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What Is Bitcoin?

According to www.bitcoin.org, Bitcoin is an innovative payment network and a new kind of money. The website states that Bitcoin uses peer-to-peer technology to operate with no central authority or bank.

In simple terms Bitcoin is digital money. A string of "ones and zeros" (bits). These bits are encrypted by way of cryptography, hence the name cryptocurrency. In fact, Bitcoin was the first ever cryptocurrency. It is the Godfather of cryptocurrency. That is why we cannot talk about cryptocurrency without talking about Bitcoin. Furthermore, we cannot talk about Bitcoin without talking about Blockchain Technology.

Blockchain technology, and consequently Bitcoin, was developed by Satoshi Nakamoto in 2008. Now Satoshi Nakamoto is somewhat of a myth more like Keyser Soze from the 1995 movie The Usual Suspects. Some people actually believe that it is not one person but a group of four people using a pseudo name. Satoshi Nakamoto has not been heard from since 2012.

Blockchain technology is a digitised, decentralised, public ledger of all cryptocurrency transactions. This ledger is constantly growing as completed blocks are recorded and added to it chronologically (Investopedia.com). Let's break it down. Blockchain technology is a public ledger - a record of transactions available for all to see; it is digitised - it is digital or generated and stored on the computer; it is decentralised - not controlled by any government or bank. These characteristics are what make bitcoin, the asset, what it is.

Bitcoin is therefore digital money which is not controlled by any government or bank and whose records of transactions are available for all to see. The public ledger provides for transparency while at the same time maintains privacy. How is it possible to maintain privacy while in public domain. Well, as i said earlier, bitcoin is a string of code which is encrypted. No one cam see the source or destination of the transaction. All we can see in the public domain is a transaction ID.

Where does Bitcoin get its value?

Apart from the underlying technology being a ground breaking novel idea, Bitcoin is non-traceable, does not require the approval of bank to hold or transfer it, there is no identity attached to it. These characteristics made Bitcoin most sought after by people who wanted to remain under the radar of authorities, for one. It also provided more control of ones wealth in that people were not restricted by bank processes. As it became more apparent that Bitcoin provided solutions for one person to transfer value to another person without using the bank as a middleman its value grew. As with any commodity, the more demand for it the more its value grows. The converse is also true as has been observed in the last 3 to 4 weeks where the value of Bitcoin has fallen, amidst fears of clampdown by governments, from about $20,000 to slightly below $10,000 before regaining to $11,110 at the time of writing.

Keywords: Bitcoin, blockchain technology, Satoshi Nakamoto, Cryptocurrency

References: wikipedia.com, investopedia.com, bitcoin.org, cbinsights.com


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