Alot of people still lack a fundamental understanding of cryptocurrency and cannot answer basic questions like, “What is Bitcoin?” The concept of a virtual currency can be abstract and confusing.
If you think about it, the concept of carrying paper and metal coins made of copper, nickel, and zinc in your pocket that can be exchanged for goods and services is an abstract idea in itself. However, many struggle to understand the concept of Bitcoin specifically because it hasn’t been properly explained to them.
To help, we put together an overview with everything you need to know about the concept of Bitcoin, how it could replace the money in your pocket someday, and why understanding it could open up a whole new world.
What is Bitcoin?
What is Bitcoin? Well, the first thing to understand is that Bitcoin is a digital currency. It’s not something you can hold or carry in your pocket. It’s a new virtual currency that hit the market in 2009 and has taken the world by storm because it’s very different than established systems. Bitcoin is broken down into digital tokens which can be sent electronically from one user to another.
The Bitcoin network is decentralized and runs through a decentralized network of computers that track all transactions on the network (known as a blockchain). This network isn’t directly connected to a bank, institution, or government. Because of this, the Bitcoin network isn’t required to follow the same rulebook as other currencies.
The concept begins to get confusing once you start talking about its value because it’s not defined. For instance, the US dollar has been broken down into 4 quarters, 10 dimes, or 100 pennies. As of this writing, Bitcoin’s value remains open to interpretation. On paper, you could dismiss the entire concept and claim that Bitcoin tokens are worthless.
However, the cryptocurrency market is growing at an incredible rate because a lot of people are willing to pay and define value to these tokens. The problem is the market is full of traders and investors assigning different values to tokens, which is the same idea as someone arguing that a quarter isn’t worth 25 cents but 50 cents because that’s how they value it.