AN INTRODUCTION INTO BITCOIN
Here you are, casually scrolling through your newsfeed on Facebook and Twitter when you stumble across the words cryptocurrency and Bitcoin. But, what is Bitcoin? And why is it taking over social media?
You have questions and VPLS is here with answers!
WHAT IS BITCOIN?
Cryptocurrency is a term used to refer to digital currency or assets. Individuals that own cryptocurrency can choose to trade this digital currency for goods, services, and other valuables. All of these transactions occur over the internet.
Bitcoin is one of many cryptocurrencies, as well as a global payment system. Each Bitcoin, or cryptocurrency, contains mathematical properties that make it unique and difficult to replicate and defraud the system.
Currently, Bitcoin is one of the most valued cryptocurrencies on the global market.
Fun Fact: Bitcoin was first released in 2009 and was invented by an unknown person (or group) under the name Satoshi Nakamoto. Nakamoto is also responsible for devising the first blockchain database.
WHY ARE PEOPLE USING BITCOIN?
Rather than paying with cash or sending money through Paypal, people are opting to use Bitcoin as a form of currency. But why?
Below are a couple of notable reasons as to why people opt for Bitcoin:
- Anonymity – Bitcoin uses a sequence of numbers to identify an account or person, rather than a person’s true identity. If keeping your transactions private is important, Bitcoin has you covered.
- Decentralization – No central authority exists. In other words, no bank or individual has complete control over the economic ecosystem.
HOW DO BITCOIN TRANSACTIONS WORK?
To better understand how Bitcoin transactions work, let’s first review some important keywords.
- Block – A group of transactions to be broadcasted over the global network.
- Blockchain – A public ledger containing a series of blocks. Each block is chained to other blocks within the global network. Hence the name, blockchain.
- Bitcoin Wallet – A wallet containing Bitcoins, as well as an application to create transactions. There exist many different applications where you can create a Bitcoin wallet.
Now that we’ve become familiar with some of the most common terms, let’s walk through a scenario of a typical Bitcoin (cryptocurrency) transaction.
Let’s say that Angela wants to send money (Bitcoin) to Darryl. First, Angela needs to own a Bitcoin wallet, such as Coin.Space or Electrum. Typically, the action of Angela sending money to Darryl is known as a transaction. Online, this transaction is known as a block.
Once Angela sends the block (transaction) to Darryl, the block is announced to the rest of the network, verified, and mathematically linked to the string of blocks within the global network. The transaction between Angela and Darryl is now part of the blockchain.
WHICH BUSINESSES ACCEPT BITCOIN?
The list continues to grow but well over 100,000 merchants worldwide have agreed to accept Bitcoin as payment for their services and goods.
Here are a few worthy mentions of merchants accepting Bitcoin as payment:
Whole Foods Expedia Virgin Airlines
Microsoft Overstock Newegg
For merchants that have yet to sign off on Bitcoin, such as Amazon or Ebay, there exist a path around that obstacle.
The app Gyft offers interested buyers the opportunity of trading Bitcoins for gift cards to retailers such as Target, Lowe’s and Best Buy.
WHY SHOULD I CARE ABOUT BITCOIN?
As abstract as the thought of digital currency may seem, Bitcoin and other cryptocurrencies are here to stay. Unlike stocks or bonds, there is no need to “cash out” in order to establish value.
Bitcoin in itself has become a global monetary system with new users added to it every day. Soon, holders of Bitcoin will be able to purchase anything and everything under the sun.
“I do think Bitcoin is the first [encrypted money] that has the potential to do something like change the world.” – Peter Thiel, Co-Founder of Paypal
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