Some say it's digital gold, others call it a distributed ledger build on the blockchain. I like to think of it as electronic currency. Just like the dollars in your bank account. Simple right? Well........ maybe not. It may be easier to describe it's qualities.
First of all there are only 21 million bitcoin. Yes i use the singular not the plural, maybe because 21 million is AN amount. Maybe I'm just lazy and don't like to type the letter s. The good news is that they are easy to subdivide. So there are really 21.00000000 bitcoin. Thats 8 zeros. The smallest number is one satoshi. So .00000001 thats a point (.) followed by seven zeros with a one at the end. Or one bitcoin= 100,000,000 satoshi. Oh yeah Satoshi Nakimura is the alias of the inventor of bitcoin. He has since gone underground, vanishing into myth like Keyser Soze. But as this is not a history lesson, I'll move on.
Perhaps the best thing about it is that governments cannot censor it. That means governments cannot take it from you and your name is not tied to your account. Yeah sure they can and have confiscated bitcoin from criminals but that is also another story.
You can trade bitcoin on exchanges and or you can send it directly to your friends, family or any business that accepts bitcoin.You cannot loose you bitcoin either. "But my friend says he lost his bitcoin!" Nope, your friend lost his password(private key) his bitcoin are sitting right there at his address on the block chain. So he has lost the use of them forever. I'll be writing on security in another post.
Bitcoin is backed by neither gold nor silver. It is only backed by peoples belief that it's a store of value, just like the the dollar or euro. Some look at it as having a network effect, the more people that use it the more valuable it becomes and the uses it has the more people who use it. Nice little virtuous cycle here. We've just crossed the 17 million bitcoin being mined. Only 4 million to go. The only way to get a new bitcoin is by mining, used bitcoin are already in circulation. There is no bitcoin company that created bitcoin, it is an open source protocol supported by a community. So no big corporation can buy them out or mismanage quarterly revenue and no conference calls like a stock. Mr. Bitcoin will never be called in front of congress to testify.
Debasement is what governments used to do to coins. They'd make a pure gold coin with the kings face on it, but over time they got greedy. They would then add a cheaper metal to the "base" metal, making a coin with 90% gold and 10% copper, nickle or whatever. This cannot happen to bitcoin like it does with our current fiat money. Fiat currency is currency that is not backed by gold or silver, like the U.S. dollar has been since Nixon took us off the gold standard. They don't add lead to your dollars anymore they just need to print more. O.K. enough of the monetary policy, i can feel your attention waning.
The last topic I'll touch upon is mining. I'll probably write an entire blog on this topic so for now, I'll keep it simple. Just like Visa has computers keeping track of all the transactions, bitcoin has a network on its own doing the same thing. Unlike Visa, the bitcoin network is a decentralized network of miners doing that work. Every 10 minutes or so one of these miners get lucky and "finds a block". The current block reward is 12.5 btc(bitcoin). I'll definitely be writing more about mining in future blogs. Hopefully "ya'll" have found this info simple and easy to di
gest. Good luck.
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