Bitcoin is a form of digital currency, referred to as cryptocurrency, that was introduced in 2009 by an anonymous software developer known only as Satoshi Nakamoto. Bitcoin can be bought and sold through online marketplaces, called “bitcoin exchanges,” using a variety of currencies. It can also be bought and sold using cash through a specialized kiosk called a Bitcoin ATM, similar to bank ATMs.
Bitcoin as “Digital Gold”
Similar to traditional gold, there is only a finite amount of Bitcoin that will ever exist: 21 million to be exact. This makes Bitcoin a commodity like gold, thus, why Bitcoin is frequently referred to as “digital gold.” This structure makes Bitcoin an attractive asset to have. As popularity surrounding Bitcoin expands, bitcoin is increasingly being accepted as a form of payment among merchants around the world. The higher the demand, and the limited availability are what drive the value of Bitcoin.
Bitcoin is a Decentralized and Deregulated Currency
Unlike government-issued and government-controlled currencies, Bitcoin is a decentralized and deregulated currency. If you’re wondering what that means, it could be summed up as: there is no single person, entity, or government that controls the price of Bitcoin or its value. The blockchain technology behind Bitcoin makes every transaction a verified event by a network of computers across the globe, unlike a bank transaction that is recorded on a private network and is vulnerable to errors or fraud.
Due to Bitcoin being entirely digital, one can never actually hold a physical bitcoin; they are exclusively stored on private wallets and online exchanges. The wallet is a record of all your Bitcoin transactions, like a bank ledger. Bitcoin wallets facilitate the buying and selling of Bitcoin, and can be either physical or digital. Every Bitcoin transaction generates two things: a private key and a public key, and these are attached to your wallet. A private key is the address only the wallet holder can access. A public key is the address comprised of an alphanumeric address, or, a QR code where other people can send funds.
Fun fact: Some people have even made clothing lines using the public key of their Bitcoin address with “I accept Bitcoin” printed on their clothes. You could say, in this sense, that Bitcoin has the potential to be a wearable wallet.