4 Things you should know about Bitcoin

In the past few years, you may have heard about Bitcoin, the digital currency. Bitcoin is a type of cryptocurrency, where the security and encryption implication is essential. Since its discovery in 2008, the price of Bitcoin has gone up sparking a lot of conversation. Even the great investors have debated on the legitimacy and relevance of this new form of currency. The discussions have left us with more thoughts to review. However, those are opinions, and while useful, it is critical to know the facts. Here are four things you should know about Bitcoin.

1. What is Bitcoin?

As discussed earlier, Bitcoin is an encrypted digital currency, which is also known as a cryptocurrency. This currency is a global payment system and is built on the idea of a technology called blockchain. The technology is a virtue ledger that that keeps track of every transaction. No one controls Bitcoin, and the accounting is publicly distributed. In theory, anybody can track the operation and verify its legitimacy. Therefore, Bitcoin is neither a fraud nor a golden nugget. In the analogue world, physical money such as goods and paper money is limited by distance. In the digital world, we eliminate the constraint of distance and speed. However, banks control the rate. The crypto world eliminates both human and institutional constraints.

2. How is Bitcoin Created? 

Bitcoin is created through a mining process. Blockchain depends on a network of exchange that ensures the integrity of the transaction history by achieving consensus. The mining process starts with validating a transaction. Once certified, the exchangers need to race, using trial and error, to solve a mathematical puzzle that requires massive computing resources. The first computer to solve the math issue is rewarded with Bitcoins. Bitcoin mining serves two purposes: the process creates new coins and facilitates the processing of transactions in the network. The protocol of creating the currency is known as Proof of Work (PoW).

3. The value of Bitcoin. 

Only 21 million Bitcoins will ever be built, meaning that the currency is deflationary compared to paper money, which is inflationary. Bitcoin derives its value and security from the fact that you can prove the substantial computing power and electric energy used to solve a mathematical problem. In this process, you are protected against fraud and fake information. While PoW creates Bitcoin, a verifiable network backs and authenticates the currency. Anyone can create their own money, but you need a community to accept it for it to have value. Bitcoin has existed for eight years, and the global community has been transacting with the currency.

4. Where to use Bitcoin. 

You can use Bitcoin for both local and global payments. For example, Bitcoin Prediction market and Exchange is a global betting site that allows users to place bets using the currency.  Bitcoin provides a faster, more efficient and hassle-free way to exchange money. The cryptocurrency allows money transfers, peer-to-peer, without an intermediary like a bank. You can transfer Bitcoin at a faster rate at a lower fee compared to digital money.

Bitcoin was the first successful cryptocurrency on the blockchain that gave the world universal, virtual, and borderless money. Bitcoin defined the future of money since it is shaping the future of economies and transactions.