What is Bitcoin anyway?
Bitcoin - the most talked about innovation in finance.
This is part of our Layman's Guide series and you can find similar articles on our website www.cloudmaitre.com.
What exactly is Bitcoin?
Bitcoin is a peer-to-peer electronic cash system and is what's known as a cryptocurrency. It's a digital currency which allows online payments to be sent directly from one party to another without going through a financial institution. It runs on the blockchain, a decentralised ledger kept running by “miners” whose powerful computers crunch transactions in exchange for bitcoins. BTC represents the reserve currency of the cryptocurrency space, there will be newer cryptos entering the market, some will be successful, others will fail.
What’s it for?
People value being able to have a store of value proving what they own, and records of their transactions free from government control - with safe access to exchange payments without having to ask for permission from a bank or the need to use a bank authorised form of identify (i.e. a debit card). The concept of not needing to seek verification from your bank for each transaction is appealing. You can simply hold and maintain your own secret password.
Bitcoin has been seen as a tool for private, anonymous transactions, making it the payment of choice for drug deals and other illegal purchases.
Is it worth anything?
Investor's are talking about Bitcoin's recent surge above gold. In March 2017, the value of a Bitcoin, at $1,268, exceeded that of an ounce of gold ($1,233) for the first time. As of July 2017, there were around 16.5m bitcoins in circulation. At current exchange rates 1 BTC is worth around £3376.
Who invented it?
A secretive developer (or developers) going by the name of Satoshi Nakamoto designed bitcoin in 2008 before it went online in 2009. As part of the implementation, they also devised the first blockchain database.