Since it was invented in 2009, Bitcoin has become one of the world’s most popular cryptocurrencies. In fact, in 2017, Bitcoin reached an all-time high of just over $19,500. Today, Bitcoin remains synonymous with cryptocurrencies and represents the new financial frontier made accessible through blockchain technology.
Bitcoin was designed to be a new electronic cash system and was invented by a person referred to as Satoshi Nakamoto. At its fundamental level, Bitcoin is a peer-to-peer cryptocurrency that is supported by a digital payment system. Bitcoins are lines or snippets of code that carry a monetary value, and these coins can be publicly traded for goods and services around the world, making Bitcoin a borderless currency.
Unlike other forms of currencies that are typically created and distributed by a centralized bank, Bitcoins are “mined”.
Though a full explanation of mining can be complex, at a basic level, “miners” use specialized software and powerful computation hardware to solve advanced math problems that verify transactions on the public ledger (blockchain). Whenever these problems are solved the miners are issues Bitcoins.
The value of a single Bitcoin varies, though in recent months, a single coin has held a value of thousands of U.S. dollars. However, many people choose to purchase a portion of a Bitcoin, with the smallest denomination referred to as a Satoshi (0.0000001). Other popular increments are the milliBitcoin (mBTC), which is worth 0.001 of a full Bitcoin (BTC) and the microBitcoin (uBTC), which is worth 0.000001 or a Bitcoin.
Why is Bitcoin so popular? One of Bitcoin's most defining characteristics is decentralization or the fact that no central institution (e.g., financial institutions, government, etc.) controls it.
Instead, Bitcoin is an open network cryptocurrency that is maintained by a collaborative group coder around the world. Further, blockchain technology adds integrity to the equation by relying on a universal ledger to maintain integrity among Bitcoin users (i.e., no one can manipulate or reverse transactions because the transaction log is maintained across computers around the world.
Another benefit of Bitcoin is the notion of anonymity. Though Bitcoin protocol does include a series of checks that verify an account holder can receive or send Bitcoins; the same checks also validate previous transactions (stored on the blockchain) to authentic Bitcoin amounts.
However, despite the checks, there is no need for personally identifiable information (PII), such as tax IDs or social security numbers.
Bitcoins are typically stored in what’s aptly called a “wallet.” However, while the common definition of a wallet suggests a container in which you store something of value, a Bitcoin wallet is essentially a private key (256-bit string) that grants you access to a specific address located in the blockchain. There are multiple ways to store your Bitcoins, including software applications or hardware (e.g., USB). By purchasing Bitcoins through Xcoins, you will gain access to your xCoin wallet, a quick and secure way to access, spend, or transfer Bitcoins as you wish.
Bitcoins can be used for a variety of reasons and sending and receiving them is simple. While Bitcoins have not become a commonly accepted form of currency within the retail space, some stores and organizations do accept them, including Microsoft, Xbox, and Gift, which allows you to use your Bitcoins to purchase gift cards from hundreds of retailers.
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