In truth, the idea of a digital currency is still very much evolving as it is still a fairly new concept. This can often act as a barrier for a lot of average people who want to get into cryptocurrency but aren’t particularly tech-savvy. However, cryptocurrencies or more specifically, bitcoin, have started to find themselves featuring more prominently in mainstream media, but they are often simply a throwaway reference which doesn’t really explain anything. This is why we have put the following article together to help increase your understanding of bitcoin. Let’s get into it.
What is it & How Does it Work?
Bitcoin was created by a person or a group – no one knows for sure as the creator has never been formally identified – going by the name of Satoshi Nakamoto. The idea first emerged in 2008 and was released the following year. Bitcoin is essentially digital money; it exists totally in the digital space and has no corporeal form. It operates through a global network as a decentralised technology. Every transaction forms part of the blockchain and can therefore be traced.
The coins themselves have to be mined by miners because they are stored in blocks of data. The miners use an algorithm in order to free the bitcoins from the data blocks. They often need the use of specialist equipment to do so. The miners themselves are rewarded for mining the bitcoin with fractions of the coins; this then acts as an incentive for them to find the coins.
What is the Difference Between Bitcoin and Fiat Currencies?
The value of both fiat currencies and cryptocurrencies can be volatile. Fiat currencies have always experienced depressions and recessions, which can make the value of money plummet. Cryptocurrencies aren’t immune to these events. They both also have a finite supply which, in theory, should help to safeguard their value. The biggest difference is that fiat money is subject to rules and regulations imposed by banks and the government, whereas cryptocurrency isn’t.
The Use of Bitcoin
Bitcoin is undoubtedly the first cryptocurrency that comes to mind for a lot of people; it is the most widely used too. Today, bitcoin has several uses, users can choose to invest in bitcoin, trade or sell their supply, and there are a number of retailers that accept bitcoin as payment. A lot of users secure their supply simply to convert Bitcoin to cash, as outlined on Paxful. This expert marketplace has everything a trader needs.
Moving forward, it makes sense to assume that the use of cryptocurrency will continue alongside society’s increasing dependence on technology. There are those that believe that, eventually, cryptocurrency will become the primary form of payment alongside credit or debit, making cash obsolete. Obviously, this would take decades, but it isn’t an unrealistic assertion to make.
There is a reason that bitcoin remains the most popular form of cryptocurrency to date; it is by far the most accessible for beginners and the most widely used and accepted too. There are still just over two million bitcoins to be mined, and it is hard to predict what will happen once they have all been mined, although the best guess remains that the price will skyrocket, making investors incredibly happy. Although, again, it is hard to say when all of the bitcoins will be mined by; some speculation guesses that it could take as long as a hundred years.