What is Bitcoin?
Bitcoin is a digital currency that was invented in 2009 by a person (or group) using the alias Satoshi Nakamoto. The goal was to create “a new electronic cash system” that was “completely decentralised with no server or central authority.” It is stored securely in a digital wallet and allows its owner to remain anonymous.
How do people acquire Bitcoin?
Buy on an Exchange
Bitcoins can be purchased from marketplaces called ‘bitcoin exchanges” where people can buy or sell Bitcoin using different currencies. Coinbase, Bitstamp and Bitfinex are some examples of these exchanges.
People can also compete to ‘mine’ bitcoins using specialised computing hardware. These miners performed complex mathematical calculations to help verify transactions that will then be added into the blockchain network. In turn, miners are rewarded with Bitcoin for dedicating computing resources to the network.
What can you do with Bitcoin?
You can use Bitcoin to buy things just like any other currency. Increasingly there are more and more businesses that are starting to adopt Bitcoin. Paypal and Ebay are two businesses that have already started accepting Bitcoin. You can also sell your Bitcoin on exchanges in order to gain a profit from its short-term volatility in price. Or, you can also hang on to it like digital gold as a long-term investment option.
What does the future hold?
Bitcoin and its network have been growing strong over the last 3 years. This growth has been boosted by the inflow of institutional money with big banks like Goldman Sachs who have started selling Bitcoin futures. Japan is the first country to legalize Bitcoin with Russia and many others looking to follow suit. Increasing government recognition and regulation will help increase the market’s confidence and trust in Bitcoin. Overall, Bitcoin has established its own ecosystem and will continue to play a bigger role in the years to come.