What is Bitcoin?
In the most general sense, an answer to a question of “what is Bitcoin” would be that it is a digital currency. It means that Bitcoin is a type of electronic cash without a physical form or central bank. It was created as a response to the needs of the sellers who strived to make themselves the ones in charge, cancel the interest fees, get rid of the middleman, introduce transparency to the transactions and cope with corruption. A result was a decentralized system in which investors could have their funds under control and could be able to monitor what was happening to these funds. Today, as far as market cap is concerned, Bitcoin is by far the largest cryptocurrency in the world. Current Bitocoin’s price amounts to around $ 7500 per coin - the highest in terms of digital currencies.
Who created Bitcoin?
Bitcoin was created at the beginning of 2009 by a developer hiding under a pseudonym Satoshi Nakamoto. A pseudonym, because Nakamoto has never decided to reveal his true identity to the world before. In fact, it is even unknown if a mysterious figure is just one person in particular or if it is maybe a group of IT specialists with an enormous financial knowledge. A lot of people tried to impersonate him, obviously, but they do not have enough evidence to confirm that they are the ones who created this marvellous virtual money. Apart from the fact that there were attempts to impersonate the creator of Bitcoin, there were also attempts to determine his identity for real. None of them proved to be successful, unfortunately. There is a possibility that Satoshi Nakamoto’s real name may remain unknown for ever, but the pseudonym will surely be put in the history books as the creator of Bitcoin.
How does Bitcoin work?
By and large, a single Bitcoin coin is simply a computer file whose place is in a corresponding digital wallet application installed on a computer or on a smartphone. The application generates special address (or addresses if needed) to which the money can be transferred. It is possible to send Bitcoin, or even its part, to both your personal digital wallet and to the wallets of other people. Because of the fact that all transactions are recorded in a form of a public list called blockchain, the history of Bitcoins can be tracked. This, in turn, results in the possibility of stopping people from spending virtual money they do not own, as well as from making copies or cancelling transactions.
Unique characteristics of Bitcoin
In comparison to traditional online payment mechanisms, Bitcoin offers by far the largest user base there is in the cryptocurrency world. It is estimated that there are more than 10 million Bitcoin wallets around the world which makes the currency not only more credible but also easier to make a transaction with. Moreover, Bitcoin payments are accepted by industry giants like Amazon or McDonalds. The coin itself can be adopted and used by various business entities and individuals as the potential use of it is tremendous for the society, making Bitcoin trading very easy.
Is Bitcoin legal?
Since its creation in 2009, no banks or governments decided to issue and/or support it because of the fact that Bitcoin is not a legal tender as a consequence of the fact that no personal information is required in order to open a BTC account as it is with an ordinary bank account. However, because of the popularity it gained among investors, it is still considered as a milestone in sparking the launch of a great number of other digital currencies and there is a possibility to, for instance, use Bitcoin as method of payment in some brick-and-mortar stores. It is then legal to use Bitcoin in the USA, for example, and even though the coins exist online only, they are subject to exactly the same taxes as physical money.
How to get Bitcoin?
There are two possible ways of obtaining Bitcoin - mining them or buying. Mining Bitcoin means making them existing. It involves not only a verification of transactions on blockchain but also releasing new coins as a prize for verifying. The process of mining Bitcoin requires recent transactions to accumulate into blocks and then trying to solve a puzzle. The first one who solves the puzzle is supposed to place the next block on the blockchain and collect the rewards. Such a mining reward includes transaction fees and encourages competition in mining. Buying Bitcoins is even easier as the coins can be bought from various cryptocurrency exchanges or through other people from market places directly. There is a wide range of ways to start buying BTC, if not with other cryptocurrencies, then with credit cards, physical money or wire transfers.
Is Bitcoin worth buying?
There are both pros and cons of investing in it, with a clear predominance of pros, though. First and foremost, there is a coin supply cap of 21 million coin which can never be crossed. It means that it is not possible to make more BTC than that and that the coins are (and will be) scarce. Taking this into consideration, it is understandable that a single bitcoin token has such a high value. Secondly, it is decentralized and transparent which already makes it better than a U.S. Dollar. Finally, in most cases, Bitcoin offers lower fees than a great number of foreign transfer institutions.
Should I buy Bitcoin?
“Should I buy Bitcoin?” is probably the most frequently asked question among cryptocurrency investors. Truth is that Bitcoin is the only decentralized cryptocurrency that raised its original price from 0.01$ to, at its all-time-high, as much as almost 20,000$. It is easy to imagine, then, that if someone invested 50$ in Bitcoin at its initial price and sold it at its all-time-high... the profit was equal to 100 million $. The price has since then dropped significantly, but even with that in mind, Bitcoin is still the largest cryptocurrency in the world with a price undeniably higher than the price of any other currently existing digital currency.