What is bitcoin?
Bitcoin is digital money. It was created in 2009 by an unknown person or group under the pseudonym Satoshi Nakamoto. While Satoshi’s identity remains a mystery, there’s no mystery as to how Bitcoin became the most popular cryptocurrency.
Following the great recession, Satoshi’s goal was to create a secure way to send money without a trusted intermediary, such as a bank, government, or institution. A trusted intermediary is an important factor for currency as it prevents users from double-spending and mitigates the chance of fraudulent activity. By using Bitcoin, you can send money directly to another person without this third party. Bitcoin accomplishes this task through the invention and use of the blockchain — a decentralized ledger that records every Bitcoin transaction and ownership.
A public blockchain is publicly available. Each transaction is time-stamped and constantly verified through the work of data miners. Data miners confirm Bitcoin transactions and secure the network. This network operates across thousands of computers around the world, forming multiple, identical copies of Bitcoin activity. Due to the sheer size of this network, the possibility of someone hacking this system becomes nearly impossible, making Bitcoin reliable and secure.
Sending Bitcoin to another person is incredibly simple: all you need is a Bitcoin address and access to the internet. Bitcoin is not regulated or owned by nations, organizations, or banks. As a result, you’re less likely to experience common inconveniences such as delayed transfers due to a holiday or weekend, additional fees for transferring to a different country, or limits to how much you can transfer at one time. Some people prefer to hold, or self-custody, their Bitcoin, instead of having to deposit it at a bank or with a third party.
Following Bitcoin, many other types of cryptocurrencies have sprung up over the years. However, Bitcoin continues to have the broadest appeal due to being the first cryptocurrency, ease to use, incredible security, and global accessibility.
What is Bitcoin Worth?
At the beginning of its launch in 2009, one Bitcoin was worth less than a penny. In the last decade, the popularity of this cryptocurrency grew and pushed its price to a peak of approximately $40,000 in January 2020. Some of Bitcoin’s growth over the years can be attributed to innovations and advancements in crypto technology.
One unique feature about Bitcoin is that you don’t need to buy an entire Bitcoin. Bitcoin can be subdivided into smaller units, called Satoshis. One satoshi is worth 1/100,000,000 (one one-hundred-millionth) of a Bitcoin. Bling games, for example, give away fractions of Bitcoin (or Satoshis) to users every day.
Thus, if you’re curious about buying Bitcoin, you don’t need to invest tens of thousands of dollars. You can purchase a fraction of a Bitcoin through crypto exchanges, or earn Bitcoin for free by playing Bling games.
How to use Bitcoin?
Bitcoin is most popularly used as a store of value. Although the price of Bitcoin can be volatile,
Bitcoin is very much tied with the concept of “sound money.” That is, money that is relatively stable and will not quickly appreciate or depreciate in value. For example, unlike most national currencies where a central bank can print more money, there will only ever be a maximum of 21 million Bitcoin in the world. In contrast, several national governments have printed trillions of dollars during the covid-19 pandemic, leading to currency devaluation. Due to these reasons, many Bitcoin owners choose to hold onto their Bitcoin for years as a hedge against inflation and currency devaluation.
Alternatively, you can exchange your Bitcoin for cash or your local currency using a local exchange. When exchanging your Bitcoin for local currency, it’s important to research and keep track of the exchange rate. The exchange rates for cryptocurrency can rise and fall changing the value of the Bitcoin you hold. These rates are calculated by averaging the buys and sells within the last 24 hours. Several companies around the world now enable this type of trading and will include price maps to track recent changes in the market. Note that different online cryptocurrency exchanges operate in different countries, so you should look to use one that operates where you live.
Many investors also like to trade Bitcoin and other cryptocurrencies to make money. Similar to the stock market, some Bitcoin owners will buy Bitcoin when its value is low, then sell it when the value has increased. Although Bitcoin is considered volatile due to its constantly changing value, Bitcoin’s overall value has continued to increase since its creation in 2009.
Lastly, you can spend Bitcoin for goods or services at retailers who accept Bitcoin. Most users who spend their Bitcoin do so for online transactions. However, it is not uncommon to see Bitcoin used for transactions in the physical world. The first commercial transaction for Bitcoin was made by Laszlo Hanyecz in 2010. He paid 10,000 Bitcoin to have two pizzas delivered to his home! To commemorate this interesting day in Bitcoin history, May 22nd is nicknamed “Bitcoin Pizza Day” in Hanyecz’s honor. As the popularity of Bitcoin grows, expect to see more merchants accepting Bitcoin as a form of payment.
