Bitcoin was created in 2009 by an anonymous entity known as, “Satoshi Nakamoto.” It was the original cryptocurrency. Bitcoin can be sent over the internet to anyone, anywhere in the world. Because of this, it can be thought of as digital money or digital gold.
Bitcoin uses a decentralised ledger to track all transactions and allows people to send funds directly to each other. This means it is not controlled by a single entity, so there are no middlemen that can control transactions, try to block them, or ask you to pay expensive fees for them.
Bitcoin is an independent, global, censorship-resistant system used to store and transfer value. It was a revolutionary invention, and many people refer to it as “gold 2.0.” This is because it shares many of the same properties as gold, such as scarcity, fungibility (what is fungability?), durability, and divisibility. However, Bitcoin is infinitely more portable than gold.
In fact, gold is extremely heavy and requires an elaborate compliance process to transport across international borders. However, all that a person needs to transport Bitcoin across international borders is a smartphone.
Bitcoin is powered by “blockchain technology.” Blockchain technology is a financial technology in which groups of transactions are validated by special computer programs run by “miners” and added to the “chain” of transactions in “blocks.” This chain of blocks, or blockchain, contains every transaction that has ever occurred on the Bitcoin network. It is Bitcoin’s blockchain that preserves its integrity.
Key benefits of using Bitcoin:
- Protection against money printing and inflation: Bitcoin has a fixed supply (21 million Bitcoins) and thus, cannot be inflated limitlessly, unlike government-issued fiat currencies. Bitcoin’s scarcity helps to preserve the value of your money over time. This is becoming increasingly important at a time where currencies around the world are depreciating in value as governments print endless amounts of their respective fiat currencies. The Stock to Flow Model live chart on this site looks at Bitcoin supply and its potential impact on price over time.
- No need to trust third parties: Bitcoin is peer-to-peer which means transactions happen between two parties. They cannot be stopped by an intermediary such as a bank or a credit card company. You control your money. Bitcoin provides complete transactional freedom.
- Security: The Bitcoin network is extremely secure. Because it is decentralised and secured using math and cryptography, it is far more secure than traditional centralised financial systems. Since its inception in 2009, Bitcoin has never once been hacked. Its underlying technology is extremely robust, and it gains more trust with each passing day.
- Send any amount, anywhere, anytime: Bitcoin never shuts down. Funds, whether large or small, can be sent at a low cost to anyone, anywhere in the world, 365 days a year. This means you won’t have to wait until after the weekend to send Bitcoin like you would if you wanted to wire money with a traditional bank. You also won’t have to wait for the market to open on Monday in order to buy Bitcoin for investing purposes like you do with other investment vehicles like stocks.