Investing in cryptocurrency
How to define bitcoin (bitcoin, btc, btk, bitcoin) in simple terms? It is a new generation of decentralised digital currency, created and operated solely on the internet. It is not controlled by anyone, the emission of the currency takes place through the work of millions of computers around the world, using software to compute mathematical algorithms. That is the essence of bitcoin.
What are its differences from traditional electronic money, like Yandex.Money, WebMoney, QIWI?
Bitcoins can be used to buy anything on the Internet, just like dollars, euros or rubles, and they can be traded on exchanges in the same way. The most important difference between bitcoin and all other forms of money is decentralization. No institution in the world controls bitcoin. In terms of independence, this is a plus, but for some people this situation can cause distrust.
Who created bitcoin?
The developer of the program is Satoshi Nakamoto, he proposed an electronic payment system based on mathematical calculations. The idea is to exchange coins without central control, electronically, in a more or less instantaneous way and at the lowest possible cost. Read more about who Satoshi Nakamoto is in our article.
But who is printing bitcoins?
NOBODY. This currency is not printed by the central bank and does not operate under its rules. Banks can issue as much money as they want to cover the national debt, thereby devaluing their currency.
In contrast, bitcoins can only be issued digitally, and anyone can start mining, or as they say, mining bitcoins at any time. Bitcoin mining occurs through the use of a computer's computing power on a distributed network. When bitcoins are transferred, the transactions are processed by that same network, turning bitcoin into a digital payment system in its own right. Read more about bitcoin mining in our article.
Is it possible to mine a billion bitcoins?
You can't. There is a limit in bitcoin's code: you can mine a maximum of 21 million bitcoins. That said, bitcoin can be divided infinitely into smaller pieces - it's a digital currency! One Satoshi (named after the creator of this cryptocurrency) is 0.00000001 btc.
What is bitcoin backed by?
National currencies used to be backed by gold or silver, now by GDP. In theory, you could go to any bank in the country and exchange your paper money for the equivalent in gold and back. Bitcoin is not backed by anything, it's pure mathematics.
Anyone anywhere in the world can run a Bitcoin mining script on their computer and feel like a miniature central bank. The source code of the script is publicly available and anyone can see how it works.
What are the features of bitcoin?
Bitcoin has several fundamental features. Read about them below.
Decentralisation
There is no central authority in bitcoin network: it is distributed among all its participants, and every computer, which produces bitcoins, is an equal member of the system. This means that no central authority has the ability to dictate rules to bitcoin owners, as was the case, say, in Cyprus in early 2013. And even if some part of the network goes offline, the payment system will continue to work steadily.
Ease of use
To open a company current account with our banks, you have to go through seven circles of hell. In the end, you may be refused without explanation. With bitcoin, you can forget about this problem, it takes you five minutes to create a bitcoin wallet and start using it right away. No questions asked, no fees. Read more about how to create a bitcoin wallet in our article.
Anonymity
Yes, yes. It is completely anonymous and completely transparent at the same time. You can create an endless number of bitcoin addresses without being linked to a name, address or any other information. However...
Transparency
Bitcoin stores the entire history of transactions that have ever taken place. This is called a sequential blockchain, or blockchain. The blockchain knows everything. So if you have a publicly traded bitcoin address, anyone can see how many bitcoins you have in your account. No one will know that the address is yours unless you tell them yourself. Those who want complete anonymity will usually use a new bitcoin address for each transaction.
The fee is negligible
Your bank can easily charge $50 for an international transfer. Bitcoin does not.
Speed of transfer
You can send money anywhere and to anyone you want. It will arrive within minutes, once the bitcoin network processes the payment.
Irrevocable transactions
Once bitcoins are sent to the addressee, there is no way to get them back, unless the recipient decides to do it himself.