Bitcoin is becoming a very popular topic, but what is it? Many people have heard of it but have no idea what it is. The idea of money being created by the free market and not by a government is a foreign concept to most people. I am writing this to give you a layman’s explanation of Bitcoin, what it is, and why people use it.
On its face, Bitcoin is digital cash. It is something you can use to buy a product or service you desire. You can buy everything form plane tickets, to hotel rooms, to groceries, to computers, and everything in between with Bitcoin. Many people also use Bitcoin as a store of wealth like you would use gold and silver. Some people use Bitcoin as an investment and trade it like you would a stock. Although many people use it for many different things, its initial purpose was to be used as money.
Bitcoin works similar to a stock in that if you buy Bitcoin, and the price goes up, your dollar amount of Bitcoin goes up. As somebody who got into Bitcoin a few years ago, I have made a decent amount of money just holding and buying Bitcoin over the past couple of years and letting the price go up.
One thing that makes Bitcoin unique is that it is decentralized. No country, company, or single person owns the Bitcoin network. There is no central Bitcoin server that can be shutoff that would shut down the Bitcoin network. The only way to stop it would be to completely shut down the internet. Another thing about Bitcoin is that you can buy a fraction of one. You can buy one dollar worth of Bitcoin or one hundred thousand dollars worth of Bitcoin, its up to you. Being able to buy a fraction means it is never too late to start using Bitcoin. Also, nobody knows who created bitcoin, all we know is that he goes by the name Satoshi Nakamoto.
Bitcoins come into existence through a process called “mining.” While mining is very technically complicated, on its face it just people’s computer solving complex math problems. When they mine Bitcoin, they are processing the transactions that have been made, and they get rewarded with Bitcoin for doing this. Only twenty-one million Bitcoin can ever be mined (about 16.7 million have already been mined).
Now why do people use Bitcoin over regular government issued currency? One of the big reasons many people use Bitcoin is because it is not controlled by any government. This attribute is a big part of why many libertarians are very into Bitcoin. Also, not being controlled by government means the government cannot inflate the currency. Bitcoin does the opposite of central bank issued currencies as it increases value over time instead of decreasing it which makes it a good store of value.
Some people also use Bitcoin for nefarious purposes like buying drugs on the dark web or using it in ransomware viruses which demand bitcoin to unlock your computer. The majority of Bitcoin use before 2014 was people buying drugs with it, but that has gone by the way side as there are other cryptocurrencies that are more anonymous than Bitcoin is.
While Bitcoin is great, it does have its drawbacks. There is a transaction fee for every transaction you do that is payed to the miners. Depending on how many pending transactions are in the network, your fee can be higher or lower. Also, Bitcoin’s price is very volatile. Just in the past week the price went form eight thousand to eleven thousand back down to nine thousand. If you are using it as investment, you can make a lot of money if you time your buys and sells correctly.
The easiest place to buy Bitcoin in my opinion is Coinbase.com. You can either download the Coinbase app on your phone or you can go to Coinbase.com. All you have to do is go through the verification process and you will be ready to buy Bitcoin with a debit card, credit card, or bank transfer. This is where I first started buying Bitcoin when I first got into it back in 2015.
Bitcoin is exploding into the mainstream right now with the likes of CNBC and Bloomberg writing articles on it often. Bitcoin is not the only cryptocurrency as there are thousands of different ones with different uses. Many people are scared away from Bitcoin because they think you have to be computer scientist to use it, but the truth is, you do not. If you can work a mobile phone app, you can use Bitcoin.
Article by: @1776Campaign