What is Bitcoin?
As defined by Jennifer Shasky Calvery, Director Financial Crimes Enforcement Network United States Department of the Treasury,
Bitcoin(₿) is a cryptocurrency, a form of electronic cash. It is a decentralized digital currency without a central bank or single administrator that can be sent from user-to-user on the peer-to-peer bitcoin network without the need for intermediaries.
Bitcoin is a form of digital currency that is also a cryptocurrency. A digital currency is defined by Wikipedia as a, “type of currency available in digital form (in contrast to physical, such as banknotes and coins).” A cryptocurrency as defined by Wikipedia is, “a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.”
These two concepts are important since many of the attractions to Bitcoin are because of its digital nature which allows it to be traded quickly and easily, and its secure nature which allows for decentralized control.
Evidence of Bitcoin’s creation date back to 2008 when a domain, bitcoin.org was registered. It wouldn’t be until 2009 when the first Bitcoin block was mined. From this point onward, more Bitcoin mining and adoption occurred. However, Bitcoin is not the first digital currency to be conceived. There are many coins that were created prior to Bitcoin’s creation. Some of those coin are, Hashcash and b-money.
It is important to note that there is no actual coin for Bitcoin. All of the value is electronic and stored on a ledger in the cloud. In layman’s terms, Bitcoin is all electronic and the data is stored in an array of networked computers. So there is no actual coin or material one can hold in your pocket or stash away in a vault. Instead, a Bitcoin owner would store their “coin” or data on a hard drive.
The benefits of Bitcoin are many. For some users, Bitcoin allows them to trade currency or transfer funds with lower fees and at a faster rate than they would be able to using current digital banking transfer methods. This helps people transfer money across borders and seas without having to deal with the headaches of banks, their fees and limitations. Instead, users can transfer money directly from one Bitcoin wallet or address to another. They can also do so anonymously if they so desired.