By now there is a fair chance that you have heard the word Bitcoin or cryptocurrency floating around. But what exactly do those words mean?
Cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It is an encrypted decentralized digital currency transferred between peers and confirmed in a public ledger via a process known as mining.
There is a lot more to cryptocurrencies than we will dive into here, but at the base level, they are limited entries in a database no one can change without fulfilling specific conditions.
There are currently over a thousand different types of cryptocurrencies, but today we are going to look specifically at Bitcoin. Bitcoin is the leading cryptocurrency and while there are other options available, this one has the most followers.
How Bitcoin works
Transactions with Bitcoin are made with no middleman. Bitcoin can be used for many things like purchasing items on Overstock or booking hotel rooms on Expedia and much more. Currently the biggest use for it Bitcoin is in trading. The value of Bitcoin has skyrocketed into the thousands.
Bitcoin has no corresponding psychical element like you would have with a coin or bill. They are blocks of ultra-secure data that are treated like money. Users called “Miners” allow their computers to be used by the system to safely verify the individual transactions. These users are then rewarded with new Bitcoins and can spend them on goods or services and then repeat the process.
Bitcoins are stored in a digital wallet, which exists on the cloud or on a user’s computer. This wallet allows users to send and receive bitcoins. A bitcoin wallet is not insured so there is some risk involved.
Bitcoin is, for the most part, anonymous. Names of buyers and sellers are never revealed; the only identifying mark is your wallet ID. This makes the market there for people to get involved in some illegal activity. It has become the currency of choice for people seeking illicit activities online.
Bitcoin is enticing to many people for many reasons. The instability of the market leaves you vulnerable to lose a lot of money. Consequently this is what people find exciting about it. Bitcoin isn’t the only option on the market and if you are interested in getting into cryptocurrency, do some research to see which one you would like to connect with.