What is Bitcoin?

Bitcoin is a cryptocurrency which was created in 2009. “Bitcoin exchanges” is its marketplace which allows people to buy or sell bitcoins using different currencies. It is a new currency which was created by an unknown person. Transactions are made directly, ruling out the element of a middle man or bank. This currency allows its users to shop on Expedia, Overstock and buy Xbox games. It was overhyped in 2017 when its price shot up to 1000s because a myth emerged that people get rich by trading it.

Bitcoins can be used to buy merchandise behind the frame, make international payments easily (as bitcoins are free from any country’s regulations), and trading.  The no credit card fees feature attracts small businesses. Bitcoins are usually bought as an investment though.

I really like Bitcoin. I own Bitcoins. It’s a store of value, a distributed ledger. It’s a great place to put assets, especially in places like Argentina with 40 percent inflation, where $1 today is worth 60 cents in a year, and a government’s currency does not hold value. It’s also a good investment vehicle if you have an appetite for risk. But it won’t be a currency until volatility slows down. – David Marcus (CEO of Paypal)

Coinbase, Bitstamp, and Bitfinex are the leading marketplaces of bitcoins. Even though all three of them are used by bitcoin holders, Bitfinex lost its reputation in 2016 when it was hacked and bitcoins worth of tens of millions of dollars were stolen. Transferring bitcoins works exactly like sending cash digitally. Bitcoins can be transferred via mobile apps. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part.

Bitcoins are stored digitally in an app called “digital wallet” which exists either in the cloud or on a user’s computer. The wallet acts as a virtual bank which allows users to pay, send or receive bitcoins, or store them for future use. But unlike bank accounts, bitcoin wallets are not insured by FDIC.

Bitcoin is a very exciting development, it might lead to a world currency. I think over the next decade it will grow to become one of the most important ways to pay for things and transfer assets. – Kim Dotcom (CEO of MegaUpload)

Even though each bitcoin transaction is recorded in a public log, buyer and seller names are not revealed. Only their wallet IDs are revealed. It keep bitcoins’ users’ transactions private and allows them to buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.

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Bitcoin is a techno tour de force. – Bill Gates

Even though the use of bitcoins is unregulated some countries like Japan, China and Australia have begun weighing regulations. Governments are concerned about taxation and their lack of control over the currency.

Mehak Tariq

Writer and Blogger