Bitcoin is a digital currency that only exists electronically. To be more precise, it’s a cryptocurrency that is based on code and encryption keys. The currency first came into circulation in 2009 and was created by an anonymous programmer called Satoshi Nakamoto.
The currency is relatively new and not many people have any idea about how Bitcoin works. The goal of this post is to give newbies clearer understanding of what bitcoin is, how it works and how it can be used to buy/sell services and goods.
What Are Bitcoins?
People often confuse the terms Bitcoin (capitalized) and bitcoin (not capitalized) with each other, not realizing that these two are completely different entities.
Bitcoin latest news refers to the Bitcoin Network while bitcoin information refers to the currency itself (i.e. 1 bitcoin, 2 bitcoins).
What Makes Bitcoin So Special?
There are several factors that make Bitcoin special and give it an edge over traditional currency. The list is unending. However, I’m going to write some advantages of Bitcoin to give you a clear idea as to what makes Bitcoin so special.
- Bitcoin is a peer to peer currency and is autonomous to third party influence.
- Bitcoin transactions are stored in a public ledger called blockchain. The recorded information is transparent and offers open access to its users, making transactions more transparent.
- Since the Bitcoin transactions don’t go through a clearing house (Government, MasterCard, Visa Card, etc.) the fees involved are extremely low.
- The currency is stored in a Bitcoin wallet which is equivalent to bank accounts for traditional currency.
- The security level of Bitcoin is extremely high. The currency is secured with encryption keys and only the owner of the coins can know about it; which makes stealing coins nearly impossible.
- Bitcoins are finite and their value depends on the volume of usage. The more people use this currency, the higher it goes in value.
These are some of the key features that make bitcoin special.
Are Bitcoins Decentralized?
Yes, bitcoins are decentralized. There is no government/private agency, a monitoring authority or clearing house to monitor bitcoin flow. This makes the digital currency spendable nearly anywhere around the world.
Due to it being decentralized, Bitcoin is also dubbed as “the currency of internet”. This is because the Bitcoin transactions are not bound to any physical boundaries and can be sent to/received in any part of the world.
Is Bitcoin Anonymous?
Bitcoin transactions used to be completely anonymous. But now many bitcoin escrow service providers have started implementing KYC (Know Your Customers) and AML (Anti Money Laundering) regulations.
These regulations bound the users to provide proof of identity and residence which makes it harder to achieve anonymous transactions.
How Can You Use Bitcoins?
Bitcoins can be used in a similar fashion as traditional currency i.e. to buy/sell goods, services, and for investment purpose. Another use of bitcoin is to generate revenue through money transfer.
How to Earn Bitcoin?
There are two major ways to earn bitcoins: buying and mining.
Bitcoin can be bought through many online exchanges. The exchanges operate on both local and global scale. You can also buy bitcoins from other people via LocalBitcoins.
In Bitcoin mining, users on different computers assemble together to form a block and work to solve mathematical algorithms. Those who successfully solve the problems earn their reward in bitcoin.
Bitcoin is well secured and the fact that Bitcoin transaction data cannot be deleted or tampered with makes it even more protected. Moreover, the currency is cost effective and many major corporations have shown their interest in accepting Bitcoin as payment. The future seems pretty cool!