What is Bitcoin?

what is bitcoin

 

Bitcoin is a decentralized digital cryptocurrency which is not controlled by any entity or government. It was first introduced in 2009 by someone under the name Satoshi Nakamoto, which is more likely a pseudo. The system that Bitcoin works on is a peer to peer, which enables transactions between two users without anyone else’s intervention. These transactions are verified by network nodes and are recorded on the blockchain which is available for the public. Bitcoins is a currency just like other real world currencies, the only difference is that is digital, while fiat is physical in shape of paper for bills and metal for coins.

Bitcoin is created using computers doing very complicated calculations. The process is called mining and the people or computer application generating those Bitcoins are referred to as miners. By discovering network nodes, miners are rewarded Bitcoins. In order for Bitcoin transactions between users to happen, mathematical problems will have to be solved by miners. There are many other digital cryptocurrencies in the market such Litecoin (LTC), Ethereum (ETH), Namecoin (NMC) but Bitcoin (BTC) remains the largest with a market cap of over $16 Billion. Unlike fiat money which is owned by the government and is usually stored in banking institutions, Bitcoin is free of any government regulations and is usually stored in digital wallets. These e-wallets are basically applications or third party websites that can be used to access the funds. They are protected by passwords and sometimes by 2FA which adds an extra form of protection against unauthorized access. You can use these wallets to pay with Bitcoins for services and other stuff like a pizza or cup of coffee, it works just like pulling cash out of your wallet.

The price of Bitcoins is very volatile, that means it keeps going up and down every few minutes. As of today, Bitcoin is worth over $1000. The Bitcoin network which is known as the Blockchain is believed to be unhackable. It is the individual wallets that can be hacked, so users should keep them secure at all times. It is worth noting that Bitcoin comes in a limited quantity, because that is how it was coded. The total number of Bitcoins that will ever exist is 21 million coins, minus all the bitcoins that were lost forever. Lost forever? you might be asking yourself. Well, if you lose your private keys, and don’t have a wallet backup, your Bitcoins will be gone forever. It is estimated that all of Bitcoins will be mined by the year of 2030.

What bitcoin and blockchain offer that no financial institution can afford is the extremely low transaction fees as well as speed for those transactions to take place. Let’s also not forget that Bitcoin transactions are virtually anonymous, which a lots of people that are concerned about their privacy really appreciate.

Many bitcoin experts and analysts believe that Bitcoin prices will be much higher than today’s, when the world adopt the digital currency and becomes mainstream. So only time will tell if  Bitcoin will be the next digital revolution.

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