What is Bitcoin? Here’s What You Should Know
Bitcoin (BTC for short) is a peer-to-peer electronic cash system. Peer-to-peer means that one user transfers directly to another user without the intervention of a third party (bank or government). The huge advantage of this is that no one can stop a transaction. You can join Bitcoin by simply installing an application on your phone in one minute and you are ready to go. From now on you can send money all over the world in seconds and for next to nothing. Without asking permission from a bank or government. This can contribute to a fairer less centralized world!
To put it simply, Bitcoin is digital money and is often seen as the internet currency. You can use it to pay, exchange between them, receive in exchange for a service, speculate and even exchange back to any currency. These are some examples of the countless uses Bitcoin is suitable for.
November 2008, at the time of the economic crisis, the Bitcoin whitepaper was circulated to a cryptography mailing list by Satoshi Nakamoto (the still anonymous individual or group behind Bitcoin). Bitcoin went live on January 3, 2009 and a lot has happened since that day.
Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities.
Bitcoin is much more suitable for payments on the internet than, for example, a credit card. That is why it is often called: “native internet currency”. BTC is, as it were, a form of money in the cloud, because if you have a wallet app on your phone you always have it with you and it can be accessed and used from anywhere.
Besides Bitcoin, there are more than 2000 other cryptocurrencies and these all tried to solve their own ‘problem’ or to become a better variant of Bitcoin. However, Bitcoin remains the absolute number one.
- Sent directly from person to person
- Shipped for a few cents
- Sent as anonymously as you want
- Just as easily sent as an email
- Can be used or exchanged anywhere in the world
- Sent without the intervention of a bank or other agency
It is the first fully decentralized digital currency in the history of money. This is the most revolutionary idea since the internet, because there is no central party, agency or regulator like a central bank that can exert influence. The Bitcoin network is completely self-organized and takes care of the new issuance of coins (up to a maximum of 21 million) and the validation of transactions. Only people who have chosen to support the software themselves participate in BTC. So-called Bitcoin nodes that connect via the internet to realize a worldwide payment network without a central authority.
Spend and Accept
Spending can be done very easily by scanning a QR code or entering a wallet address. You perform a push transaction with BTC in which you send the money to a party and not that they debit it. You also do not have to enter any data or give authorities access to your accounts.
Accepting Bitcoin is just as simple. You only need a Bitcoin address to receive or you integrate an e-commerce plugin such as OpenNode in your webshop and it is handled completely automatically. In addition, it is possible to take a payment provider and have this Bitcoin accepted for you and immediately converted into Euros.
It is becoming easier to spend BTC and it is becoming more and more accepted. The list of companies where BTC can be used is getting longer. Check Bitcoinsiders.com for a page of companies where Bitcoin is already accepted.
Bitcoin is slowly starting to become a serious alternative to gold and payment methods. Good reasons for accepting BTC are:
- Transactions are immediately fulfilled anywhere in the world which means no waiting two days for your money.
- Minimal transaction costs (few cents) whether you send 1 or a hundred BTC.
- No transactions that are reversed as with credit card.
- No monthly fees or subscriptions.
- No restrictions or rules.
- No governments, central banks, governments or other parties.
- As anonymous as you want.
- Receive and send mini amounts of cents (micropayments).
- Exchange against any currency if you know how.
How are Bitcoins created?
Bitcoins originate from the cryptography of the network and there will be a maximum of 21 million (we are now towards 18 million). To earn BTC you can join the network by ‘mining’. This means that you use the computing power of your computer or special mining equipment (hardware) to validate and store Bitcoin transactions. Every 10 minutes 12.5 Bitcoins are added and these are awarded in a kind of lottery to pools of miners. In this way, it is evenly distributed across the network.
In addition to ‘mining’ BTC or receiving BTC for services or products, it is also possible to purchase BTC. You can buy Bitcoin through a so-called ‘exchange office’ that sell BTC to users or exchange it back to Euros (or other FIAT) with a small surcharge. Compare them to the GWK which converts dollars to euros. You can purchase BTC directly at these exchange offices with iDEAL. Nowadays buying BTC is very easy and fast. Here is an overview of the providers.
Overview of companies that sell Bitcoin directly via iDEAL:
With these companies it is also possible to sell BTC and then they will deposit the amount back into your account.
The price of BTC is not determined or influenced by any central authority or government. This is unique, because with ordinary money, huge inflation is always caused by money creation and qualitative easing. BTC is traded in many different places and exchanges. This supply and demand are important factors in determining an average price that composes the price.