Bitcoin is a cryptocurrency, i.e. money based on cryptography, functioning on the Internet. It was created by a person or group of people using the pseudonym Satoshi Nakamoto and introduced into circulation in 2009.
We know that there are many new people interested in Bitcoin and with them in mind we remind them of the basics. This is the first article in the 7 series that will be available for new users.
One of the most important features distinguishing it from regular currencies is the absence of a central issuer (in the case of national currencies, the central bank is the issuer). In addition, the Bitcoin code includes an inflation control mechanism that limits the number of units of this currency to 21 million.
Such a limit does not apply to national currencies, e.g. dollars or zlotys, the number of which is potentially unlimited: the issuer can produce them “indefinitely”. Meanwhile, the number of bitcoins cannot exceed the programmed ceiling. Thanks to this it is not possible to artificially lower the value (purchasing power) of Bitcoin, just like the value of a dollar or a zloty decreases, “printing” money that has no cover in durable goods (e.g. gold). That is why Bitcoin is defined as a deflationary currency, i.e. one that increases its purchasing power in the long term.
Because Bitcoin aspires to be a global currency, the number of its units must be large enough. For this purpose, the creators of this currency have introduced a division into 100 million smaller subunits, called satoshi – they can be considered the equivalent of pennies in the case of zlotys or cents in the case of dollars.
Bitcoin is a currency based on open source code – open and accessible for everyone to see. It is also a “democratic” currency – any proposal to change the code must be accepted by the majority of users. This way, Bitcoin is not susceptible to manipulation and accidental interference.
Although the technology on which Bitcoin is based may seem complicated for most Internet users, using this currency is extremely easy. In some ways, it is simpler than using bank transfers. Just install the appropriate software on your computer or create an account on one of the services and generate an address of your wallet. From now on, you can make transactions in an unlimited way, e.g. by transferring funds to a person on the other side of the world.
When transferring bitcoins, we do not incur any costs specific to bank transfers, such as currency conversions or commissions. Transactions are also much faster: the recipient receives the funds within a few minutes of sending them. Bitcoin is easy to use, free of additional costs and safe. It also allows to maintain a large dose of anonymity – although it is not 100% anonymous.