What is Bitcoin? To cut right to it Bitcoin is a digital currency. Bitcoin are not printed like dollars or euros. It is both created and held electronically, and is controlled by no government. It is quite different from the standard currency used today.
It is both and exciting investment opportunity, and an anonymous way to make purchases online. Let’s learn more about this exciting new form of currency below.
What is Bitcoin and what makes it different?
The primary use of Bitcoin is to purchase things electronically. You can do this with dollars, euros, and Yen, so it is similar in that regard.
The latest Bitcoin Price Index is 2,410.25 USD https://t.co/lzUu2wyPQN pic.twitter.com/JRofcnv02D
— CoinDesk (@coindesk) May 24, 2017
What makes a truly different from these other currencies is that it is not centralized. There is no institution which controls the Bitcoin network. This means that you are not at the mercy of a bank.
Who makes Bitcoin?
Bitcoin is not physically made by anyone, it is not printed. It is not accountable to any institution, population, and makes rules all on its own. It was initially proposed by Satoshi Nakamoto. He was a software developer who wanted to create a better electronic payment system that was based on mathematics. Other goals for Bitcoin included:
- Independent of central authority
- Instantly transferable by electronic means
- Low transaction fees
The final step is that Bitcoins are mined using a shared computer network. This network also helps process the transactions of Bitcoins, making Bitcoin both its own currency and its own payment network.
These few simple ideas started a revolution in the currency world. The days of a central bank printing money, completely on accountable to the population, and making up rules that no one has say on.
Are Bitcoins unlimited?
If Bitcoins are mined using a shared computer network, does not mean you can just make as many Bitcoins as you like? No, Bitcoins have been limited to a total of 21 million. These 21 million can be divided into smaller parts. The smallest part is 100 million of a full Bitcoin. They call it a ‘Satoshi.’
Is Bitcoin based on the gold standard?
Traditional currency is based on gold or silver values. Theoretically, you could get gold back from the bank based on the amount of dollars you have. Have you ever tried it? Don’t. It’s mostly theoretical.
Bitcoin is different as it is based on math. People all over the world are using a software program that follows the mathematical formula. This mathematical formula is what actually produces Bitcoin. The mathematical formula isn’t a secret, anyone is free to check it, and it is open source.
What is Bitcoin in a nutshell?
Let’s look at the main characteristics quickly summarize what Bitcoin it’s all about:
- It is not centralized: Every single person, or every machine, that processes transactions to mine Bitcoins part of the network. This means that one central authority figure is unable to tinker with the monetary policy and cause a crash. If one part of the Bitcoin network does go off line there is no reason that the rest of the network can’t keep moving.
- Easy-to-use: You can set up an account in a few seconds with an address, and no fees payable.
- Anonymous: While Bitcoin is not completely anonymous, they pride themselves on transparency, you can take steps to be anonymous. People can see addresses and how much is at that address, but they will not know that is yours. To stay a bit more anonymous using Bitcoin do not use the same address consistently, and do not transfer a large amount of Bitcoin to a single address.
- Fees: Transfer fees, even international transfer fees, are very small.
- Speed: You can send money absolutely anywhere in the world and it will arrive within minutes. Not even PayPal can do that.
- Returns: Any money that you send through Bitcoin cannot be sent back. Once you push send it is gone. If the recipient chooses to return it you will get it back, otherwise it is gone forever.
You can see that Bitcoin is a very unique form of currency. If using Bitcoin for privacy is important there are steps you can take. It, and other cryptocurrencies, are the future of currency. While this may seem confusing, just remember that it all comes down to computer software doing calculations. We all know that computing power is the future of humanity, Bitcoin looks to tap into its wealth potential.
Getting into Bitcoin now, or at least becoming familiar with it, will help you prepare for the future. Learn about Bitcoin exchanges, where you can purchase and sell Bitcoins, to start on your blockchain journey.