The aim of this site is to give an overview of what Bitcoin is and how it is different than the traditional currencies. Bitcoin is unlike any other financial system. It’s very complex, so don’t expect to understand it from the first time.
What is Bitcoin?
Bitcoin (BTC) is an internet currency available to everyone in the world who have installed the Bitcoin program. Interestingly, it is not controlled by anyone and runs automatically on its own.
It has a limited supply of 21 million Bitcoins that will ever exist. The more people have it, the higher the price will go because the number of available bitcoins remains 21 million. Since, Bitcoin is better form of money than the current financial system, it constantly attracts new people. Basically, Bitcoin is designed to preserve its value over time or be a reliable store of value.
Traditional currencies like USD, slowly drop in purchasing power. This is because central banks print money out of thin air. Remember that 10 years ago, you could have bought more things for the same amount of money, right? This is the exact reason why the anonymous Satoshi Nakamoto created Bitcoin. To provide a form of currency which doesn’t lose value over time and is available to all people in the world.
All currencies are worth less when there is more of them. (Source)
Bitcoin is separated from the banking system. People can send money between themselves without the need of a bank. Basically, people who’ve installed the Bitcoin program keep the network alive and secure. They have the same record of transactions and synchronize between themselves. This way, users collectively detect and remove bad actors from the network. No need of a bank. This is called decentralization.
However, Bitcoin comes with 1 disadvantage. You’re responsible for your own security. There is no customer support to help you retrieve your coins if you lose your Bitcoin password. Although, careful preparation and use gives you high security and freedom.
So, what is Bitcoin? An internet currency available to everyone in the world without restrictions. It is designed to preserve value over time, and help people during economic crisis.
Bitcoin compared to traditional currency
Only 21 million Bitcoins will ever exist for 7+ billion people. No printing of additional Bitcoins is planned. This makes them very rare, and if there is a constant demand, the price should theoretically increase over time.
Central banks are printing more money, which increases the total amount in circulation. There is more money for the same availability of goods and services. As a result, prices rise, and you can buy less with the same amount of currency.
How Bitcoin Works?
Bitcoin works in a decentralized way.
People who have installed the Bitcoin program are connected directly to each other. Everyone keeps the full record of all BTC transactions. This way, the power to control Bitcoin is distributed evenly between all users. All transactions are open and visible by everyone, unlike with banks, where your balance is private.
The blockchain keeps record of all Bitcoin transactions
How to Buy Bitcoin?You can buy BTC using the following methods:
How to store Bitcoins?
Users can have a private Bitcoin address and password
You can open a Bitcoin account online or through a program not connected to the internet. It creates a Bitcoin address where people can send you coins, and a Private key, with which you can spend them. Similar to banks, where they give you IBAN or account number and a password.
Your coins are stored on the Bitcoin network and you need the private key to move them.
It is extremely hard to guess a Bitcoin private key. The odds of guessing it are:
1 in 115,792,089,237,316,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000
As long as people keep their private keys a secret, their coins are safe. Their balance is constantly verified by all other Bitcoin users in the world.
How are Bitcoins created?
Bitcoin is designed to bring new coins into circulation when a new block is added to the blockchain. These newly created coins are given to the miners, who add blocks to the blockchain. See step 3 of the “How Bitcoin works” infographic above.
The first coins were created with the “genesis” or first block by Satoshi Nakamoto, the creator of Bitcoin. Now, the Bitcoin blockchain has around 600,000+ blocks and 18+ million Bitcoins in circulation.
What is Blockchain?
The blockchain is a way of storing a record of all Bitcoin transactions. Blockchain allows all users in the world to see the same history of transactions. This makes it possible to collectively verify and secure the network. No central institution, such as a bank, is needed.
All Bitcoin transactions are written in one place called a block. There is a new block of transactions every 10 minutes. When those 10 minutes pass this “new block” is attached to the last block forming a chain of blocks or blockchain. This chain of blocks cannot be modified and remains permanently visible. Everyone sees the same list of transactions using block explorers.
Is Bitcoin secure?
The Bitcoin network has never been breached. Only services on top of Bitcoin, like cryptocurrency exchanges, have been breached. A result of their poor security practices. We advise to store your coins on a hardware or paper wallets as the most secure ways.