Updated: May 3
So, what is Bitcoin?
Well, this emerging store-of-value technology may seem scary at first, but so does anything that you don’t understand in the beginning. Instead of continuing to wonder, what Bitcoin is? Let's jump into a detailed analysis now.
If you have been trying to avoid cryptocurrency because it seems confusing and you’re hoping it wouldn’t last, then you are in for a huge awakening.
Cryptocurrency is here to stay and, once you fully understand what Bitcoin blockchain technology, does for each of us, you will be glad you are a part of it now.
Here you will learn:
What Is Bitcoin Crypto Currency?
To understand cryptocurrency, you must first have a firm grasp of what blockchain technology is and why it will transform our world.
Bitcoin is simply digital money. Not just any money, but the safest, and possibly the most valuable money in the future.
Originally founded by Satoshi Nakamoto in 2009, Bitcoin was initially meant to be a peer-to-peer payment system that quickly evolved into also becoming a valuable digital asset, just as good as gold.
Just like gold or paper money we have now, Bitcoin is digital money that gets recorded transaction by transaction, automatically, on the blockchain.
Bitcoin is the first cryptocurrency and the pioneer of blockchain technology, which is highly specialized computer code that autonomously runs itself.
How Does Bitcoin Work?
Just like a central bank keeps their own private ledger of all their accounts and their transactions, so does Bitcoin. When a transaction takes place in Bitcoin, it gets recorded on the public ledger that anyone holding Bitcoin can see and verify at any given time.
The autonomous computer code that is Bitcoin is hardened and impossible to hack because Bitcoin transactions are updated on the ledger, by thousands of computers simultaneously, which doesn’t leave any room for forgery or theft, whatsoever.
The difference between centralized banking where only the bank sees the ledger and gets to charge whatever fees they wish, Bitcoin fees are automatically adjusted for supply and demand by the code.
Bitcoin doesn’t need any human help to function properly. That is the whole point about why Bitcoin, decentralized websites, and Blockchain, were created in the first place.
What Are the Benefits of Bitcoin vs. Fiat Money?
Firstly, most people do not know what fiat money is, and that is what they have in their pockets and within their bank accounts in America today.
Fiat, meaning ‘by decree,’ means that the one-hundred-dollar bill you have in your wallet is only worth that hundred bucks because the government says so.
It totally sounds ludicrous, but this is what Americans accept blindly, without even realizing how this can hurt them financially.
Giving any centralized authority that much power to simply tell you how much a rectangle piece of printed paper is worth doesn’t instill a sense of confidence that my accumulated wealth, from years of hard work, means what I thought it did.
Before 1971, when then-President Nixon decided to make all money fiat and disassociate it from gold, money used to have real value.
We have truly lost lots of ground when it comes to money keeping its value in this country. Paper money used to be connected to gold, and the entire reason that centralized banking was born was that gold was too difficult to cut up at different value points and too heavy to be useful in long-distance transactions.
Back in the day, a centrally located bank started taking people’s gold and giving them redeemable certificates that were easy to spend and could be redeemed at any time for their weight in gold. Hence the saying, it’s worth its weight in gold.
It used to be...
All this ended after WW2 when countries that had brought their gold to the USA in huge amounts to securely store because Hitler was confiscating many country’s riches and gold supplies for the Germans.
When they tried to redeem these certificates, Nixon declared they were no longer redeemable and fiat money was born. He basically said, ‘no you may not redeem for gold, but the paper money that we gave you for the gold is worth what the gold is worth because we declare it to be so.’
This system is plagued with fraud as well since all the custodianship of wealth is held by the central banking system and not the account holders who deposit their monies into their accounts.
Bitcoin solves this problem, and all others, that have been tested by the blockchain. When you buy Bitcoin and cryptocurrency, you own them in your own online or offline wallet.
Where Can I Buy Bitcoin?
To buy Bitcoin, you must either have an account on one of the crypto exchanges or a hard, offline wallet that connects to the exchanges.
Either way, you can buy Bitcoin from the exchanges and store it within your online wallet on an exchange. You can keep your Bitcoin in the hot wallet you receive with your exchange account, or offline in a hard wallet, free from any hacker’s reach, or from centralized systems.
Is Bitcoin a Safe Investment?
That is the biggest question that everyone is asking these days. Will Bitcoin become the currency we all use regularly, or will Bitcoin disappear like so many fads before it?
The science behind blockchains is sound, and some chains like Bitcoin and Ethereum, have been successfully running trillions of transactions and have processed billions of dollars so far. Bitcoin’s 14-year record for running perfectly without any negative disruptions is certainly appealing to investors.
Any investments come with inherent risk, and Bitcoin is no different.
But, if you think that our world will eventually be converted to cryptocurrencies in the future, then Bitcoin will be one of the best investments in human history.
Wrapping This Up Thoughtfully
With so many ways to view, use, and perceive money, it’s no wonder that digital assets are emerging as a real player in the financial markets.
If you do a Google search for “What is Bitcoin?” you will see millions of results because Bitcoin and cryptocurrency is not only an emerging currency, but it may be the best one we ever had.
Now, code designers are creating their own smart contracts on blockchain to do all sorts of things and they even produce their own cryptocurrencies, as well.
Just remember that Bitcoin is the first blockchain technology that all other cryptocurrencies and smart contracts were designed around because Bitcoin will always be considered the OG.