What is Bitcoin? A Crypto layperson FAQ
What is 'a Bitcoin'?
- A Cryptocurrency FAQ & Cryptionairy
What is Bitcoin?
A Bitcoin is an online currency that can be exchanged for goods and services across a number of platforms. The Bitcoin is said to be a crypto currency because the entire Bitcoin network is digitally encrypted using an algorithm.
This algorithm allows pockets of transactions, called ‘blocks’ to be completed over regular amounts of time. These ‘blocks’ contain the ledger information necessary for Bitcoin to act as a decentralised bank. The details included in a block consist of the transaction history, and the time and date that the block is completed.
How are New Bitcoins Issued?
Bitcoins are created through a process called ‘mining’. Computers on the bitcoin network are constantly attempting to solve an algorithm, in order to obtain a reward. This reward is given in the form of a variable bitcoin reward, that is adjusted over time. It started at 50 in 2008, and halving every 4 years since- it’s currently at 12.5 Bitcoins per block reward.
What decides the value of a Bitcoin?
The value of a Bitcoin is decided by the amount of value placed on it by the holders of the currency, as well as by the amount of miners on the network that mine Bitcoin. People value a decentralised, electronic, private and anonymous method of storing and sending money for obvious reasons.
As Bitcoin and other cryptocurrencies gain further attention for their uniquely useful their features value increases, and they become more scarce. This drives the markets to desire it more, much in the same way gold works. For this reason, it’s often unfairly branded a tulip bubble by lazy economists, and slanderers- the same Wall Street suits who buy up the manipulated crashes throughout the year.
Buy none of the disingenuous remarks, they ignore the nuance involved in a technological breakthrough such as the blockchain and resulting technologies. It also ignores the facts of blockchains continuing adoption and usage.
Note: This article is a running blog post. This means that our writers are constantly thinking of new entries to freshen up our first point of call for the crypto lay person.