Bitcoin in under 3 mins
As an avid cryptocurrency enthusiast — I thought a post about Bitcoin would be advantageous in showing perspective on what it is and how it works.
THE MILLION DOLLAR PIZZA STORY
In 2010 — the most unexpected transaction of the 21st century occurred. An individual paid 10 000 Bitcoins for 2 pizzas. This was the first time a virtual currency had been used to buy something in the real world. Skip to the present day and those pizzas would be worth $90 million.
WHAT IS BITCOIN?
In a nutshell, Bitcoin is a digital currency that is created and held electronically. This means that it is not printed like Dollars or Euros and no one has complete control over it.
WHO CREATED BITCOIN?
Bitcoin was developed in 2009 by the unknown person(s) “Satoshi Nakamoto”. Satoshi put forward a system based on mathematical proof — an idea to create a currency that would be independent of authority and would allow two people to transact with one another without the need for a 3rd party intermediary (e.g. a bank).
IS THERE AN UNLIMITED SUPPLY OF BITCOINS?
No there is not. The Bitcoin protocol states that only 21 million Bitcoins will ever be created. There is roughly 16 million Bitcoins in circulation right now and the cap is only set to be reached by the year 2104.
WHAT DOES MATHEMATICALLY BASED MEAN?
Just like conventional currencies such as the Euro and Dollar were backed by Gold in the past, Bitcoin is based on mathematics. People from all over the world, therefore, use Bitcoin “mining” machines which have a large computing capacity to follow a mathematical formula and produce Bitcoins.
THE CHARACTERISTICS OF BITCOIN:
1. It is decentralized
The Bitcoin network has no central authority control and the machines people use to mine bitcoins and process transactions make up the network. There is no Bitcoin headquarters, there is no Bitcoin building, there is not even a Bitcoin server that can be shutdown. It is completely decentralized.
2. It is anonymous
When you set up a Bitcoin wallet you receive a unique address. That is all you need in order to exchange the currency. No other information is required (i.e. Name, Address etc.)
3. It is completely transparent
Every single transaction that occurs is stored on the “Blockchain”. This is a public ledger that records every Bitcoin transaction and allows anyone to see how many Bitcoins are stored at a specific address. They just cannot see that it is a specific person.
4. Bitcoin transaction fees are minute
5. Transactions are high speed
You can send money to anyone anywhere in the world in a matter of minutes and as soon as the Bitcoin network has approved your transaction and processed your payment.
“Bitcoin has, in my opinion, a very bright future ahead of itself. As we all know, however, the future is unknown and anything can happen.”
As Chris Dixon says: “There are 3 eras of currency: Commodity based, politically based, and now, math based”.