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Bitcoin is everywhere. To put it mildly, Bitcoin has been redefining "investment gains" for those visionaries who invested in Bitcoin before it went exponential by the middle of 2017. But even latecomers are still reaping a tidy profit, given that Bitcoin has gone from about $800,- to $8000,- since. And counting...
Clearly, Bitcoin is a game-changing technology, set to possibly supplant, but at least supplement, the current banking and money transfer industries. Along with numerous others.
But what actually is Bitcoin? This article will break Bitcoin down into bite-sized chunks so everyone can understand it.
Bitcoin is a new kind of money system that is decentralized. Invented by Satoshi Nakamoto, Bitcoin is very different from normal money in that you can use Bitcoin to make payment from A to B without there ever needing to be a third party involved. No VISA, no PayPal, no HSBC, no Western Union. No intermediary is required at all. Bitcoin is what they call a peer to peer payment system.
Obviously, when none of these companies are necessary, it stands to reason that Bitcoin money transfers can not only be much cheaper, but much faster too. This is indeed the case.
And this is part of the reason for the blistering run-up in Bitcoin's value; its immense disruption potential.
However, this begs the question as to how Bitcoin can achieve any level of security if there's no authority looking out for the interests of those transacting.
Blockchain is what makes Bitcoin Bitcoin. Bitcoin's security, indeed its very disruptive nature, is derived from Blockchain. Without going into too much detail, it suffices to consider that Blockchain is an algorithm, a computer script if you will, that governs every single valid Bitcoin transaction ever made and that will be made yet.
Blockchain is really just a ledger in that sense, but one that is extremely powerful, since it's amended real-time to include every latest transaction and automatically copies itself to thousands of computers on the Bitcoin network.
Given this wide distribution, committing fraud with Bitcoin is very very impractical. After all, if and when a transaction is tampered with, it may fool one computer, but how can anyone clandestinely overwrite transaction details recorded on thousands of computers simultaneously? Well, basically, it's impossible.
And here we have the next reason for Bitcoin's Value meteoric rise. Essentially, the Blockchain is a transparent, public, immutable and uncensorable distributed ledger.
And as it happens, so ironclad is the Blockchain infrastructure, that various industries are researching the feasibility of implementing Blockchain into their security.
But Bitcoin's's protocol has a few other ingenious features up its sleeve. One of these is that the number of Bitcoin ever to be in circulation has a hard-coded ceiling. It will never exceed 21 million. This renders Bitcoin finite.
This is another reason for Bitcoin's break-neck speed of appreciation; its supply/demand factor ensures high valuations, to the point that Bitcoin has been nudging gold off its pedestal as the world's number one contrarian long-term store of value!
This is the case especially amongst Millennials, who've had a soft spot for everything digital from birth. In fact, Bitcoin may even be said to be better at storing value than gold, since its much more compact than gold and transports way better than gold.
But the cap of 21 million Bitcoin also ensures that, unlike regular money, Yen, Euro, Ruble and their centralized ilk, Bitcoin is resistant to inflation. This has two main consequences: