What is Bitcoin (BTC)? What is "Digital Gold" Used For?

Bitcoin (BTC) is a digital currency (also called a virtual currency) that was created in 2009, and it was the first-ever cryptocurrency. Bitcoin can be traded, exchanged, and used as a form of payment, completely independent of central banks and governments. This is why it is called a peer-to-peer currency. It doesn’t need a central authority to operate. Instead, Bitcoin’s peer-to-peer (P2P) model works using a .

What is Bitcoin?

Bitcoin was created by an anonymous developer (or perhaps a group of developers) using the fake name Satoshi Nakamoto. Satoshi Nakamoto's for Bitcoin was an electronic payment system based on cryptographic proof.

Bitcoin was the world’s first cryptocurrency. Even all these years later, and with thousands of other cryptocurrencies on the market, it still holds the position of being the most valuable cryptocurrency, with the highest market capitalisation. This means that more people have invested in Bitcoin than in any other cryptocurrency.

Bitcoin has also grown in popularity as a type of payment. Bitcoin owners can use the crypto to buy items and services from merchants and retailers who accept BTC. Even can accept Bitcoin, among other big names.

How does Bitcoin work?

Bitcoin operates on a distributed ledger (think of it like a shared database) called a .

A blockchain is made up of blocks that are arranged by date, and contain data about each transaction on the Bitcoin network. This information can include the date and time, the parties involved, the total value of the transaction, and a unique identification code.

The blockchain is a public ledger. This means that once a transaction (in the form of a block) is added, it is publicly accessible to anyone. While anyone can see the transactions, it can be hard to determine who made the transactions, unless the wallets involved are named. You can have a nosey at the richest Bitcoin wallets .

What is Bitcoin mining? How does it work?

Bitcoin mining is when “miners” use powerful computers to add new records of Bitcoin transactions to the Bitcoin blockchain. The job of Bitcoin miners is to put transactions into sequence, in order onto the Bitcoin blockchain.

Miners have to solve hard maths problems to check that each new transaction is real. The first miner who solves the problem and adds a new group of transactions, called a block, to the Bitcoin blockchain gets new Bitcoin as a reward.

If two or even three miners publish a block at the same time, the winning block will be the one that has the most work.

History of Bitcoin price

Since the cryptocurrency's inception in 2009, the price of Bitcoin has fluctuated dramatically. Bitcoin surpassed US$0.10 for the first time in October 2010. By February 2011, it was worth US$1. On November 10, 2021, Bitcoin reached an of US$68,770. After that, the Bitcoin price fell, but since then the price has risen (and fallen) again.

You can follow the Bitcoin price .

How many Bitcoin are there?

At the time of writing, there are around Bitcoin in circulation. However, there will only ever 21 million, but this number is not expected to be reached until the year 2140.

One Bitcoin can be divided into a smaller unit known as a Satoshi. There are 100 million Satoshis (Sats) in a Bitcoin. You can think of Sats as the “cents” of Bitcoin. For example, if one Bitcoin is worth $65,187.68, then one Satoshi is worth $0.0006518768.

How is Bitcoin different from traditional money?

Traditional currencies are usually issued by governments. Bitcoin is a peer-to-peer monetary system that is not controlled by a central authority.

Traditional currencies have a physical version, such as coins or notes (although this is fast disappearing). Bitcoin, on the other hand, is a digital currency, with no physical version.

Traditional currencies are a legal medium of exchange because they are backed by their respective governments. But Bitcoin isn’t welcome everywhere. It is illegal in several countries, however this may change as governments change.

Traditional currencies are printed by the government, and these governments can print more money whenever they feel like it. It is hard to know, therefore, how much money is actually in circulation. Bitcoin, on the other hand, has a fixed limited supply of 21 million Bitcoin. So the amount in circulation can’t be manipulated to get a desired outcome by anyone.

Is Bitcoin a good investment?

Cryptocurrencies are highly speculative, and investors should only invest what they can afford to lose. Bitcoin's value is expected to rise further as it becomes more widely used as a medium of exchange.

