This is just a very short introduction to bitcoin for those that have only just heard about it and are wondering what the hell it is and what all the fuss is about.
Bitcoin is the first decentralized digital currency. Bitcoins are digital coins you can send through the internet to another person or entity.
Compared to other alternatives bitcoins have a number of advantages in that they are transferred directly from person to person via the net, without going through a bank or clearinghouse.
This used to mean that the fees were much lower, and as a result you could use them in every country. But nowadays, the blockchain is so clogged up that it could take days to send or receive bitcoin and the fees are now very high.
A solution is required to improve this, but that's for another article. Also, your account cannot be frozen and there are no prerequisites or arbitrary limits.
How Does It Work?
A bitcoin is generated all over the Internet by anybody running an application called a Bitcoin miner. Mining requires a certain amount of work for each block of coins. This amount is automatically adjusted by the network in a way that creates bitcoins at a predictable and limited rate.
Your bitcoins are stored in a digital wallet. When you transfer bitcoins, an electronic signature is added and after a few minutes the transaction is verified by a miner which is then permanently and anonymously stored in the network.
The Bitcoin software is completely open source and anybody can review the code.
Bitcoin is changing finance the same way the web changed publishing. When everyone has access to a global market, great ideas flourish.
How Bitcoin Is Used?
You can purchase goods online and you can go to currency exchanges online where you can trade your bitcoin for dollars, euros and other currencies. For businesses, it doesn't cost anything to start accepting them, there are no chargebacks or fees and you could get additional business from the bitcoin economy.
With that said, given the tremendously slow transaction times the use of bitcoin on a daily basis has become limited and expensive. So no longer is it worth it for most businesses to use it.
Today it has become a sort of value and as of today's writing it's valued at around $16,399 for one bitcoin and is used as a base currency on trading exchanges.
Besides it being a store of value, it has led to the introduction of cryptocurrencies. Bitcoin is as is and all other digital coins or tokens are called cryptocurrencies. A lot of these are much more usable on a daily basis.
This is a revolution in the financial industry and there's absolutely no stopping it. So consider investigating this further and see where it takes you.