Can you believe that Bitcoin has been around for 10 years? We can’t either! Over the past few years we’ve seen a huge buzz around Bitcoin, but what actually is Bitcoin?
Bitcoin is a cryptocurrency where all of the money is virtual. Think of it as the online version of cash. Each Bitcoin is basically a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer. Bitcoins can then be used as payment for an item or transferred to another person. You can use Bitcoins to purchase items online, however this isn’t an option for many online retailers.
How does Bitcoin work?
Once you own bitcoins, they behave like physical gold coins. They possess value and trade just as if they are nuggets of gold in your pocket. You can use your bitcoins to purchase goods and services online, or you can tuck them away and hope that their value increases over the years.
Bitcoins are traded from one personal wallet to another. A wallet is a small personal database that you store on your computer drive, smartphone, tablet or somewhere in the cloud.
There are currently about 17 million bitcoins in circulation. There isn’t a central regulatory agency or government controlling the supply of bitcoins, meaning the supply is controlled by design. The total supply to ever be created is capped at 21 million bitcoins.
Is Bitcoin safe?
Every single transaction is recorded in a public list called the blockchain. This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undo-ing transactions. Every transaction is recorded publicly so it’s very difficult to copy Bitcoins.
It is possible to lose your Bitcoin wallet or delete your Bitcoins and lose them forever. There has also been thefts from websites that let you store your Bitcoins remotely.
The value of Bitcoins has gone up and down over the years since it was created in 2009 and some people don’t think it’s safe to turn your ‘real’ money into Bitcoins.
The Advantages of Bitcoin
- Fees are low
- Blockchain make it near impossible to hack
- Decentralized — cannot be shut down at a single point
- Transparent — you don’t have to trust anyone
- Anonymous transactions
- Powered by the community
- Anyone can use it
Why are Bitcoins proving to be so popular?
Bitcoins completely bypass banks as they are transferred through a peer-to-peer network between individuals, with no middleman bank to take a slice. Plus there’s no regulatory authority overseeing your money movement making transactions harder to trace.
Bitcoin wallets cannot be seized or frozen or audited by banks and law enforcement. Nobody but the owner of the bitcoin wallet decides how the wealth is managed.