What is Bitcoin?
Bitcoin is a digital currency, created and storaged electronically. There’s no central control like it is with any other currency which we use today. It means there’s less opportunities to abuse money for power, as we’ve all seen happening every day.
Bitcoins aren’t printed like dollars or euros. Bitcoins are produced/mined by ordinary people and now some businesses that are concentrated on Bitcoin mining. Mining is basically solving mathematical curriculums/problems.
Bitcoin is the largest of the cryptocurrencies.
Who created Bitcoin?
Some say it’s a made up name, which it probably is, but Satoshi Nakamoto is considered to be the creator of the Bitcoin. He proposed an electronic payment system based on mathematical proof. His idea was to produce a currency independent of any central authority, transferable electronically with very low transaction fees.
What makes it different from conventional currencies?
Bitcoin is a digital currency and can be used to buy things electronically. This doesn’t make it too different from other conventional currencies like euros or dollars, as most of the world’s money is digital and can be used for online transactions.
The biggest difference, and the most important characteristic of Bitcoin is that it’s NOT centralized. This is hugely important, as there are no central bankers that control the money flow. It means people won’t get ripped off in some majestic scheme of things as it has happened so many times with the global financial crisis. Bitcoin is decentralized. This is the real beauty of cryptocurrency revolution.
Tell me once more, who prints the Bitcoin?
No one prints Bitcoin. It’s not controlled by any central bank or small group of people with their own agenda that serves no one else but them. Bitcoin is created by people like you and me through mining, i.e using computer power in a distributed network.
How many Bitcoins are there?
Maximum 21 million bitcoins can ever be mined total. It’s important to have a cap, as otherwise there wouldn’t be any value if there was unlimited amount of Bitcoins. This doesn’t mean that maximum 21 million people can own bitcoin (if everyone had just one BTC), because bitcoins can be divided into smaller parts. The smallest amount is one hundred millionth of a bitcoin and it is called a “Satoshi”.
Wait, is Bitcoin backed at all?
Bitcoin is based on mathematics. People are using software programs that follow a mathematical formula to produce bitcoins. Bitcoin has a cap, so the demand (market) sets the value, as the resource is not infinite.
It’s important because conventional currency isn’t backed by anything, nor has a cap. Dollars and euros are printed everyday and they’re not backed by absolutely anything. Dollar used to be backed by gold, but this system was broken down and didn’t work for long.
The more you print dollars or euros, the more value these currencies lose. Hence, holding your assets in conventional currency means you’re losing buying power.
Some Pros of Bitcoin
Easy to start. Although it might seem like complex process to start, it really isn’t, especially if you compare it to opening a bank account. It’s quicker and easier to get your money to a bitcoin exchange and buy bitcoins.
Decentralized. This is probably the biggest plus of all. If you’re tired of central banks governments having so much power of our lives, it makes a lot of sense to have some of your assets in cryptos.
Fast. Transactions take way less time compared to traditional bank transfers.
Cheap. It’s very cheap to make Bitcoin transactions. There are no banks who are skinning you as much as possible for every transaction. You can even do it on a P2P (peer to peer) platform.
Anonymity. Well, it’s not 100% anonymous, but you can hold multiple bitcoin addresses which aren’t linked to names or other personally identifiable information.
Some cons of Bitcoin
As it’s new and unregulated industry, there are always people in the market with not so good intentions. It has gotten a lot better and safer in recent years though.
Refunds. Let’s say it’s not that easy to turn back transfer or get your bitcoins back once you transfer it to a wrong address.
Volatility and political risk. Prices of bitcoin and especially altcoins are very volatile. It creates opportunities to make a lot of money, but also might not be the best option for someone who loves certainty. The price is also very prone to political decisions, as some countries try to fight or regulate bitcoin more and more – which is a risk on its own.
We sincerely believe that cryptocurrency is a chance of a lifetime. Start with small sums, but start today.