What Is Bitcoin?

by Dave Brahimi

Bitcoin is controversial across the globe because few understand it. Some view it as something that can only be used by tech-savvy people and others think it's used for black market purposes. Neither is true! Bitcoin is just a made-up (just like money!), virtual currency that lets people be anonymous.

Bitcoin offers protection that money cannot. You don't have to have a bank account, your name on any transaction and gets rid of some of the risks of becoming a victim of criminal activity. In fact, the digital exchanges are showing rising prices due to the increased popularity of bitcoin as more people realize bitcoin's advantages.

Bitcoin's payment network is not centralized, meaning it's only maintained through a peer-to-peer network. Also, bitcoin is encrypted, which means its just electronic data (a set of numbers and letters) that is stored on something called "Blockchain technology". This makes it different from conventional currency. But remember, money is not just physical: it also represents electronically. You can purchase items or send your country's money electronically - and you can do the same with Bitcoin. In fact, millions of people are already purchasing things with it! It will become a common form of money sooner than you think.

Do you remember when PayPal didn't exist? PayPal is now a very common way to send, receive and then withdraw your balance in different types of currencies like the U.S. dollar or Euro. Other online payment processors exist now, as well like Zelle and CashApp. Bitcoin, though, is unique and doesn't operate in that way. And because it uses a decentralized network, there's no "official method" to determine bitcoin's value.

Bitcoin is the same as "normal" currencies in that it's value is based on supply and demand - how much is available and how many people desire it. However, it is different though in that you cannot withdraw a physical currency (paper or coins). This is because it's not really a physical form of money; it's an entry in an accounting ledger online - run by software.

The amount that you have and your purchase using Bitcoin is just a line that is entered in the Blockchain ledger (an accounting ledger) which is encrypted and thus uses digital keys to store the data in an offline or online wallet.

It's major advantage is that you can online payments anonymously and securely, but a disadvantage is not being able to withdraw a physical currency. You can, however exchange Bitcoin for your country's currency, just like you do in Foreign Exchange (forex). Bitcoin's value can be translated into the U.S. dollar, for example.

To put it simply - bitcoin currency is a digital form of money, which keeps you anonymous and allows you to securely buy and sell things online. In today's world where more and more of your privacy is disappearing by the second, this is a welcome change