Bitcoins, you have heard about it for sure, but when people start talking about it you are lost in words like blockchain, wallet, anonymous, exchange, mining, altcoins, ico's and so on.
Let's take it one step at a time.
First what it is, and what it is used for.
Bitcoin is just a currency.
Eventhough it is not like a dollar note you can hold in your hand, or wallet, it is still a currency.
Bitcoins can be used for payment in many (online) stores.
The value of Bitcoins is determined by supply and demand. This makes it a little risky, others would say fun, to use Bitcoins.
The value of the Bitcoin changes quickly. You could buy Bitcoins at rate x and find out a few hours later, the value dropped. But it could also be the other way around.
People buy Bitcoins for different reasons.
- some people just want to hold on to some Bitcoins for a few years hoping the value increases a lot
- some people buy Bitcoins because they can buy certain items with it. Those people will keep an eye on the rate and buy when it is low
- some will buy Bitcoins to trade. They don't really care about longterm rate changes.
Most people who use Bitcoin for payments, do this because there is no one else involved other than the sender and the receiver of the money. Transferring money is troublesome in some countries. Transferring Bitcoins is easy.
Next post will be on, how does this work without a bank.
