What is Bitcoin (BTC)? The complete guide for 2020

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What is Bitcoin (BTC)?

It’s been the hottest thing in both finance and technology for years now: Bitcoin has arrived at the doorstep of the mainstream. Yet, most people are still scratching their heads and finding it hard to understand what’s so special (or useful) about this cryptocurrency.

Bitcoin, also known as “BTC” for short, is a virtual currency. It is similar to how you use dollars and fiat currency to transact, with one caveat: unlike traditional currency, it is not issued by banks or governments. Instead, it is created in a process known as Bitcoin Mining and is specially constructed so that each and every Bitcoin (and a fraction of Bitcoin) is accounted for and tracked in a global ledger (think of it as a book) known as a blockchain.

Because of the way it is issued and tracked permanently through secure and almost unbreakable digital means, it is an attractive alternative currency that is trusted by an increasingly large community. Proponents of the currency believe that it is more secure, represents true ownership, and becomes more valuable over time, due to its limited supply.

Perhaps the “true ownership” part of the story is the biggest deal; Bitcoins are often called decentralized currency, as its issuance, creation, and transference is not governed by any single entity. With traditional fiat currencies, the amount of money in circulation is determined by authority; as a user of the currency, you need to inherently trust that this authority is behaving in your interests – for example, by not printing too much currency and causing the banknotes you are holding to be less valuable.

However, in the case of Bitcoin, by using a massive global network of miners to “validate” the movement of transactions, the existence of each and every bitcoin, and having a regular issuance backed by information on the blockchain, the entire system is made “trustless” and users of Bitcoin can be assured of the provenance of each coin, and therein its ability to act as a true store of value.

Is Bitcoin legal to own?

Many have heard of the stories where Bitcoin is used in criminal activity, which deters them from owning or learning more about it. Have no fear; Bitcoin is legal in the majority of jurisdictions and nations around the world. Its reputation is perhaps owed to the fact that it is such a good alternative for a currency that smugglers, drug dealers, and criminals favored it over traditional currencies for their transactions. However, in recent times, the trackable nature of Bitcoin has made it possible to track down perpetrators of digital crime.

The latest incident in relation to this is of course the large-scale twitter hack in July, where 3 people were arrested over accessing Twitter’s systems and using prolific twitter accounts to get people to send their Bitcoin to their own wallets.

How do I use Bitcoin?

Bitcoin works just like every other digital wallet provider, like those offered by your bank – however, the terminology may vary slightly. In the instance of your bank account, you may have a pin number and a password, as well as a 2FA device; in Bitcoin, your account is called a “wallet”, and the password to the wallet, known as a private key, is securely generated and cannot be changed. You’ll have to record it down safely somewhere where no one can get access to it but you (we recommend a Password Manager). Finally, your account number is known as a public address, and it looks something like this:

17d4wa4wpgz4tZkMouiQZWMWgt5DmUsQwX

People use this string of numbers and letters to identify your wallet and send Bitcoin to it, while you will need to unlock your wallet with the private key that’s generated to send Bitcoin out to others.

What’s the purpose of Bitcoin when it was created?

Today, Bitcoin is better known as a store-of-value and the financial world’s most unorthodox investment. But in the original whitepaper written by its creator, Satoshi Nakamoto (a pseudonym) intended the digital currency to be a currency independent of the existing financial infrastructure and ecosystem. He was prompted by the 2008 financial crisis to build the peer-to-peer currency and hoped that it would one day resolve issues associated with the movement of money around the world.

How many bitcoins are in the entire world today?

The maximum number of Bitcoins that can exist has been set at 21 million, with over 1800 Bitcoins created – or “mined” – daily and gradually creeping towards this number. While this may seem like a lot, many of the Bitcoin has already been lost to time, and it is likely that the amount of circulating supply of Bitcoin will be much lower than 21 million once all of it is mined (expected to be around the year 2140, much later than now)

The top 5 reasons you should use Bitcoin today:

It is TRUSTLESS and ANONYMOUS

You can send money safely and securely anywhere around the world without needing to rely on your bank or an agent in between, or even needing to give away your identity to the recipient.

It is absolutely free to set up and use

You can open a bitcoin wallet any time for free and start receiving Bitcoin in exchange for goods and services, and then use that Bitcoin to buy stuff from other people. Buying Bitcoin directly is easy too – you can do so with a Credit Card or by buying it directly from other people looking to sell!

You can be part of a new finance movement

Bitcoin and its associated technology are changing the world of finance and technology in more ways than one. By purchasing and using your first Bitcoin, you can also start learning about the hundreds and thousands of use cases that blockchain technology is enabling, including Smart Contracts and Decentralized Finance (DeFi for short) 

You don’t need to wait for days to send money globally

Bitcoin offers more reasonable transaction fees than the likes of global remittance services, as well as much faster confirmation time. You can also look towards other cryptocurrencies to bring the cost down even lower, sometimes as low as a fraction of a cent!

Everybody else is already using it

Support for Bitcoin, the number of people using it, the number of transactions on the network, and of course its price has increased year-on-year for the past 10 years since its creation. You can see the statistics for yourself!

About Oobit

Oobit is a financial service that makes buying and selling digital currency easily, simple and lets you use crypto with the same ease as traditional money. We connect and introduce what would be an endless maze of information surrounding blockchains, and build tools that enhance the crypto user experience.

Oobit believes the digital currency world should be user-friendly, simple to operate, and instant for anyone. Find out more at oobit.com and purchase your first Bitcoin today!

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