What Is Bitcoin and Why Is It So Popular?
Unless you’ve been living under a rock for the past ten years, you’ve probably heard about Bitcoin (BTC). You might be wondering what the big deal is, though: online discussions tend to be very polarized, with some people seeing Bitcoin and other cryptocurrencies as the path to the future and others still considering them one big scam.
Whatever the general sentiment is, it’s hard to dismiss Bitcoin after it single-handedly created an entire industry and inspired multiple cryptocurrency projects. Fortunately, it’s pretty easy to explain what Bitcoin is, and you can decide for yourself if it’s worth the attention that it gets.
Bitcoin in a Nutshell
Bitcoin was the first cryptocurrency ever invented. It was created by an individual or a group of people under the pseudonym of Satoshi Nakamoto. It’s used as a digital currency backed by blockchain technology, enabling it to have a public distributed digital ledger.
Nakamoto’s idea behind creating Bitcoin in 2009 was to find a way of dealing with issues inherent in using fiat currencies, especially those related to secure payments and privacy. The answer was to create a digital currency that’s decentralized, transparent, and impossible to manipulate.
Blockchain technology sounds like the latest tech buzzword, but it actually is a name for the tech behind the database containing all Bitcoin transactions.
With a network of specialized computers that verify transactions, there’s no need for a centralized institution like a bank to act as a mediator between the parties. Each computer within the Bitcoin network authorizes transactions by solving a demanding mathematical problem, and people providing the computational horsepower to do so (“miners”) get rewarded in Bitcoin for their efforts.
When enough new transactions are verified, they form a block that’s added to the existing chain of blocks (hence the name). Blockchain enables an essential aspect of cryptocurrencies: transparency. All Bitcoin transactions ever made can be seen on the publicly available ledgers, including the balance of every Bitcoin wallet around.
There are certain technological benefits of using Bitcoin that make it incredibly popular among its users. It’s worth pointing out a few of the most significant features that can explain the hype among Bitcoin enthusiasts.
Bitcoin can be sent and received securely by anyone, and the only thing you need is a smartphone or computer with an internet connection. It can also bridge the gap for a significant number of countries that are left out of most global payment systems. Bitcoin can essentially provide banking services to anyone, regardless of location.
Ease of Use
All that’s required to start using Bitcoin is to download a BTC wallet app, which is a much faster process than opening a bank account.
Even though Bitcoin transactions are public, users can remain anonymous because wallet addresses are not linked to any personally identifiable information.
Low Transaction Fees
Sending large amounts of money is more cost-efficient with Bitcoin. This is especially true for international money transfers, which often include costly fees and are usually much slower to process.
Bitcoin transactions are some of the quickest transactions you can conduct online, and most transfers get completed in only a couple of minutes.
Bitcoin operates as a decentralized entity with multiple computer nodes having copies of Bitcoin’s blockchain and participating in the transaction verification process. Therefore, it’s impossible to have a central entity that will influence it with bad monetary policies or decide to seize someone’s assets for whatever reason.
Bitcoin’s hardware infrastructure is distributed globally, and because of that, there is no central point that can fail and bring down the entire system.
Many would argue that investing in Bitcoin isn’t as wise as doing so with index funds or real estate. Still, Bitcoin keeps gaining in value and global acceptance, even getting adopted as legal tender in El Salvador later this year.
With major companies like Amazon, Twitter, and Tesla contemplating how to include BTC in their businesses, its popularity may still grow exponentially, along with its price.
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