What is Bitcoin?
Little has turned more heads of late than a new addition to the investment world known as Bitcoin. By now, most of us have heard of “cryptocurrency”, but few can explain what it is. In fact, it seems the more we try to understand, the more confusing it gets.
Here’s a primer:
Bitcoin is a cryptocurrency which is basically a currency that does not belong to any country, otherwise known as a decentralized world-wide payment system. Bitcoin is the most popular of cryptocurrencies because it was the first of its kind.
It was invented by an unknown person or group of people under the name Satoshi Nakamoto and was “released” to the public as an open-source software in 2009 to be used as a peer-to-peer network with transactions taking place directly between users without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain.
In reality, Bitcoins are a form of money that can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
In today’s world, Bitcoin is primarily used as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
Cryptocurrencies use what is called “blockchain” as an operating software. The blockchain is an encrypted public ledger that records bitcoin transactions without any trusted central authority. Therefore, all transactions are secret…from everybody, including governments. In the blockchain, bitcoins are registered to specific bitcoin addresses, by picking a random valid private key and computing the corresponding bitcoin address. This computation is executed in a split second. However, the reverse (computing the private key of a given bitcoin address) is practically impossible so users can tell others and make public a bitcoin address without compromising its corresponding private key.
Bitcoin is now gaining public acknowledgement and acceptance. With all the merchants accepting Bitcoin, imagine the opportunities for a method for buying and selling products and services or investing in complete secrecy.
Many people believe it is not really acting as a currency at all and that it is more of a non-correlated alternative asset like gold. That could explain its wild ride.
What industries would be particularly interested? Well, the multi-trillion-dollar cannabis industry cannot use banks because it is still federally illegal. The “don’t trust the government”, folks who want to avoid taxes and the list goes on. The only people I see against it is the government and the old established banking system who have the most to lose.
There are several websites where you can buy and sell Bitcoin, Coinbase being one of them, although they are all incredibly confusing. Please keep in mind that trading in Bitcoin is not for everyone and should not be undertaken without professional advice or your own independent research. There can be no assurance that the current appreciation of Bitcoin will continue and like all investments you could lose money. There is no guarantee that you can be successful in trading in Bitcoin.
I hope this helped. If your head is spinning look deeper and it will get worse. I have found that the more I look into cryptocurrencies, the deeper the rabbit hole goes and the more confused I get. Personally, I think the concept is amazing and it sure seems to me that Bitcoin is not only here to stay but will also become much more prominent in our society.