What is Bitcoin?
Cryptocurrency has made a big impact in the past several years, and you may have heard of Bitcoin—the digital coin that revolutionized digital finances, and started it all. A pseudonymous software developer who went by the name of Satoshi Nakamoto proposed Bitcoin in 2008. Bitcoin was created to be an electronic payment system that was based on mathematical proof, and Nakamoto’s idea was to create a means of exchange that was decentralized, or independent of any central authority. Exchange was transferred electronically in a secure, immutable, and verifiable way.
To this day, no one knows who Satoshi Nakamoto really is. The developer made a big impact in the world, as Bitcoin can now be used to pay for things electronically, and it has inspired thousands of alternate cryptocurrencies, or altcoins. These are the important ways that Bitcoin differs from traditional currencies.
It Has a Limited Supply
Fiat currencies (USD, euros, yen, etc.) have an unlimited supply, which not only can lead to inflation, but also puts the burden of cost onto holders of the currency. Banks can issue as much as they want, as well as manipulate a currency’s value relative to others. With Bitcoin, however, the supply is tightly controlled using an underlying algorithm. There’s a hard cap on the coin at 21 million, which also lends to an increase in value for each individual coin.
Perhaps the most important characteristic of Bitcoin is that no single institution controls Bitcoin’s network. Instead, the coin is maintained by a group of volunteer coders and is run by an open network of dedicated computers. This makes the coin appealing to people who are uncomfortable with the control that banks and governmental institutions often have over money. With Bitcoin, transactions are maintained by a distributed and open network, and it’s owned by no one.
It Has Immutability
Unlike electronic fiat transactions, Bitcoin transactions cannot be reversed. If a transaction is recorded on the network and an hour has passed, it’s impossible to modify. This means that any transaction cannot be changed or tampered with, lending to Bitcoin’s reliability and control.
It Has Pseudonymity
Senders of traditional electronic payments are typically identified, however, Bitcoin users operate in semi-anonymity. Since there’s no central validator, users don’t need to identify themselves as they send Bitcoin. The system never needs to know either the sender’s or the receiver’s identity. Since the network is transparent, the progress of a transaction is visible to everyone, creating an open and honest system.
Satoshi Nakamoto revolutionized the idea of digital currency with the introduction of Bitcoin. With open transactions that are permanent, decentralization, and a hard cap supply, cryptocurrency offers a viable alternative to traditional fiat money. For people who are looking to conduct transactions anonymously, participate in finances that have no risk for inflation, and like the idea of no central parties being involved, Bitcoin and alike altcoins are the perfect digital coins to invest in, trade, and purchase online. When Bitcoin was introduced, digital currency changed forever.