What is Bitcoin? Bitcoin Simply Explained for Beginners

Launched in 2009, Bitcoin is still the world’s largest cryptocurrency in terms of market capitalization and has generated a lot of buzz in recent times. But what is Bitcoin, and where did it come from?

To understand Bitcoin, let’s first understand how the money we use works today. Our traditional currency is called “fiat” and is backed by the government by what is known as “legal tender.” Money derives its value from a central authority — in this case, from governments. Without a centralized authority, you cannot control the supply of money.

Today, we mainly use credit cards, PayPal, wire transfers, and other forms of digital money, which is an evolution of fiat. To keep track of how much money individuals hold in their accounts, banks keep a centralized ledger on their servers that records balances and transaction of each user and are kept private.

Introduction of Bitcoin

In October 2008, a document was published on the internet by a person or a group going by ‘Satoshi Nakamoto.’ This document suggested a way of creating a decentralized digital currency called Bitcoin. This system claimed to control the flow of money without needing a centralized authority.

Just like banks, Bitcoin also maintains a ledger to keep track of who owns how much. However, Bitcoin maintains a transparent ledger, which means that anyone can see all the transactions taking place on the ledger at any point in time. The only thing no one can figure out is who owns these accounts.

Bitcoin uses blockchain technology. Unlike banks, Bitcoin is decentralized, and a single entity does not maintain its ledger. Every computer that is a part of Bitcoin’s blockchain has a copy of the ledger. Every time a new transaction takes place, each ledger gets updated with the transaction details, reducing the need for a centralized authority to manage the ledger.

For the first time since digital money came into existence, we have an alternative to the traditional financial system. Bitcoin is a form of money that everyone can hold, but no person or entity can control.

Where do Bitcoins come from?

Bitcoins are not printed like traditional money but, they are generated out of a process called mining. The reason it’s called mining is that just like any natural resource, there is a finite number of Bitcoins. The maximum number of Bitcoins that can be mined is 21 million.

Miners use computers to solve complex mathematical problems to generate new bitcoins. They also use their computers to verify transactions and prevent fraud on the network.

Benefits of Bitcoin

Bitcoin has several advantages over the current system:

  1. It gives you more control over your money. Ideally, no one can freeze your account or confiscate your holdings.
  2. Bitcoin cuts a lot of the intermediaries from the process of transferring money. It means that in numerous cases, using Bitcoin is cheaper than traditional wire transfers or money orders.
  3. Unlike fiat currencies, Bitcoin was designed to be digital by nature, meaning you can add additional layers of programming on top of it and turn it into “smart money”.
  4. Anyone who owns a smartphone and an internet connection can hold a Bitcoin and use it for transactions.

How to buy Bitcoins?

Instead of mining bitcoins, most people buy, sell and hold bitcoins via exchanges such as Binance. To store a Bitcoin, you’ll need a digital wallet provided by the exchanges. You can also use third-party wallets to store your Bitcoins.

Bitcoins provide an excellent investment opportunity for people looking to diversify their portfolios. We have developed a platform that uses machine learning to run highly tested strategies to enter and close trades, which efficiently helps existing and new investors get the best possible returns.

— —

Whether you have a question about our products, features, or anything else, our team is ready to answer all your questions. Please feel free to get in touch with us on our Telegram Community Chat.

TeraBlock official links:

TeraBlock is the simplest solution to buy & easily manage crypto assets with the help of Machine Learning based trade automation. https://terablock.ai