Bitcoin (BTC) is increasingly mentioned in print media and on the Internet. This cryptocurrency has long ago ceased to be considered an object that only people who are passionate about crypto can deal with. If you don’t know what bitcoin is yet, we will tell you in our beginner’s guide.
What Bitcoin is in simple terms
Bitcoin is an electronic payment system that uses tokens – digital coins – to make payments. Well-known VISA and MasterCard also allow electronic payments. However, they use the usual currency (fiat money) – dollars and euros – as the means of payment, and each payment transaction is processed by a bank. The essence of bitcoin is that it exists only in virtual space. It is not tied to any banking institution or state. It has its own price which depends on demand. You can use open bitcoin wallet to store cryptocurrency.
How Bitcoin works
The main thing to know about how bitcoin works is that it is based on a blockchain. It is a continuous blockchain of all transactions. The block closes when a digital signature is picked up. A new block can then be formed. For ease of understanding, we can imagine that each transaction is to be written to a new page. A sequence of such pages forms a book chapter – a block. To record a new page (payment transaction), it is necessary to flip through all previous pages. In other words, each new transaction implies processing of previous blocks. Their totality forms a blockchain. It is impossible to delete any block. At the same time, the blockchain is an open database and is available to all users of the platform.
Who created Bitcoin?
It is quite difficult to find a primary source and determine a clear chronological sequence of creation. For dozens of years, crypto experts worked on the development of a unique decentralized platform based on mathematical calculations. Taking advantage of the experience of their predecessors and their expertise, Satoshi Nakamoto and Hal Finney developed the planet’s first cryptocurrency unit – bitcoin – in 2008. Nakamoto published a file with the bitcoin protocol, and gave a brief description of the features of the new currency. His name was given to the smallest part of the bitcoin (one bitcoin contains 100 million satoshi).
How Bitcoin is secured
There is an opinion that electronic currency on the internet is something like a financial pyramid, because Bitcoin is not backed by gold and foreign exchange reserves. However, today no fiat currency is 100% secured by gold. The price of regular money for a long time reflects only how much people trust the government and the economy of a particular state. BTC is similarly secured. The price of virtual tokens reflects how much users trust the system. The value of the tokens depends on market supply and demand. In fact, it is the price people are willing to pay for cryptocurrency. You can also pay with your bitcoins in stores using a Cryptopay card. It is a very convenient modern solution and you should pay attention to it.