As the world pushes on into the 21st-century, innovation remains ever-present. One of the biggest in the past decade was the birth of cryptocurrency
, a new system of digital money that has shaken up the finance world. And at the center of it all is Bitcoin, the one that started everything. By its name, you'll probably assume that it's nearly a digital version of a coin, but it's far from it. The Bitcoin is way different from the extra change you keep in your purse or pockets. It's a lot more complicated and essential than that. Here's what you need to know about Bitcoin.
The Definition of A Bitcoin
In essence, Bitcoin is a type of cryptocurrency that you can use for online transactions. Although there are many images that seem to 'depict' what Bitcoin is, it's essentially software that serves as a digital currency. More specifically, it's a series of codes that owners can buy and sell through various digital platforms. It's by far the most popular cryptocurrency to date as well as having the highest market capitalization of them all. You can only access them when you have a Bitcoin wallet on your device. It's an app where you can buy and sell Bitcoins,
How Did Bitcoin Start?
Every currency has its start and for Bitcoins, it was all the way back in 2008. An unknown developer who went by the name of 'Satoshi Nakamoto' laid down the groundwork for the cryptocurrency from 2008 to 2009, establishing the important platforms and sprucing up the system. By January 12, 2009, the first Bitcoin transaction took place wherein Nakamoto gave American developer Hal Finney ten Bitcoins. As to why they invented Bitcoins, Nakamoto stressed that they wanted to create a type of currency where banks, financial institutions, and especially the government can't interfere with. The rest, as they say, is history.
The Value of Bitcoin
Although Bitcoin is regarded as the most valuable cryptocurrency today, it's worth noting that its value itself is volatile. While it enjoys a generally high market capitalization, it can quickly plummet in a span of a day or even a couple of hours. This is why many are still adamant about getting or investing in Bitcoins. Despite the fact that, at times, Bitcoins are worth tens of thousands of dollars, the fact that no one can tell whether it'd go higher or lower makes it a worrisome currency. It's safe to say that those who own and dabble with Bitcoins are more or less risk-takers in the financial world.
Bitcoin Keys and Wallets
As already mentioned, in order to get Bitcoins, you'll need to have your own Bitcoin wallet on either your phone, computer, or any other device. Just like a regular waller, your Bitcoin wallet will store your Bitcoins before you buy and sell them on various digital platforms. Now, in order to spend your Bitcoins, you'll need a secret piece of data called a 'private key.' This will serve as a 'signature' of sorts to confirm your transactions. Its purpose is similar to how you'll need to put your signature on a check when it comes to standard currency transactions.
Knowing About The Blockchain
Just like standard currency, you can easily transact Bitcoins through an online ledger called a blockchain. Similar to how an ordinary ledger works, a blockchain serves as a database that contains all sorts of data when it comes to bitcoins. Of course, that also includes transactions. Every single detail is chronologically and systematically listed down, chained together one by one for all the world to see. Hence why it's called a 'blockchain.' Through this public ledger, anyone can calculate their balance, see past transactions, and the like. Do note, however, that all data listed in blockchains are permanent.
'Mining' is a very important part of the Bitcoin process. You know how accounts list down all sorts of transactions on ledgers when it comes to standard currency? Well, that's essentially what mining is when it comes to Bitcoins. A special network of 'miners' records all the Bitcoins transactions on the blockchain to ensure that everything is organized, complete, and public. The moment the transactions are packed in a 'block,' they're automatically confirmed and listed in the blockchain. With the help of mining, it safeguards all Bitcoin transactions and keeps the flow of the process straight and seamless.
If you want to get into cryptocurrency, you first have to know all about Bitcoins. It's safe to say that Bitcoin is the quintessential cryptocurrency—the pioneer of the emerging digitalization of the financial world.