what is bitcoin?
Bitcoin is a virtual currency – the first created in the world – and can be used to purchase services, products and any other items in establishments that accept to be paid with it.
One of the big differences is that bitcoin does not have a physical currency or banknote. It is entirely digital, formed from a unique code. Hence, it enters the cryptocurrency category.
Bitcoin is the world’s first decentralized currency. This means that, in addition to not being regulated by governments, banks or companies, it is possible to buy, send and receive bitcoins without any intermediaries, such as banks or credit card issuers.
Also, it is a limited currency. Unlike the real, dollar and euro, currencies that can be issued as countries feel the need, bitcoin and its code were created in a way that only 21 million coins can be issued – this is the limit. By 2019, an estimated 18 million bitcoins had already been issued.
How does bitcoin work?
Bitcoin is traded on the internet on its own network, the blockchain: a database where all bitcoin transactions between network participants are recorded.
Also, bitcoin is decentralized and open (although participant information is anonymous).
Each bitcoin transaction is made between members, recorded through software and also by mining members, who verify each transaction.
Once validated, transactions are added to transaction blocks – hence the name blockchain – every 10 minutes, when new blocks are created. Because of this validation, it has never been possible, until today, to defraud bitcoin.
Each user’s bitcoins are stored in so-called digital wallets, through which it is possible to transfer and access the coins. They are basically programs and software installed on computers and cell phones.
What is the value of bitcoin? Who decides this?
Bitcoin, like any other currency, undergoes daily variations and follows the law of supply and demand – that is, the more people wanting it, the more expensive it gets and vice versa.
But, unlike other currencies, it has a very large oscillation and can vary, in a single day, up to 20%. This happens for two main reasons: the fact that bitcoin is limited and the high demand for the currency.
The popularization of digital wallets, the emergence of bitcoin brokerages and the notoriety of the currency itself made the search for bitcoins increase, also raising its price in relation to traditional currencies.