To say that Bitcoin is a global phenomenon is an understatement. It seems like you can’t have a conversation today without Bitcoin being mentioned. But what, for the uninitiated, is Bitcoin anyway? In this short guide, we’ll answer the question “what is Bitcoin” so you can hold your own at the next dinner party.
1. What is Bitcoin?: in a Nutshell
Bitcoin is digital money. There are 21 million Bitcoins in the world. There can never be any more or less. Each Bitcoin can be divided into millions of pieces, so even 0.00000001 Bitcoin has value.
2. What is Bitcoin…Mining?
Bitcoins aren’t issued by a government or a company. A person nicknamed Satoshi Nakamoto created software in 2009 that let people all around the world use their computers to “mine” Bitcoin. Every Bitcoin that has ever existed has been “locked” out of public circulation by a long, complex, secret code. Powerful computers search large numbers at random. When one “discovers” the code, the original Bitcoin software rewards this “miner” with new, uncirculated Bitcoin.
3. What is Bitcoin…Value?
So why are these virtual coins valuable? To understand, let’s ask another question: Why is anything valuable? Bitcoin has value for two main reasons 1) People around the world agree to accept Bitcoin as payment (just like any other currency), and 2) Bitcoin is rare (just like the rarity of gold contributes to gold’s value).
The more people who use Bitcoin, the more it will be worth. This is simple “supply and demand” economics that anyone can understand.
Why do we Need Bitcoin?
Not everyone agrees that the world needs Bitcoin. But some people think that world governments have too much control over money. Others worry that “fiat” currencies like the Euro are subject to the decisions of centralized power structures, not the will of the people.
No one can change the Bitcoin software unless most Bitcoin miners around the world agree on the changes. No one can ever increase the number of Bitcoins, diluting its supply. No one can destroy Bitcoin, not even powerful governments.
Bitcoin has granted financial freedom to oppressed people around the world. Bitcoin’s fixed supply is something no physical asset can boast. Bitcoin has created wealth for thousands because of fundamental mathematical principles.
If you’re new to cryptocurrency, there’s more to learn about Bitcoin, but we hope this “what is Bitcoin” guide is enough to communicate why Bitcoin is exciting!
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