What is Bitcoin?

1 min read by Ben
published 1 year ago


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“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust…

“I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.” – Satoshi Nakamoto.

Bitcoin is a digital and decentralised cryptocurrency that was created in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto. It operates on a technology called blockchain, which is a distributed ledger that records all transactions made with Bitcoin.

Unlike traditional currencies issued by governments (fiat currencies), Bitcoin does not have a physical form; it exists only in digital form. It is not controlled by any central authority, such as a central bank, and is maintained by a network of computers around the world that validate and record transactions on the blockchain.

Key characteristics of Bitcoin include:

  1. Decentralization: Bitcoin operates on a peer-to-peer network, meaning transactions are conducted directly between users without the need for intermediaries like banks.
  2. Limited Supply: There will only ever be 21 million bitcoins in existence, making it a deflationary asset. This scarcity is built into the Bitcoin protocol to prevent inflation.
  3. Security: Bitcoin transactions are secured by complex cryptographic algorithms, making them highly resistant to fraud and counterfeiting.
  4. Anonymity: While Bitcoin transactions are recorded on the public blockchain, users can hold multiple addresses and maintain a certain level of privacy if desired.
  5. Global Accessibility: Bitcoin can be sent and received by anyone with an internet connection, regardless of geographical location or traditional banking infrastructure.
  6. Divisibility: Bitcoin is divisible into smaller units, with the smallest unit being one hundred millionth of a bitcoin, known as a “satoshi.”

Bitcoin is often used as a store of value and a means of transferring value across the Internet. It has gained popularity as an investment asset and a hedge against inflation and economic instability, particularly in developing nations, such as El Salvador.

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