What Is Bitcoin? Easy-To-Understand Explanations For Beginners!

By Mike Reiss- Nov 27, 2022 27

Bitcoin has been gaining traction as a new investment target in recent years. Since it has become a hot topic on TV and SNS, many may have heard the name. 

But even after hearing the name, many may be thinking, "What is Bitcoin?" And "Where do I buy it?" 

This time, we will explain what Bitcoin is like, an easy way to understand, even for beginners. We will also introduce the process, features, and uses of Bitcoin, so if you are interested please take a look at the latter.

 

What is Bitcoin? Easy-to-understand explanation

Cryptocurrencies have been gaining traction as a new investment target in recent years, and many of you may have heard the name "Bitcoin".

 

So what is Bitcoin? In this chapter, we will give an overview of Bitcoin.

 

What is Bitcoin?

 

Bitcoin is the first cryptocurrency to be born and currently reigns supreme in market capitalization. Even if you don't know how it works, you've probably heard of it if it's just a name.

 

A research paper published by a scholar named "Satoshi Nakamoto" states the origin of Bitcoin. This paper discusses a new currency proposal that uses blockchain technology.

 

Unlike ordinary currencies, virtual currencies like Bitcoin have no reality. It is not legally valuable, it is based on the trust of the user.

 

The birth of Bitcoin has had a huge impact on the world economy and is expected to solve the expected currency problem.

 

What is the difference between Bitcoin and Altcoin?

Bitcoin is one of the many cryptocurrency brands. However, since it is the first virtual currency to be born, its name and value are paramount.

 

Altcoin, on the other hand, is a cryptocurrency brand other than Bitcoin. "ETH" and "XPR", which have attracted attention in recent years, have also been classified as an altcoin.

 

Since Altcoin was created based on Bitcoin, the basic system remains the same. However, there are many Altcoins whose properties differ from Bitcoin. For example, Bitcoin had problems with increasing remittance fees and time constraints, but "XPR" solves this problem.

 

What is the difference between Bitcoin and e-commerce?

 

Many people confuse Bitcoin with e-commerce, but two different things. Electronic money is a payment method that charges the dollar and uses it.

 

However, since Bitcoin itself is a currency, there is no concept of charging. After buying on the exchange, you can make payments and remittances as currency.

 

Also, there are differences in management systems between Bitcoin and e-commerce. Since e-commerce uses tools to charge dollars, it is operated by e-commerce publishing companies.

 

Bitcoin, on the other hand, has no central administrator and has the feature that users can trade freely with each other.

 

Where can I buy Bitcoin?

 

When buying Bitcoin, it is common to use Virtual Currency Exchange / Sales Office. Virtual Currency Exchange is a platform that allows users to trade virtual currencies freely.

 

Many cryptocurrency exchanges are open in the UK and are characterized by high levels of independence and low fees.

 

Cryptocurrency Sales Office is a platform where users and companies can make cryptocurrency transactions and you can buy as many cryptocurrencies as you like at any time.

 

This is recommended for those who want to buy smaller cryptocurrencies, as sales offices often handle different types of stocks than cryptocurrency exchanges.

 

Mechanism/features of Bitcoin

Bitcoin has completely different processes and features from the traditional currency. Having this kind of knowledge will be helpful when using Bitcoin.

 

A central bank does not exist

A key feature of Bitcoin is that there is no central bank. In legal tenders, such as the pound and the dollar, the central bank controls the issue and distribution.

 

However, Bitcoin has no administrator like the central bank and it is done using a network that combines all blockchain technologies. With traditional Fiat currency, you have to pay a fee because you have to send money through a bank. It also takes time to deposit.

 

Bitcoin, on the other hand, has no specific administrator, so you can transact quickly. Fees are often very cheap.

 

Impossible to forge

Bitcoin has an aspect that is impossible to counterfeit. It involves a job called "mining" which is essential for bitcoin transactions.

 

Mining is the management of the mathematical processing required when trading Bitcoin. Mining requires a highly-specific personal computer.

 

Originally, this process was recorded in the new Bitcoin, so if any counterfeit currency was created from outside the blockchain, it would be released immediately. Also, since this blockchain does not have a specific administrator, it will not be possible to hack and tamper with the data.

