If you’re here, you’re probably wondering, “what is Bitcoin?” In short, Bitcoin is a form of cryptocurrency (digital currency) that you can use to purchase goods and services without any centralized financial institution. But what else should you know about the digital currency? Let’s find out.
What is Cryptocurrency?
Cryptocurrency is a form of digital currency that allows users to send money without using a centralized financial institution such as a bank. This makes transactions cheaper (no need to pay transaction fees) and faster (instantaneous).
What is Bitcoin Specifically?
So, what is Bitcoin? Bitcoin is the first decentralized cryptocurrency released to the public in 2009 by a person (or persons) under the pseudonym Satoshi Nakamoto. With Bitcoin, your transactions and what you’re purchasing online remain private and secure.
For example, when using credit cards online, third parties often can track what you’re buying online (credit card companies, government monitors that need to “spy” on what citizens are doing).
Bitcoin makes it easy for you as the user to stay anonymous. And if there’s any disputes or problems with what you purchased or what your purchase amount should have been, it will still be completely private between users sending each other money.
You can use Bitcoin to pay for products or services online from your favorite retailers, just like regular money. Many different places accept Bitcoin as a form of payment. You can also cash out your Bitcoins at an exchange service for fiat currency.
Who Invented It, and When Was it Invented?
Bitcoin was invented in 2009 by a person or group of people operating under the pseudonym Satoshi Nakamoto. The first Bitcoin was “mined” in 2009, and its current market capitalization is over $9 billion.
What Makes Bitcoin Unique?
Bitcoin is what you could call a “peer-to-peer electronic cash system” – what this means is that Bitcoin doesn’t require a central point of authority or clearinghouse to manage the transactions. This makes transactions quicker because there’s no need to wait for your money to be cleared by a third party like with credit card companies (which can take days).
Why is Bitcoin Useful as a Cryptocurrency?
Bitcoin derives its security and usefulness from the fact that it is decentralized. No one person or organization controls Bitcoin, making it impossible to be altered by any central authority. In addition, since you are your bank, you do not have to worry about anyone else holding your money for you. This makes you more secure than you would be if you deposited your savings at a bank.
How Does Bitcoin Compare to Regular Currencies?
Bitcoin is not backed by gold or other precious metals, and it has no value per se. On the other hand, you can still use Bitcoin to buy goods and services as you would with any other currency. Depending on where you live, you can also trade in your Bitcoins for dollars, euro, rubles, yen, and several other currencies.
Keep in mind that the price you pay for something when paying with Bitcoins depends solely on how much demand there is from people selling their coins. If you are paying with Bitcoins, you can be sure you are paying the exact amount you want to pay. No extra random fees or taxes are included in your purchase.
What is the Current Value of Bitcoin in Canadian Dollars?
The value of Bitcoin can be volatile, but you have to remember that it is a very new currency and has a lot of potential. As of August 2021, one Bitcoin is equal to nearly $65,000 Canadian dollars.
What is a Bitcoin wallet?
A Bitcoin wallet is a software or application you can use to access your Bitcoins. You can create different wallets, such as a mobile app wallet or a local storage wallet on your computer.
What are Software Wallets?
Software wallets are applications you can install on your device or computer to access and get Bitcoin. Software wallets allow you to store any amount of Bitcoins you want; you are the sole authority over your money; you own it.
One big advantage software wallets have over hardware wallets is that you can install one on all of your devices (computer, mobile phone, etc.) which makes it easier for you to send and receive Bitcoin wherever you go.
What are Hardware Wallets?
Hardware wallets are physical devices you can connect to your computer or mobile phone to store Bitcoins offline. This means you are not vulnerable to hackers, and you don’t have to rely on a third-party provider service as you do with software wallets.
What are Bitcoin Exchanges?
A Bitcoin exchange is an online platform where you can buy and sell Bitcoins. If you have a software wallet, you will have to transfer your currency from that wallet to an exchange if you want to trade or invest in other cryptocurrencies such as Litecoin, Ethereum, etc.
You can think of it like the stock market: you need to go through an exchange/broker to buy/sell stocks. Then, they make you bid on them with your USD, which gives you Bitcoin. But be careful when trading cryptocurrency, as this is very new, and there is no guarantee that any specific cryptocurrency will succeed long-term.
What are the Environmental Arguments Against Bitcoin?
There has been a lot of discussion about how much energy (electricity) is consumed to keep this new decentralized digital currency going. Some people have estimated that Bitcoin’s energy consumption is equivalent to that of mid-sized economies such as Switzerland.
This raises questions regarding the environmental impact Bitcoin could have on our planet. As you probably know, the earth is becoming warmer every year due to the increasing amounts of greenhouse gases we produce (carbon footprint). These gases trap heat and make our planet warmer than it should be naturally.
Bitcoin is a new type of currency you can use online. You store your Bitcoins in a wallet that you can then use to buy products and services from the companies that accept Bitcoin as an official payment method.
What you need to know about Bitcoin:
- You own it, and you are the sole authority over it (like cash).
- There are different ways you can access your money online (software wallets, etc.) which makes it easier for you to use them when you want/need to.
- The value of Bitcoins has always been volatile, therefore do your research before investing. There is no government bond guaranteeing you profit. Always do some research first before you invest.
Now that we’ve covered everything on the very basics of Bitcoin, what is your opinion on the digital currency? Let us know in the comments below.
Also, if you want to buy Bitcoin, we wrote a whole blog post on the topic which covers all the best options for buying Bitcoin in Canada.