What is Bitcoin?
A pseudonymous software developer going by the name of Satoshi Nakamoto proposed bitcoin in 2008, as an electronic payment system based on mathematical proof. The idea was to produce a means of exchange, independent of any central authority, that could be transferred electronically in a secure, verifiable and immutable way.
Bitcoin is separated into two components. On the one hand, you have bitcoin-the-token, a code snippet that represents ownership of a digital concept. On the other hand, you have bitcoin-the-protocol, a distributed network that maintains a ledger of balances of bitcoin-the-token. Both are called “bitcoin“.
In what ways is it different from traditional currencies?
Bitcoin is free from any purview by bank institutions or government bodies.
Bitcoin payments are not anonymous, but "pseudonymous". Transactions are transparent, but your identity cannot be tied to your bitcoin wallet unless you disclose both at the same time.
Bitcoin transactions cannot be reversed. This is because there is no central “arbitrator” that can return money back. If a transaction is recorded on the network, and if more than an hour has passed, it is impossible to change.
Bitcoin transactions are cheap. As no intermediaries stand between users, there is no one to pay tribute to.
Bitcoin in numbers?
Fiat currencies (USD, EUR, GBP, etc.) have an unlimited supply – central banks can issue as many as they want and can attempt to manipulate a currency’s value relative to others. Holders of the currency (and especially citizens with little alternative) bear the cost.
With Bitcoin, on the other hand, the supply is tightly controlled by the underlying algorithm. A small number of new Bitcoins trickle out every hour and will continue to do so at a diminishing rate until a maximum of 21 million has been reached. This makes Bitcoin more attractive as an asset – in theory, if demand grows and the supply remains the same, the value will increase. That’s why they are divisible and also can be quoted in small amounts, which are very useful for microtransactions. The price is driven by demand and limited supply.
How can I use Bitcoin?
Bitcoin can be useful in many ways other than instant transactions. Here are a few of them:
Bitcoin is a highly flexible asset, compared to traditional assets like stocks, gold or commodities. Bitcoin can be used as a store of value and for speculation purposes.
The era of cryptocurencies is on the rise. Already now you can instantly pay for your purchases, whether this is an international online shopping experience or a cup of coffee around the corner.
Instant, global and secure - use bitcoins for payments and global money transfers. By using bitcoin, you can send money in any quantity anywhere on the earth in less than an hour.
