Covering the Basics: What is Bitcoin, And What Does it Do?!
Article by Bob Pattni, Cryptocurrency expert.
It’s the question I’m most often asked when I tell people what I do for a living. ‘Oh’ they say, looking puzzled. Then, politely but still very puzzled, comes the same question time after time. ‘But what is a Bitcoin? What does it do?’
I’ll answer this here in the same way I answer it in conversation – quite lengthy, but in as plain English as I’m capable of giving!
Firstly, you’re going to need to understand – just briefly – what cryptocurrency actually is. A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. It’s is a medium of monetary exchange like normal currencies such as USD, but designed for the purpose of exchanging digital information through a process made possible by certain principles of cryptography.
Okay so far?! Great. Now you understand the basics, let’s look at Bitcoin.
Bitcoin was created in 2009 by an unnamed individual or group of individuals known by the pseydonum of Satoshi Nakomoto. It’s a digital and global monetary system and is now a recognised form of currency. It allows people to send or receive money across the internet, even to someone they don’t know or don’t trust. Money can be exchanged without being linked to a real identity.
The mathematical field of cryptography is the basis for Bitcoin’s security. It’s not controlled by any country or bank, rather anyone can ‘mine’ for Bitcoins using specialist computer equipment to solve mathematical equations online and gather the currency.
Simply put. It’s money. Online, digital money that you can use in real transactions and is now recognised in nearly every country worldwide.
Bitcoins are electronic currency, otherwise known as ‘cryptocurrency’. Bitcoins are a form of digital public money that is created by painstaking mathematical computations and policed by millions of computer users called ‘miners’.
Bitcoins are, in essence, electricity converted into long strings of code that have money value.
But What Do Bitcoins Do?!
They do the same things as other money does – buy and sell goods or commodities. Bitcoins are completely virtual coins designed to be ‘self-contained’ for their value, with no need for banks to move and store the money.
Once you own bitcoins, they behave like physical gold coins: they possess value and trade just as if they were nuggets of gold in your pocket. You can use your bitcoins to purchase goods and services online, or you can tuck them away and hope that their value increases over the years.
Bitcoins are traded from one personal ‘wallet’ to another. A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud. Bitcoins that you win by ‘mining’ go into your personalised wallet, and are there for you to spend.
Sound complicated?! Then it’s probably not for you. But if you’re a ‘tecchy type’ then this is something you should really be thinking of investing in. For your next step, read all about what equipment you’ll need to invest in and how to get started ‘mining’.
_written by Bob Pattni_