What is Bitcoin?
Created in 2009, Bitcoin is a digital asset that leverages a peer-to-peer network to facilitate the transfer of value without intermediation from banks or central authority.
Bitcoin is a digital currency, with no physical bitcoins in circulation.
Creating Bitcoin
Bitcoins come into existence by the validation of transactions on the bitcoin network, through a process called mining. Those performing this validation are referred to as miners.
When miners successfully verify a group of transactions, they are currently awarded 6.25 bitcoin for their work, as well as the transaction fees included with each transaction. Miners follow a set of cryptographic rules which keep the network stable, safe and secure.
Bitcoin transactions are recorded and verified on a digital public ledger called blockchain.
Currently there are approximately 19.5 million bitcoin that have been mined. It is estimated that by 2140 there will be 21 million bitcoin, which is the finite amount allowed in the system.
Earning Bitcoin
There are multiple ways for an individual to obtain bitcoin:
- It can be purchased on an exchange using a traditional payment method
- It can be transferred to you from another person or entity
- You can earn bitcoin as a miner
Storing Bitcoin
Before taking possession of bitcoin, you must have a bitcoin wallet.
Secure bitcoin wallets can be downloaded and set up on a computer, smartphone or other mobile device. Each bitcoin wallet stores your private key, which allows you to sign transactions that send bitcoin to other parties.
Using Bitcoin
You can use bitcoin as a payment method for goods or services. There are a growing number of retailers who currently accept bitcoin and its commercial use continues to expand.
Bitcoin can be used as a currency for international remittance or as an investment. It can be owned or used as a tradable instrument. Bitcoin can be bought or sold in exchange for a fiat currency such as the U.S. dollar. Bitcoin premiums vary across currencies creating arbitrage opportunities.
Bitcoin is most liquid of all cryptocurrencies and its adoption by individuals and institutions continues to evolve.