Basics of Bitcoin

Bitcoin is constantly in the news, especially with more and more big banks and companies jumping on the bitcoin bandwagon, but many people are still asking themselves what exactly is bitcoin? Bitcoin is a cryptocurrency that was created in 2009 by an anonymous person or group that went by the name Satoshi Nakamoto. Bitcoin is a decentralized digital currency that isn’t backed by any governments or central banks. Instead, bitcoin utilizes blockchain technology where transactions are sent from user to user over the peer-to-peer network and the transactions are then verified by network nodes through cryptography and recorded in a public distributed ledger.

Physical bitcoins do not actually exist, there are just balances kept on a public distributed ledger that everyone has access to. All bitcoin transactions are verified using a massive amount of computing power. Bitcoin has been criticized for the amount of electricity used to very transactions, a process known as mining. The mining process uses high-powered computers to solve complex computational math problems. The results of bitcoin mining are twofold where bitcoins are created, and miners make the bitcoin network trustworthy and secure by verifying its transaction information by solving computational math problems.

Bitcoin has also been scrutinized in the past for its use in illegal transactions, price volatility, and thefts from exchanges. But recently big names such as Tesla, Square, and MicroStrategy have invested billions of dollars in bitcoin. Financial services companies like Morgan Stanley and Fidelity are now looking to incorporate bitcoin in their investment funds. Tesla even recently started offering customers the ability to purchase cars in bitcoin.

What are your thoughts on bitcoin? Is it the currency of the future? Or is it a speculative bubble that will eventually burst? Leave me a comment below with your opinion on bitcoin.

Photo by Bermix Studio on Unsplash
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