What is Bitcoin?

Bitcoin is a digital currency or cryptocurrency first invented in January 2009. It was created to be a peer-to-peer currency that does not need a central bank. The initial theory of cryptocurrency was conceived by a still-unknown individual or individuals called Satoshi Nakamoto in the aftermath of the housing market crash. Bitcoin sets itself up an alternative to fiat currency and promises to be more egalitarian by offering administration by a decentralized authority, and lower transaction fees than traditional online payment systems.

Bitcoins are not physical but rather a digital currency. Bitcoin is used in the exchange for services, products, and other currencies It is also not issued, backed, or overseen by any authorities from banks and governments. Individual Bitcoin balances and transactions are to be transparent and accessible to everyone via a public digital ledger, called a blockchain. A blockchain is like a digital set of blocks, and every block is a set of transactions. This process means that transactions are public reducing the opportunity for people can defraud the system.

Coins are released into circulation through a process called Bitcoin mining. Mining requires the solving of extremely difficult computational puzzles in order to unveil a new block, which is then added to the larger blockchain. Through the addition of new blocks to the blockchain, mining adds and verifies transactions across multiple networks. The miners who solve these quizzes, and are responsible for adding new blocks to the blockchain receive bitcoins as rewards.

Bitcoin’s value as an investment has been tumultuous. For example, the value of cryptocurrency rose to $20,000 per coin in 2017. However, as of 2019, it is trading for far less than half of $20,000. Despite this, it has become increasingly popular and its popularity has led to a competition to create even better land more advanced cryptocurrency referred to as Altcoin.

See “Cryptocurrency”

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