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Introducing Bitcoin: What You Need to Know

 2 min read / 

Bitcoin is the largest and first cryptocurrency, with a market capitalisation of just under US$119m (at the time of writing). It was invented by an unknown person, or group, working under the pseudonym Satoshi Nakamoto and released in 2009. Bitcoin was the first decentralised peer-to-peer currency, which could be exchanged with anyone, irrespective of their location, provided the receiver had a bitcoin wallet (all bitcoins are stored in digital wallets).

Using Bitcoin

Sending or receiving bitcoin logs a digital record of this on the bitcoin blockchain. Unlike with banks, bitcoin transactions are verified by users (miners), who are rewarded for processing transactions in bitcoin. There are no middlemen: if I want to send some bitcoin to a friend, I can do so via my bitcoin wallet and pay a small transaction fee. Rather than having a bank account, bitcoin wallets can be downloaded and used without any need to verify your identity. Some see this as a blessing, while others a curse – more on this here. Additionally, if I mistype the wallet ID of the person I wish to send bitcoin to, there is no way to reverse this transaction, something a conventional bank could do. However, in using bitcoin, I can withhold personal information in a way that would not be possible with banks (who require proof of your address and identification).

 

The supply of Bitcoin is fixed at 21 million BTC, and each can be divided into a hundredth of a millionth of a bitcoin (0.00000001 BTC). Some claim a capped supply makes bitcoin a valuable investment, as over time the supply of bitcoin will only increase fractionally, eventually stopping. Others question the core value of bitcoin as a currency, largely due to its volatility. Having a currency that changes in value so frequently undermines stability, and day-to-day people need stability.

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