 

Top transaction volume among virtual currencies

 

Of the approximately 15,000 types of virtual currencies, Bitcoin boasts the highest transaction volume. Lots of transactions mean demand and rising prices.

 

The volume of transactions is a very important factor in cryptocurrency investing. It is also an indicator for judging whether a cryptocurrency will grow in the future.

 

Bitcoin is a cryptocurrency with the largest trading volume, so prices are volatile. But you may be able to make a big profit depending on the trading method. The market capitalization of Bitcoin is quite high, so it can be difficult to invest if you do not have integrated assets.

 

There is an upper limit to the number of issues

 

There is a high limit to the number of cards that can be issued by Bitcoin. Setting a high limit on the number of problems creates rarity and maintains its value.

 

It is not uncommon for cryptocurrencies to have an upper limit on the number of cryptocurrencies issued, and this is a system that has been introduced in many cryptocurrency brands.

 

If Bitcoin issuance continues at its current pace, it will be 2140 to reach the highest issue number, which is still a long way off.

 

If Bitcoin is issued indefinitely, it will lead to price declines due to excessive distribution. So it can be said that it is essential to determine the maximum number of bitcoins to be maintained in order to maintain quality.

 

How to use Bitcoin?

So far, we have explained the outline, process, features, etc. of Bitcoin, but what kind of uses does Bitcoin actually have?

 

Investment

 

The main use of Bitcoin is an investment. Many who are thinking of buying Bitcoin from now on will have the desire to invest.

 

Bitcoin and other virtual currencies do not have a specific value. So, you can make a profit by buying when prices are low and selling when prices are high.

 

Bitcoin is a cryptocurrency with maximum market capitalization, but its price fluctuates frequently. Thus, when analyzing charts, you need to determine when to buy and when to sell.

 

At first glance, this may seem like a dream, but investing in Bitcoin is also risky. Prices will fluctuate due to trivial matters, so be careful about the amount you invest.

 

Remittance / settlement

 

Bitcoin is also an excellent medium for remittances and payments. For conventional cash transfers, it is common to transfer using a bank.

 

But, if you use a bank transfer, you will have to pay a fee. Especially when it comes to remittances abroad, there are a lot of fees and time spent.

 

Since owners of virtual currencies like Bitcoin can be transferred, remittances can also be made. Depending on the exchange, there may be almost no fees.

 

Bitcoin can also be used to make purchases at stores and sites that support virtual currency, so it can also be used as a payment method.

 

Application development

 

Virtual currencies like Bitcoin can also be used as a platform for application development.

 

The famous altcoin Ethereum "ETH" was also developed using this system. Since cryptocurrencies use blockchain technology, they are very compatible with the development of decentralized applications that use blockchain.

 

What is the price of Bitcoin? How much can you buy?

 

As of April 2022, the value of Bitcoin is 1 BTC = about 40 thousand dollars. Many will be surprised because it is quite expensive.

 

Since Bitcoin has a very large transaction volume, the price fluctuates accordingly and in 2021, it rises to a maximum of 60 thousand dollars.

 

Bitcoin is so expensive that many will think they can't afford it. However, some cryptocurrency exchanges allow you to buy a small amount of less than one unit. On the main cryptocurrency exchange "Coinbase", you can invest up to $ 1 in large cryptocurrencies like Bitcoin.

 

What is the future of Bitcoin? Points that lead to price increases?

 

Bitcoin is sensitive to global problems, so it is impossible to predict what the price will be in the future. But, there are some points that will make a big impact.

 

Popularization of Bitcoin payments

The first step toward increasing the value of Bitcoin was the expansion of Bitcoin payments. Bitcoin is attracting attention as an investment goal.

 

But, in recent years, there has been a movement to use Bitcoin as a payment method, and the price is expected to rise if it is adopted on a larger scale. If Bitcoin payments become widespread, it may be possible to use them when shopping abroad without being aware of the legal tender.

 

Development of laws regarding virtual currency

The third issue that drives the rise of Bitcoin is the development of virtual currency law. The current situation is that the law of virtual currency has not been caught yet.

 

Legislation is slowly being enacted to deal with virtual currencies like other financial investment products. So we want to look at the future movement.