What is Bitcoin?
What is Bitcoin?
Bitcoin is a new way of storing and exchanging value. Throughout human history, we have used various things to exchange and store value such as shells, cattle, salt, gold coins and eventually paper money. Bitcoin is the next step in this evolution.
The creator of Bitcoin, Satoshi Nakamoto, introduced it by saying;
“I’ve developed a new open source P2P (peer to peer) e-cash system called Bitcoin. It’s completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust.”
The best thing about Bitcoin is that it is “non government” money. If you look around the world you can see that governments are terrible at managing money. It is not controlled by any government. No government can print more supply thus reducing it’s value through inflation.
At its core, Bitcoin is the evolution of digital money. The Bitcoin network is made up of computers that work together to validate transactions and create new coins. Unlike traditional currencies, Bitcoin is not controlled by a central authority which makes it decentralised. Its value is determined solely by market demand and supply. This means that individuals do not need permission to buy and hold it.
One of the key features of Bitcoin is its security. Transactions on the network are secured by cryptography, making them virtually impossible to counterfeit or double-spend. This means that Bitcoin is much more secure than traditional payment methods, and it can be used to make transactions with anyone, anywhere in the world.
Another advantage of Bitcoin is its speed and low transaction fees. Because there are no intermediaries involved in Bitcoin transactions, they can be processed much faster and at a much lower cost than traditional payment methods. This makes Bitcoin ideal for sending money internationally.
Unlike other forms of money, Bitcoin’s supply is limited by its programming. The maximum amount of Bitcoin that will be produced is 21 million. At present, there are about 19 million Bitcoin in existence. The final Bitcoin is not scheduled to be created (mined) until approximately 2140. With the world population currently at 8 billion people, there will not be enough to go around.
Bitcoin has all the characteristics to make it useful as a unit of exchange and a store of value:
It is durable. Being digital, it will never wear out like paper or plastic notes.
It is fungible. Each Bitcoin holds the same value as every other Bitcoin.
It is portable. Being digital it can easily be transferred across distances, unlike gold.
It is divisible. Bitcoin can be divided into smaller units labelled “Satoshis” or “sats” for short. Each Bitcoin is equivalent to 100 million sats.
It is secure. Every transaction is verified by a collection of thousands of independent computers located throughout the globe known as nodes.
It is scarce. Supply is limited to a maximum of 21 million Bitcoins.
It is acceptable. As time goes on, more and more people and businesses accept Bitcoin as payment.
Bitcoin has some features that are a vast improvement on our current financial system which are;
It has a fixed cap of 21 Million coins.
It has no single point of failure.
No permission is needed to obtain and use it.
It has a stable monetary policy.
It is digital so it can be used anywhere there is internet access.
It is global so it is the same in every country.
It operates everywhere 24/7.
It is decentralised. No one person or organisation controls it.
Bitcoin and cryptocurrencies are detailed topics. Our intention is to give you an introductory overview to spark your interest in learning more.