What is Bitcoin in simple terms? – ForTrader.org financial magazine


Bitcoin in simple words is digital money. Physically, this currency does not exist, there are only special electronic registers that keep records of how many bitcoins someone has and who transfers them where. These journals are called blockchains. Bitcoin is also called a cryptocurrency or electronic payment system like Visa and MasterCard.

What does Bitcoin look like?

The bitcoin cryptocurrency itself is stored in a wallet that anyone can install on their computer. A Bitcoin address is a 34-character set of Latin letters and numbers. It can also be presented as a QR code.

Sometimes in the pictures we see bitcoin as a simple coin of different colors – gold, silver. He even has his own mark. However, such money does not actually exist, and cannot be, because in fact it is an electronic record in the system, which for convenience was called a coin. Investors know bitcoin under the BTC code, but when you buy it, you will not receive any paper, metal or any other physical equivalent – only an entry in your bitcoin wallet.

Bitcoin and gold

BTCMany people call bitcoin an electronic analogue of gold, because the cryptocurrency, like the precious metal, exists in a limited amount, established by the author. Over time, it becomes more and more difficult to mine bitcoin, more and more computing power is required. Perhaps this is the only similarity.

And, frankly, BTC cannot be compared with Gold, because the volatility of Bitcoin is extremely high, it is a risky investment asset. Gold, on the other hand, is a tool that conservative traders buy.

Difference from regular currency

Bitcoins differ from ordinary currencies in that registers are not stored centrally in banks and payment systems, but simultaneously on all computers whose owners have installed special software for themselves. Anyone can view all buy-sell-transfer transactions with all bitcoins in history, but they will be anonymous.

In addition, cryptocurrency money cannot be paid without software, so to speak, in cash, and in some countries the electronic version is now banned. Bitcoin is an investment vehicle that tries to get the role of money, but so far due to lack of regulation, this has not happened. However, despite this, it is becoming more and more expensive to buy BTC.

Similar to bitcoin

Bitcoin in simple words

At the moment, there are many types of cryptocurrencies like bitcoin (more than 1000), they are also called altcoins. From time to time, some appear, others do not withstand competition and disappear from the market, but bitcoin was a pioneer and earned trust.

Bitcoin is followed very persistently by the Ethereum course, which is of interest to investors, including thanks to technology. You can create ether just like any other cryptocurrency – through mining. But now mining is becoming less and less profitable, so altcoins and BTC are easiest to buy on the exchange.

Benefits:

  • your bitcoin account will never be blocked by anyone, unlike accounts in other payment systems;
  • you can use a similar account anywhere;
  • anonymity and transparency of transactions – all transactions are visible in the public log to anyone who wants to;
  • your account is not tied to your personal data in any way.

The main advantage of bitcoin:

Bitcoin developers managed to come up with a system where you can avoid problems with intermediaries, such as a bank or payment system, who take a commission for their services. This is achieved by technology where each user can directly transfer money to another user.

Disadvantages:

  • the risk of losing money when exchanging bitcoins, because the activities of exchange platforms are not regulated;
  • the price of bitcoin (BTC) can change rapidly or even disappear, because it is not tied to any official state currency;
  • consumers who use Bitcoin for payments for goods and services are not protected by the regulations of the USA, EU, Russia or any other country providing for a refund if they are debited as a result of an unauthorized transaction;
  • bitcoins stolen from a digital wallet are almost impossible to return;
  • lost codes from the wallet cannot be recovered.

Can Bitcoin be counterfeited?

Bitcoin registries are protected by cryptography. You cannot fake them all at the same time. There is no way to rewrite data in blocks and claim that someone now has millions. Bitcoin is pretty secure in this sense. True, there is already an attack that allows you to pay twice with the same bitcoins, so it is impossible to say that bitcoin is absolutely safe.

A simple and clear video of what bitcoin is.

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What else is useful to know about bitcoin

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