Bitcoin is digital money.<\/p>\n
That’s the short answer.<\/p>\n
Bitcoin is the first, biggest and by far the most important in a new category of currencies built from\u00a0cryptographic technology and it has some\u00a0remarkable features, benefits and consequences. Many people believe it is uniquely positioned as\u00a0the basis of a whole\u00a0new\u00a0financial system well beyond just money.<\/p>\n
Bitcoin is also a payment network, enabling transactions of tiny or massive amounts of money for little or no transaction fees.<\/p>\n
Bitcoin is complex and full of novel technicalities so it requires detailed study to fully\u00a0understand how it works.\u00a0While there are\u00a0vocal critics, even billionaires and Nobel Prize\u00a0winners\u00a0in Economics, most\u00a0of these profess almost total ignorance\u00a0of Bitcoin.\u00a0You should\u00a0definitely\u00a0be skeptical but also\u00a0educate yourself.<\/p>\n
Bitcoin the currency works a bit like gold because of the way its supply is strictly constrained (by “mining”) and is\u00a0ultimately deflationary, but it is also\u00a0a bit like modern cash because it\u00a0has no physical commodity accompanying or “backing” its value, it’s a pure token.<\/p>\n
Being\u00a0electronic, it’s easily transacted online\u00a0but unlike Paypal or credit cards, it’s\u00a0fully decentralised with transactions that work through peer-to-peer connections without\u00a0third party\u00a0authorities\u00a0like banks. Being decentralised is crucial, not least because it\u00a0accelerates\u00a0Bitcoin’s\u00a0global adoption by billions of unbanked and underbanked people even those with minimal internet access and no permanent electricity supply.<\/p>\n
This\u00a0global potential has driven many people to speculate on Bitcoin’s\u00a0value and while the exchange rate has seen sharp drops, it’s seen intense and explosive growth over the years.<\/p>\n
Bitcoin development is\u00a0a\u00a0community-driven project which\u00a0focuses on building reliable software\u00a0systems of consensus transactions without requiring trust. It works by combining several existing technologies\u00a0into a groundbreaking solution to some long-standing open problems of computer science. Bitcoin’s zero trust consensus protocol enables many\u00a0kinds\u00a0of transactions like\u00a0contracts, property, licensing, voting, identity validation, auditing and various financial instruments. More complex kinds of\u00a0transaction systems like whole markets can also be built on top. Startup businesses building such services\u00a0and apps on top of Bitcoin are growing\u00a0exponentially.<\/p>\n
Bitcoin is increasingly recognised by dominant financial institutions and governments as a threat to old ways of doing things. Their spokespeople raise important questions about how crime and terrorism can be fought without centralised controls and these same voices call desperately and hastily for regulation.<\/p>\n
You might be wondering how you can get some Bitcoin.<\/p>\n
Anyone can buy Bitcoins or tiny fractions of Bitcoins through\u00a0a business running an\u00a0exchange and anyone can decide to sell their products or services for bitcoin. There is another way to get Bitcoins, called “mining” which usually involves the use of specialised high-power computers but this is an advanced technical topic and newcomers can generally ignore it.<\/p>\n
Bitcoin is considered by many to be in an early high-risk gold-rush phase, just five years after its creation in 2008. It’s still often a confusing technical challenge to safely transact and store significant monetary value and Bitcoin’s value is highly volatile. It’s possible the whole thing could crash permanently!<\/p>\n
Bitcoin\u00a0was invented by a mysterious person named Satoshi Nakamoto who has since retired from the project and whose\u00a0secret identity\u00a0will\u00a0possibly never be known. While this mystery is unsettling to many, other people say it’s an important and distinguishing feature of Bitcoin that the identity and motivations of its inventor don’t matter.\u00a0The software\u00a0is fully open source\u00a0so\u00a0every digital nut and bolt is bared to the world for inspection. As for the motivation, there are hints that Satoshi made Bitcoin in response to the poor economic management of governments and the catastrophic failures of large banking institutions.<\/p>\n
There are plenty of places to read more about Bitcoin, such as\u00a0We Use Coins<\/a>\u00a0and Bitcoin.org<\/a>.<\/p>\n <\/p>\n Also recommended is the Let’s Talk Bitcoin<\/a> podcast and a free video course on Bitcoin at Khan Academy<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Bitcoin is digital money. That’s the short answer. Bitcoin is the first, biggest and by far the most important in a new category of currencies built from\u00a0cryptographic technology and it has some\u00a0remarkable features, benefits and consequences. Many people believe it … Continue reading