The Basics of Bitcoin
Read on to discover the basics of bitcoin.
Not issued by any country. No bank holds it. Not institution backed. No coins (or bills) even denote it.
Bitcoin is crypto-currency. In simple terms, it is an alternative to money as we know it. That’s the currency part. It is entirely virtual. Transacted almost exclusively online, it exists only in digital form. The market determines the value. The crypto part is what protects it. Cryptography is what controls its creation and management.
Since its inception in 2009, Bitcoin has been a curiosity for many. And a mystery to many more. After all, can a currency that exists purely online even be real?
The answer is yes. Yes, it can.
In fact, its value is very real. It recently surged to well above $2,000 USD – more than doubling its value in one year. One financial analyst at Saxo Bank predicts its value could hit $100,000 USD in just ten years. At the same time, its value can fluctuate wildly. In May 2017, for example, it took a dive of more than $500 in just one day.
So how exactly does Bitcoin work?
Bitcoin can be obtained either by
- selling goods and services,
- purchasing it via Bitcoin exchange or private seller, or
- ‘mining’ it.
Because the currency is not centralized, it relies on computers provided by Bitcoin miners to perform and validate its transactions. It is the Bitcoin miners who provide the computational machinery. They are then compensated in the actual currency, from transaction fees and newly minted Bitcoin currency.
How do I Hold Bitcoin
Bitcoins are kept in individual online “wallets”. These wallets enable each respective owner to receive, store, and send bitcoins to other wallet owners. Each wallet has an address to which its owner has a private key. And while each wallet is private, every Bitcoin transaction is logged in a blockchain. A blockchain is a public record of every Bitcoin transaction.
Affordability. Convenience. And security. Compared to banks and credit cards, transaction fees are almost nonexistent. Buyers and sellers can conduct transactions instantly across international jurisdictions. And, there’s no risk of the funds being seized by a third party.
So Who’s using Bitcoin?
It’s actually hard to say, because much of the Bitcoin community remains anonymous and widespread. The average user is 33 years old and lives in the United States according to one study. Even so, while there is a committed group of core users, Bitcoin’s popularity continues to grow. Especially among more volatile economies such as Venezuela, Nigeria, and even South Korea.
But, is Bitcoin having a significant effect on the economy? After all, it’s available in every part in the world. Giving everyone the potential to buy and sell goods and services on a global scale. Bitcoin will become the de facto standard for international trade. This is due to the demand of Bitcoin. Coupled with security, inability to be counterfeited, and scalability according demand.