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What is Bitcoin (BTC)

Bitcoin (BTC) is a cryptocurrency and was created in 2009 by a person or group that goes by the name of Satoshi Nakamoto. No one knows the true identity of the Bitcoin creator. In general terms, Bitcoin is a cryptocurrency (digital currency) that allows people to transfer money to each other peer-to-peer with no middleman, or should we say banks. When sending bitcoin to another person, you do not have to give your name or any details about yourself. All you need is the other person’s Bitcoin wallet address. While Bitcoin allows you to perform transactions between each other anonymously, it does, however, keep a record of the transactions on a public ledger called a blockchain. These transactions are verified by an individual or group of people by mining Bitcoin. “Miners” essentially are running a fast computer that solves complex math problems to validate that the transactions on the public ledger are valid. Miners are rewarded with Bitcoin based on the speed of their mining or based on their computer hash rate (Hash Rate is the speed a computer is completing an operation on the Bitcoin network).

New Bitcoins are created and distributed to miners based on their hash rate. There is a finite number of bitcoins that will ever be created totaling 21 million. Once this number has been reached, miners will be compensated via a transaction fee for verifying the transactions. Small amounts of bitcoin are referred to as satoshis. Bitcoin was released in 2009 as open source code and can be forked by anyone. Forking is the process in which a developer takes the original open source code as a base and makes changes to it. Bitcoins were created with no need for a centralized authority to be involved and is considered to be decentralized.

Bitcoins can be stored in an online wallet or a hardware wallet such as a Trezor or Ledger Nano. I will talk about storing Bitcoins and safety in another post. Bitcoins are protected in a wallet via a private key. The private key is how you retrieve bitcoins from your wallet and this is what protects your coins as well. If you lose or forget your private key, you will not be able to access your Bitcoins.

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