If you have heard of bitcoin, the chances are you have heard it discussed in a derogatory way. And, sure, bitcoin has its drawbacks – but what finance doesn’t have a few issues? Most of the time, people aren’t open to a conversation about bitcoin because it can get very complicated – depending on how deep you delve. However, you can take a lighter look at bitcoin and its uses without diving heavily into the mathematics – of which there are plenty if that makes you happy.
In basic terms, bitcoin is usually described as a cryptocurrency, a digital currency, or a virtual currency. So, from that, we can already draw the conclusion you will never be able to hold bitcoins in your hand. They are totally virtual.
Consider it online cash.
Photo by Dmitry Demidko on Unsplash
But you’ve seen images of bitcoin (like the one above)! Yes, but it is essential to know that those coins are a bit of a novelty and are worth 0. Unlike the private codes that are printed inside them.
To start with bitcoin, you are going to need something called a digital wallet, which you can now have as an app on your phone. Each bitcoin is a computer file that will be stored in that wallet.
Italy’s best bitcoin site has a hand tool at the top to see how much a single bitcoin is currently worth, to give you some indicator of the value.
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How Does It Work?
Much like money, you can send a bitcoin, in part or all to friends and family, you can pay for some services and goods online. They are anonymous in the way that they do not share your name or address when you spend or share them, but there will be a record of your transaction. Each of these transactions is added to a public list that is called the blockchain.
The reason they are highly traceable is so that people can’t generate more, copy codes, or otherwise commit fraud. There are currently 17 million bitcoins in circulation, and there are only 21 million in total.
How Can You Get Them?
There are a few ways you can purchase bitcoin. You can sell goods and allow people to pay you in bitcoins. You could buy bitcoins using real money, or you can spend time researching how to mine for bitcoins.
The computers that do the mining are incredibly powerful, and in fact, they are a little over 300 times as powerful as the world’s 5 most powerful supercomputers. The computer’s only objective is to work out complicated sums, and once they are worked out – you are rewarded with a bitcoin. The sums get increasingly difficult over time, to ensure that there is never a flooded bitcoin market. Even if you were to start mining now, you might never see a bitcoin at all.
The final thing that you should know about bitcoins is that they are a very secure but volatile currency. Because every transaction is recorded publicly, you cannot make fakes or spend what you don’t have. It is, however, possible to delete or lose your wallet, in which can you will lose everything that you had in there.
