Once an obscure form of currency that few people had ever heard of, Bitcoin is now one of the most talked about topics on the internet. Bitcoin mining, speculation, trading, and investing are trending. Bitcoin futures trading is right around the corner. But what is this new cryptocurrency and why is it so popular? Here is a brief explanation of Bitcoin.
What is Bitcoin?
Bitcoin is a cryptocurrency, a digital asset that is used as a method of payment. It is based on cryptography, which function as it’s system for verifying and securing transactions, creation of more Bitcoin, and transfers of specific amounts of Bitcoin. It can be difficult to understand Bitcoin as it is a form of currency that doesn’t have a tangible asset like gold or silver as a basis. Digital currencies have the inherent problem of preventing duplicate units from existing. For example, if you have a virtual dollar bill, how do you know that it isn’t a copy?
Bitcoin has solved this problem, so you can think of each Bitcoin unit as a digital coin that carries with it a process for making sure that it is authentic. The authentication comes from something known as blockchain, which is a public ledger system that records every Bitcoin transaction. This prevents double spending from occuring within the decentralized currency system. Even though it is virtual, Bitcoin is an actual currency that you can use to pay for everyday purchases online.
History of Bitcoin
Bitcoin was created by an individual or group of people known as Satoshi Nakamoto. No none knows the true identity of its creator, but it was released as an open-source software in 2009. It is a peer-to-peer currency system that uses cryptography, rather than a trusted third party, as a way to ensure that money is not duplicated and spent more than once. PayPal is an example of a third party that oversees transactions and ensures their validity. With Bitcoin, there is no middle man, and it is self-regulated by its own cryptographic system.
How Do You Get Bitcoin?
You can buy Bitcoin from exchanges or from other people directly through marketplaces. You can use another cryptocurrency to buy Bitcoin, or you can use your credit or debit card just like any other purchase you make online. Before you buy Bitcoin you will need a secure Bitcoin wallet, which is essentially a bank account made just for Bitcoin.
What is Bitcoin Mining?
Bitcoin mining is the name for the public record-keeping that takes place to ensure the integrity of the currency. With Bitcoin mining, computer processing power is used to verify and add new transaction to the blockchain. Bitcoin mining has evolved over the years, so that now there are specially designed Bitcoin mining programs available for your computer. Miners are rewarded for their contribution to the system, receiving Bitcoin payments after completing sections. Bitcoin mining can be profitable if you have an efficient system and a mining program. There are mining pools that you can join so that you can combine efforts with others and earn a share of the rewards, depending on how much of a contribution of processing power you’ve made.
What is the Future of Bitcoin?
Bitcoin values fluctuate and have been on an upward trend as of this writing. Many experts think that the furute of Bitcoin is uncertain since it is too new to know for sure. However, others are calling Bitcoin the new gold. Some see the U.S. Dollar as weakening and are looking to Bitcoin as a safe alternative.
The Chicago Board Options Exchange (CBOE) Global Markets as well as Nasdaq and CME Group are set to launch Bitcoin furutes trading. Futures trading involves two parties agreeing on the exchange of an asset for a specified price on a set date in the future. This will bring Bitcoin trading further into the mainstream and create even more buzz about the cryptocurrency going forward.