Land Titles: A Ideal Analogy
When one learns about Bitcoin for the first time, he or she immediately imagines that "coins" are moved physically from one virtual wallet to another, just like small packets of money are carried over the internet. But that is not how Bitcoin works. The truth is simpler, and so we can use something more traditional and familiar to us in order to simplify it: moving land ownership.
Land Ownership Doesn't Travel — The Title Does
When you buy a piece of land, the land does not move. It stays where it is. It is the record of ownership — the title deed, kept in a secure registry — that is moved. Once you transfer the title, everyone concurs that the land is yours now. The soil, the trees, and the buildings don't change places. The only thing that changes is who has the right to them legally.
This is the way that Bitcoin works.
Bitcoin Does Not Leave the Network
Sats never leave the Bitcoin network. They are not "within" your wallet. Your wallet simply contains the cryptographic proof that you own individual sats recorded on the Bitcoin ledger.
When you make an onchain Bitcoin transaction, the sats don't vanish into thin air in your phone or computer. Rather, you pass ownership of those sats to a new party. The network refreshes its universal record to note that. Just like a land registry, anyone can guarantee that the record is permanent, accurate, and tamper-free.
Your Wallet Is Your Title Deed
Look at your private keys as your title deeds to your property. Whoever has them, you can claim ownership. Losing them is the same as losing your title deed without a replica at the registry. You would definitely forfeit the right to establish its ownership.
Or, if you have your private keys in the hands of a custodian, it is the same as having them own the original title deed. You don't own it now; they do.
Immutable Ownership
One of the best things about Bitcoin, similar to land title under a sound regime of laws, is its permanence. The moment a Bitcoin transaction is confirmed, it can't be reversed, any more than the moment a title to land is legally recorded, it can be capriciously revoked. This definitiveness makes possible reliance on the system independent of central coercion.
Why the Analogy Matters
This analogy eliminates most confusion:
Sats don't move. It is the ownership that changes. This can be observed in the way the Yap's Rai Stone previously served as money.
In a 1991 essay, economist Milton Friedman argued that while the Yap money system of unmovable money might appear bizarre at first glance, it wasn't very dissimilar from the manner by which the gold vault of the Federal Reserve Bank of New York makes payments of gold between governments and never moves the gold out of the vault. French government calls on America to make the like payment in 1932 contributed to a bank panic throughout France, illustrating that industrialized nations were capable of being as much in the thrall of economic rituals as the Yap islanders.
Wallets don't contain coins. They contain keys to prove your claim.
Blockchain is the earth's land registry where it's logged who possesses what sats, indefinitely.
So the next time you transmit Bitcoin onchain, think of it similar to signing over title to a parcel of land. The land (sats) sits there still on the Bitcoin network, but title has transferred to another person, etched in the book of history forever.