Bitcoin: a new currency.
In 2008, someone under the pseudonym Satoshi Nakamoto shared with the world his vision of a new type of currency.
In his academic paper entitled "Bitcoin: A Peer-to-Peer Electronic Payment System", Satoshi described a new system of digital transactions that would not be centrally controlled by any company or government.
A system that does not require a trusted third party.
Bitcoin, a scarce asset
Bitcoin retains its value because it is a scarce asset, much like gold. However, there will never be more than 21 million bitcoins, or 2.1 quadrillion satoshi.
1 bitcoin = 100,000,000 satoshis (just like 1 euro = 100 cents).
Powerful computer networks spend energy solving complex mathematical problems to secure the system, and as a result, are compensated for their work with newly created bitcoins. This is called mining (or proof of work).
A new financial system, which cannot be manipulated
This financial system can be controlled by no one but mathematical rules followed by a decentralized network of computers.
This brought two key features to the world: finality of transactions and ultimate scarcity.
Bitcoin has become a radically new way of transacting and preserving value around the world. It has revolutionized the way we can transact on the Internet.
Secured by the Blockchain
Computers process transactions by forming a register in a new type of database consisting of a chain of blocks, hence the name "blockchain". This register cannot be changed without redoing all the work from the beginning. This would be so expensive that it would be uneconomical or outright impossible.
Any computer can download the blockchain and verify all transactions from the beginning to maintain the integrity of the Bitcoin ledger. Anyone can participate in the network to ensure that the rules of the game are followed and confirm the rightful owner of each Bitcoin. You become your own bank.
You own your money
But how do you get Bitcoin? Some people mine Bitcoin and others buy it on regulated platforms, like Bitstack. Others buy it from each other, in person or online.
Because the supply of Bitcoin is limited, its price fluctuates primarily with demand. But unlike gold, when demand increases, the supply of bitcoin remains fixed at 21 million. This makes bitcoin very desirable.
But where to keep your Bitcoin? Some people choose to store them on their computer or phone, and others on a specialized hardware. And those who don't want to worry about it can simply let regulated platforms, like Bitstack, do it for them.
Is Bitcoin the currency of the future?
Either way, your bitcoins are valuable. So be sure to keep them safe.
Maybe one day Bitcoin will become the world's currency of choice, but what is certain is that a movement towards a new form of currency has begun.
A currency where anyone can freely exchange value.
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