What is Bitcoin?

If you have not heard of “cryptocurrency,” “Bitcoin,” or “digital currency” in recent years, then you have not been paying attention. Cryptocurrencies really are and have been MAJOR topic around the entire world.

Are you ready to learn more about Bitcoin? How it works? Where you can buy some for yourself and what you can do with them?

I will be sure to answer them and many more for you. There are still lots of people who know very little about them and this is not actually surprising. You are here to learn a bit more about them.

Bitcoin is still considered new, the basic concept of them is quite simple, but there are a lot of complexities involved.

Bitcoin can be quite confusing when first learning and reading about them. The amount of information can seem overwhelming at first, but well take it step for step. Become part of the community, Jump in and take part, you wont regret it.

Many People are already showing interest in crypto for a long time. This is because they are a exciting development that have a serious potential to change many aspects of our lives. Bitcoin provide excellent investment and trading opportunities.

We have lots more information and advice about Bitcoin for you, including how to buy and sell them, how to mine them, and how to use them for the purposes of investment and trading.

Here is a formal definition to start:

Any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions.
Source: https://www.merriam-webster.com/dictionary/cryptocurrency

So using the defintion above we have three key points to explain in more detail. These are as follows:

  • Cryptocurrencies only exist digitally (or virtually)
  • Decentralized and not issued or regulated by a single authority or organization
  • They use cryptography to secure transactions.

Cryptocurrencies only exist digitally

A digital or virtual currency is one that does not exist in any tangible form. There are no physical coins that you are able to hold. The currency is stored on computers and exists solely in digital form.

Digital currency is still “real”, it just means You can’t actually touch it or hold it.
An easy way to understand this to think of it like money stored in a PayPal account.

There’s nothing physically in a PayPal account either. The amount shown is just a RECORD of how much money is associated with the account.

Although this is to help you understand the basic concept, it’s important for you to recognize a key difference. Money in PayPal is backed up by some form of traditional currency (FIAT), so it has a real value. Cryptocurrencies are not backed up by anything.

The value of Bitcoin for example is based on what the open market thinks they are worth. Their worth is what people are prepared to pay for them.

Note that Bitcoin can be used as a “medium for exchange.” This means that they can be used for buying goods and services, providing the seller is prepared to accept a cryptocurrency as a means of payment.

As such, they can legitimately be considered a currency in their own right – just a different type of currency than the ones we are used to.

Cryptocurrencies are Decentralized

We associate the United States Dollar and the Euro as traditional currencies. These are called “fiat currencies,” as they are backed by a government and considered to be legal tender. All of the currency we are used to are managed directly by the government or by a government-appointed authority.

The authority controls the supply of currency and can affect its value by creating more of it. They can also adjust the interest rates associated with the currency.

The german Bundesbank as an example can print more Euro and this will typically reduce the value of the currency, as there is more of it in supply.

Cryptocurrencies are decentralized because they have no such authority associated with them.

No single individual or organization has control of them, and their supply is determined by the rate at which they are created. The most of them rely on a process known as “mining” to be “created”.