Bitcoin Definition, Meaning & Examples

Date: November 14, 2019 / Category: Glossary

Bitcoin has a unique claim to fame. It’s the world’s first decentralized currency – essentially the predecessor to every other form of cryptocurrency we enjoy today. Let’s take a closer look.

What is Bitcoin? A brief, basic guide for beginners

Bitcoins aren’t like physical money (also known as fiat). Instead, a bitcoin is a digital “coin” that is sent from one place to another via the internet, without any need to pass through a bank.

Unlike the currency you carry in your wallet or the funds you keep in your bank account, Bitcoin isn’t regulated by a single government. Instead of having an administrative agency in charge of distribution, it is sent from one user to the next via a peertopeer (P2P) network.

Invented in 2008 by an anonymous individual or group known as Satoshi Nakamoto, Bitcoin was first distributed in 2009 when the original source code was released to the public as open-source software that allowed anyone with enough computing power to engage in bitcoin mining.

In its early days, Bitcoin struggled to find a legitimate and beneficial use case. These days, it’s possible to use this form of cryptocurrency and others to purchase a variety of goods and services on the open market. Investors trade this crypto on various exchanges, where it is referred to by the Bitcoin abbreviation BTC. For most, however, Bitcoin is seen as a store of value – an asset class for the digital age that will significantly increase in value over time.

How Bitcoin Works

There are many different exchanges that facilitate the buying and selling of Bitcoin for US Dollars, Euros, and other forms of currency (fiat money). Between transactions, Bitcoins are stored in digital wallets that are accessed via computers and mobile devices.

There’s a lot of technical wizardry that takes place between the BTC miner and those who own the bitcoin later on in its life – for more information, we recommend reading up on Blockchain. Luckily for the average person, it isn’t necessary to understand the technical aspects of Bitcoin to get a feel for how it works.

Just like other digital transactions, sending Bitcoins from one place to another is simple. Think of the way an email works: You choose a recipient and transmit information, and the email appears in the chosen recipient’s account. You can buy just about anything with Bitcoin – even big-ticket items like cars and real estate.

Every bitcoin transaction involves a public key and a private key. As the terms suggest, the public key is available to everyone, while the private key is known only to the current user. It’s impossible to own or spend bitcoins without the private keys.

Every transaction is recorded, verified, and stored on the Bitcoin blockchain. In essence, all transactions are recorded on a transparent public ledger that maintains user anonymity while verifying ownership and ensuring integrity.

Bitcoin Price

Just like other forms of currency and cryptocurrency, Bitcoin value and price varies – sometimes wildly. Here’s a brief sampling of Bitcoin prices at various times throughout its history.

Historic Price per Bitcoin

January 2011 – $.30

June 2011 – $31.50

July 2011 – $11.00

September 2011 – $4.77

January 2012 – $5.27

August 2012 – $16.41

January 2013 – $13.30

November 2013 – $1,163.00

January 2014 – $770.00

January 2015 – $314.00

January 2016 – $434.00

January 2017 – $998.00

December 2017 – $19,783.06

January 2018 – $13,412.44

January 2019 – $3,747.00

The current Bitcoin to USD exchange rate can be obtained with a BTC to USD calculator.

  Sources:

https://bitcoin.org/en/

https://bitcoin.org/en/how-it-works

https://en.wikipedia.org/wiki/Bitcoin

https://blockgeeks.com/guides/bitcoin-cash/

https://cointelegraph.com/bitcoin-cash-for-beginners/what-is-bitcoin-cash

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