining groups increases and becomes more geographically dispersed, it becomes increasingly difficult and expensive for governments to shut them all down. As a result, to this day the Bitcoin blockchain has never been hacked.