What is Bitcoin?
Bitcoin is the first and most popular cryptocurrency that individuals can send directly to one another, anywhere in the world, at all times, without involving any third parties or central authorities.
Apart from its function as an alternative form of money, bitcoin also acts as a store of value, thanks to its limited supply (21 million coins) and its increased mining difficulty over time. Many investors consider bitcoin as a better alternative to gold, as it offers many benefits in terms of value appreciation, portability, and storage.
How Bitcoin works
Bitcoin is divided into two main categories:
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The Bitcoin network (blockchain) - This is the underlying technology upon which users are able to transfer value to one another. The blockchain is a transparent ledger that allows every market participant to track the network’s transaction history, keeping the identity of the individual hidden behind a wallet address. Unlike banking ledgers, the blockchain is fully transparent and is governed by code. This technology is now being used for other industries as well and is not limited to financial systems like Bitcoin.
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The currency (bitcoin) - The token of the Bitcoin network is simply known as bitcoin. It’s a unit of measurement that can be subdivided into smaller parts (Satoshis) and is used to represent the value that is being transferred. New bitcoin is mined daily to accommodate the increasing demand, but the difficulty of doing so increases as well. Due to this, the bitcoin price increases over time and is expected to continue doing so in the future.
Bitcoin features
Nowadays, bitcoin can be used both as a form of payment and as a reliable store of value. This is because of several properties that make it stronger than its predecessors:
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Global access - Bitcoin can be sent to anyone in the world, at any time, with little to no fees. Users only need an internet connection and a bitcoin wallet to participate.
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Increased privacy - When paying with bitcoin, there is less hassle with regard to third parties. No bank statements, invoices, or any other personal information, apart from the amount that is being transferred and the participating wallets.
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Individual responsibility - Similar to cash, bitcoin transactions cannot be reversed or canceled. Banks cannot limit or close your account. You are fully responsible when it comes to the transactions you make and the safety of your funds.
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Increased security - Payments on the Bitcoin network are more secure than bank transactions since no personal information is exchanged unless the participating wallets are “whitelisted”. Therefore, the risk of exposing personal financial information is decreased as well.
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Resistant to inflation - Bitcoin cannot lose its value by artificially increasing its supply, as is often seen with government-issued currencies. This leads to a gradual (but volatile) increase in the price of bitcoin.
Who invented Bitcoin
Bitcoin was introduced to the world in 2009, in the midst of a global financial crisis. It was invented by Satoshi Nakamoto, an anonymous individual or group of people that used the pseudonym to protect their identity.
The creator(s) of Bitcoin published the project’s whitepaper in an early edition of the Cypherpunk newsletter to describe how the software works, indicating its importance to global macroeconomic conditions.
While the Bitcoin whitepaper is now available to the public, receiving more than 2.6 million visits a month, the inventor(s) of Bitcoin is still unknown. Many speculate that we may never find out their real identity.