The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise.

How to buy Bitcoin?

You can buy BTC by signing up to CoinJar. The services available to you depend on the crypto regulatory policies in the state or country you live in. A step-by-step guide on how to do this is on the ConJar website.

How to store Bitcoin?

You will need a place to keep your Bitcoin safe and secure after you buy it. This place is called a . There are different kinds of wallets, such as online or offline wallets.

Online wallets (also called hot wallets) are connected to the internet and let you do things like pay for things or use apps. Offline wallets (also called cold wallets) are not connected to the internet and are good for keeping your Bitcoin for a long time.

CoinJar also gives you an online wallet to store your Bitcoin. You can use CoinJar to send and receive Bitcoin from other people or places. You can also use CoinJar to change your Bitcoin into other currencies or cryptocurrencies.

How to store your Bitcoin in a wallet

To store your BTC after you buy it from CoinJar, you have two options.

-You can keep it in your CoinJar online wallet. This is convenient especially if you want to use BTC to pay for things and to trade for other cryptos. However, if an exchange gets hacked or goes bankrupt, then you could be at risk of losing your crypto.

-You can move your BTC to your own offline wallet. This is more secure for the long-term. But it also means that you have to take care of your offline wallet and not lose it or forget your password. If you lose your offline wallet or your password, you will lose your BTC forever.

What happens if you invest £50 in Bitcoin today?

It is important to say that before you start reading this section, no one can know what will happen in the future to any cryptocurrency price for certain. We can take educated guesses, but that’s all it is: A guess.

With that said, the price of BTC is expected to rise in the next few years. But this depends on a whole ball of factors such as adoption by mainstream institutions and regulation.

Therefore, investing £50 in BTC today could result in different outcomes, depending on when you sell your BTC and how the market performs.

One possible positive outcome is that BTC continues to grow in value and reaches new highs, as some experts predict.

For example, if BTC reaches US$1.48 million by 2030, as Cathie Wood, CEO of Ark Invest suggests, then your £50 investment today (with BTC worth US$42,830.60 at the time of writing) would be worth about £1726.

Please note that past performance is not a guarantee of future results. The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. While this is possible, it is a really, REALLY optimistic outcome.

Don’t forget there’s another scenario. If BTC crashes and loses most of its value, then your £50 investment today would be worth absolutely nothing.

Of course, these are just hypothetical scenarios. BTC is an unpredictable asset, however, it is fun to think about!

Can you convert Bitcoin to cash?

Yes, you can convert BTC to cash using CoinJar.

The first way is to use the buy/sell tab in CoinJar, where you can sell your BTC for local currency and deposit it into your CoinJar’s cash account. From there, you can withdraw your cash to your linked bank account or use it to buy other cryptocurrencies.

Why is Bitcoin real money?

BTC is real money because it meets the criteria of money, such as being a store of value, a unit of account, and a medium of exchange. This is despite not being used by traditional financial institutions.

However, BTC is not the same as fiat currency, which is issued and backed by governments. BTC prices can be subject to market fluctuations, which can affect its purchasing power.

However, BTC is real money: A new and innovative form of money that challenges the traditional notions of what money is.

While BTC is not accepted everywhere, it has the potential to offer more benefits as more people adopt it.

Summary: What is BTC?

Bitcoin, a peer to peer electronic cash system, was first described in a 2008 white paper by Satoshi Nakamoto.

It allows online payments directly between parties without the need for intermediaries like banks. BTC is a cryptocurrency, existing solely as data managed by a network of computers running BTC software. Users send BTC over this network, with transactions recorded on a public ledger. These transactions are secured and verified using computational power, with miners receiving a block reward for their efforts.

While not tied to the stock market, BTC can be bought and sold on cryptocurrency exchanges. Each user controls their BTC with a private key, a secret code necessary to authorise transactions. Early discussions about Bitcoin often took place on mailing lists, as it was a new technology gaining traction.