What is Bitcoin?
Bitcoin (BTC) is the first and the most popular cryptocurrency in the world. As of November 23, 2022, the value of a single bitcoin is about $16,000.
Its creator is the pseudonymous developer Satoshi Nakamoto. Nakamoto introduced bitcoin to the world in 2009 by publishing its technical description. Satoshi Nakamoto believed that bitcoin is suitable for becoming a unified electronic money system.
The main innovation of Bitcoin
Bitcoin was created as an open-source digital payment system. The main breakthrough and at the same time the value of this project is that for the first time ever it managed to create a self-sufficient, reliable, and decentralized system for money transfers.
Any bank or other similar financial institution is a centralized entity. The functioning of its operator is usually fully or partially closed from the users (customers). This leads to the need to entrust your money to a centralized structure. Centralized entities are prone to errors, abuse, and fraud.
Bitcoin does not have any of these problems, because it is a decentralized entity that is built and maintained by its participants themselves, without the involvement of a central operator. All users’ balances are public (although specific identities are hidden), and the network protocol has mechanisms that regularly check the accuracy of all data.
What is the value of bitcoin?
Bitcoin’s value lies in people’s trust in it. A popular theory claims that cryptocurrencies in general and bitcoin in particular are a better form of money than traditional currencies such as the dollar. Although physical dollar bills have almost no intrinsic value, we appreciate them because we trust the monetary system to exchange bills for goods and services. The monetary system, in turn, derives value from the economy and the goods and services that all citizens produce.
Bitcoin has a similar story. It has value because its network performs a service that people find valuable — sending money quickly and cheaply, without having to trust an intermediary. In addition, the supply of coins is limited. As a result, the more people conclude that bitcoin is a valuable commodity, the more people want to buy it, and its value increases. This has led to bitcoin being seen as a means of savings, just like gold.
