This article explains the basics of Bitcoin. You will find a lot of information about Bitcoin online, however you need to beware of the less than reputable websites just trying to get investment.
Bitcoin is a digital currency. It’s different to traditional currency as it’s not just money stored in a bank account. Its value is also not necessarily linked to traditional currency (i.e. $100 equals one Bitcoin).
You can buy Bitcoins with normal money by contacting a crypto currency broker. These Bitcoins can then be traded or held as an investment.
Bitcoins are essentially blocks of secure data. Moving this data from one person or place to another, verifies a transaction a bit like paying by credit card. But it requires huge amount of computing power. Users, called “miners” allow their computers to be used by the system to safely verify the transactions. A miner who successfully generates a new block, receives new Bitcoins, which can then be spent on goods and services.
So in crypto-graphic terms, if it’s a digital currency that creates “wealth”, how can it be spent? It’s not a lot different than paying for something using a debit card.
Your Bitcoins are kept in a program called a wallet, which has your password and a connection to the Bitcoin system. If you want to trade, you send a transaction request to another user, buying or selling, and you both agree to the transaction. The system verifies the transaction and securely transfers the value from one user to the next.
There’s no centralised bank or credit system – the peer-to-peer network completes the transaction with the help of Bitcoin miners. The transaction is anonymous as the buyer and seller are represented solely by random numbers.
There’s so much more to Bitcoin than this article can hope to cover. Our advice if you’re looking at investing in Bitcoin or any crypto currency is to do your homework. While many companies now accept Bitcoin currency, its long-term viability is unclear. Fortunes have already been made – and lost – with Bitcoin. Make sure that you are not one of the losers.