Bitcoin: Digital Currency

Bitcoin is a digital asset created in 2009 by Satoshi Nakamoto (nobody knows if this is one person or a collective, which adds to the fantasy surrounding its inception).

Bitcoins are created via a special software that generates a protocol that compensates agents who complete transactions. These agents provide computational power to verify, secure and insert said transactions in a virtual register called Blockchain (cf article What is Blockchain Technology?).

Every time a new block is accepted, the verifying, securing and inserting process called mining is rewarded in freshly created bitcoins.

Bitcoin is that the total supply is limited to 21 million units and each unit is divisible to the eight decimal point (0.00000001 units). This means that you can purchase part of a Bitoin if you can’t afford an entire one.

Bitcoins is used as currency and as a commodity: as such, it can be exchanged for currency, commodities, goods and services. Bitcoin’s exchange rate is fixed on a market and fluctuates according to the law of supply and demand. Anybody can purchase some on online exchange platforms such as Coinbase.

Bitcoin is increasingly used as a means of payment by businesses worldwide. However, processing a Bitcoin transaction can take hours or days depending on the amount and it is irreversible (cannot be canceled). This is not very practical and explains why many businesses are unwilling to adopt Bitcoin as a means of exchange.

This is why altcoins, cryptocurrencies based off of Bitcoin’s technology, are emerging to challenge Bitcoin by becoming easier to process (faster to use).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s