Understanding Bitcoin – the five most common questions answered
Originally posted @ techguide.com.au
Want to understand arguably the most popular cryptocurrency around? Interested in investing? Or do you just want to impress your friends with your knowledge?
To make this possible, we attempt to answer some of the most common questions about Bitcoin.
- What is Bitcoin?
Bitcoin first emerged in 2008 when it was proposed by Satoshi Nakamoto, an anonymous person(s) in a published paper.
The basic idea was that it would be an electronic payment system based on mathematical proof. Essentially though, bitcoin is a cryptocurrency.
This is a digital currency that uses encryption to verify fund transfers with no physical presence.
- How Can I Buy Bitcoin?
Despite being a digital entity, there are a finite number of bitcoins, 21 million to be precise.
These can be mined and broken down though, into millibitcoin and many others, so you don’t have to buy one whole bitcoin at a time.
If you’ve got a supercomputer, you can mine bitcoin yourself.
However, the easiest way is to open a bitcoin wallet, exchanging your chosen currency for the digital one.
- When is Bitcoin Used?
At the moment, it’s most common to trade bitcoin rather than use it for actual purchases.
Yet after the huge rise in value it experienced in 2017, many places did begin to accept bitcoin as a payment method for all sorts of items.
From some branches of Subway to Microsoft allowing it to buy content on Xbox and Windows stores, its use is ever-growing.
- What is Blockchain?
Blockchain is the underlying digital ledger technology that powers bitcoin.
One of the main ideas behind the cryptocurrency is that it should be decentralised and separate form any bank.
Blockchain provides this as it records all bitcoin transactions and stops them from being tampered with or deleted.
It’s also expanded to be used for a wide range of other purposes.
- Is Bitcoin Good or Bad?
There are many advantages of bitcoin, which can explain its sharp rise in value and exposure.
It offers payment freedom, is transparent, secure and makes transferring money overseas a lot more affordable.
As a new and exciting cryptocurrency, it also holds a lot of potential for investors.
However, since hitting peaks in 2017 its value has fallen and resulted in plenty of volatility.
Depending on how widely used and accepted it becomes, bitcoin may either thrive or struggle in the future.