The Currency of the Future
Bitcoin Explained (Part 2)
It’s a great pleasure to introduce Biditex readers our new guide for Bitcoin beginners. It consists of 5 articles that will explain what is Bitcoin (BTC), how it works and how you can use cryptocurrency in everyday life.
Bitcoin is a cryptocurrency, a form of electronic cash. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin blockchain network without the need for intermediaries.
Bitcoin can be sent directly between two parties via the use of private and public keys. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions. Every single transaction is recorded in a public list called the blockchain.
At its simplest, Bitcoin is either virtual currency or reference to the technology. You can make transactions by check, wiring, or cash. You can also use Bitcoin (BTC), where you refer the purchaser to your signature, which is a long line of security code encrypted with 16 distinct symbols. The purchaser decodes the code with his smartphone to get your cryptocurrency. Put another way; cryptocurrency is an exchange of digital information that allows you to buy or sell goods and services. The transaction gains its security and trust by running on a peer-to-peer computer network that is similar to Skype, or BitTorrent, a file-sharing system.
Bitcoin is nearly 10 years old now since it was introduced to the world in 2009. Thanks to the pseudonymous Satoshi Nakamoto’s invention of this first decentralized cryptocurrency that gave birth to countless other cryptocurrency types that are in use today. Having majorly disrupted the financial system already, the limitless capabilities of cryptocurrencies have become more widespread across businesses, the financial sector, governance, and consumer retail.
Bitcoin’s history as a store of value has been turbulent; the cryptocurrency skyrocketed up to roughly $20,000 per coin in 2017, but as of two years later, it is currently trading for less than half of that.
In 2017 alone, the price of Bitcoin rose from a little under $1,000 at the beginning of the year to close to $19,000, ending the year more than 1,400% higher. More recently, the cryptocurrency has declined in value and more-or-less plateaued, save for a few periods of relatively lower price figures (the early portion of 2019, when prices hovered around $3500) and relatively higher ones (June and July of 2019, when prices briefly peaked at over $13,000). As of October 2019, Bitcoin seems to have found a new price point in the range of $8,000 to $9,000.
There are three main ways people get Bitcoins.
- You can buy Bitcoins using ‘real’ money (USD, EUR, etc.).
- You can sell things and let people pay you with Bitcoins.
- Or they can be created using a computer (mining).
In order for the Bitcoin system to work, people can make their computer process transactions for everybody. The computers are made to work out incredibly difficult sums. Occasionally they are rewarded with a Bitcoin for the owner to keep. People set up powerful computers just to try and get Bitcoins. This is called mining.
Some people like the fact that Bitcoin is not controlled by the government or banks. They can spend their Bitcoins fairly anonymously. Although all transactions are recorded, nobody would know which ‘account number’ was yours unless you told them.
Bitcoins can be accepted as a means of payment for products sold or services provided. If you have a brick and mortar store, just display a sign saying “Bitcoin Accepted Here” and many of your customers may well take you up on it; the transactions can be handled with the requisite hardware terminal or wallet address through QR codes and touch screen apps. An online business can easily accept bitcoins by just adding this payment option to the others it offers, like credit cards, PayPal, etc. Online payments will require a Bitcoin merchant tool.
