What is Bitcoin?
It’s a digital asset. Some call it a currency or money but until it is widely accepted as payment for goods and services, it is really a speculative and extremely volatile way to store wealth. You buy it through an exchange with government legal tender and you sell it at an exchange to turn it back into government issued legal tender. It is a very convenient and almost instant way to move money from one country to another.
The hardest thing to understand is that it doesn’t actually exist like gold or real estate. It is an entry in a a decentralized encrypted (blockchain) ledger with a limited number of entry places, 21 million to be exact. There won’t be any more which is what gives it a way to measure value as it is in limited supply.
Bitcoins are created by “mining” them which is a process where complex problems are solved to arrive at an answer which is rewarded with an earned bitcoin. At first this was very easy but as the remaining balance of the available 21 million continues to get smaller, it takes an ever increasing amount of computing power to find them. At the beginning you could find bitcoins using a small specialized computers from your home. As time has gone on, it has gotten to the point that it takes an ever increasing amount of computing power and energy to mine the remaining coins. It is now taking large corporations with “crypto farms” using enough energy to power a small country to find the remaining coins. It is estimated that the last coin will never be mined. It is believed that this scarcity is what gives it value.
Feel free to leave a comment or correct me if I have made an error or are unclear about something.
Thanks for reading.