What is cryptocurrency?
Let’s keep it simple: cryptocurrency is digital cash for the digital age. It’s similar to regular money — think $$ or €€ — but it’s digital-only, so there are no bills or coins to carry around.
How is cryptocurrency different from regular money?
Cryptocurrencies and regular money share some traits — like how you can use them to buy things or how you can transfer them electronically — but they’re also unique in interesting ways. Here are a few highlights.
What is Bitcoin?
Bitcoin is a cryptocurrency first introduced on October 31 2008 with a computer science paper that described how it would work. A few months later, on January 3, 2009, the code was released and the first bitcoins appeared.
Bitcoin is often compared to gold in that there is a limited supply — the maximum number of bitcoins that will ever enter circulation is 21 million. Unlike gold, however, bitcoin is digital, making it far easier to divide, transfer, and store.
Where do cryptocurrencies get their value?
The economic value of cryptocurrency, like most goods and services, comes from supply and demand. Supply refers to how much is available — like how many Bitcoin are available to buy at any moment in time. Demand refers to people’s desire to own it — as in how many people want to buy Bitcoin and how strongly they want it. The value of a cryptocurrency will always be a balance of both factors.
There are also other types of value. For example, there’s the value you get from using a cryptocurrency. Many people enjoy spending or gifting crypto because it gives them a sense of pride to support an exciting new financial system. Similarly, some people like to shop with Bitcoin because they like its low fees and want to encourage businesses to accept it.
In laymen’s terms, Bitcoin is a revolutionary new kind of money and a currency without borders. It is the world's first and premier crypto-currency.
Most believe Bitcoin will revolutionize not only the world of internet payments but — perhaps more importantly — money as we know it. Because of Bitcoin's decentralized and open nature, it has the potential to provide a level financial playing-field for all.
We recommend this short and entertaining introduction video.
What is a blockchain?
At its most basic, a blockchain is a list of transactions that anyone can view and verify. The Bitcoin blockchain, for example, is a record of every time someone sent or received bitcoin.
This list of transactions is fundamental for most cryptocurrencies because it enables secure payments to be made between people who don’t know each other without having to go through a third party verification like a bank.
Blockchain technology is also exciting because it has many uses beyond cryptocurrency. Blockchains are being used to accelerate cancer research, improve sharing of healthcare records, verify people’s identity, and so much more.
Why should I care about Bitcoin?
Although Bitcoin should still be considered an experiment, it can be said that it has the potential to be a better form of money than the currencies most of us use today.
What makes Bitcoin better than other forms of money?
Bitcoin combines the best qualities of hard money, such as gold and silver, and modern banking that most people in the ‘developed’ world have become accustomed to.
Bitcoin Versus Gold
Similar to gold, Bitcoin has a very limited supply — there are only about 18-million bitcoins in existence today, and the total supply is capped at 21-million. This means the value of each bitcoin will tend to increase in time.
However, unlike gold, Bitcoin is vastly cheaper and faster to send — you could send thousands of bitcoins (worth millions of dollars) from New York to London (or Bombay to Buenos Aires) in seconds and for almost no cost.
Bitcoin Versus National Currencies (Fiat Currency)
Like national currencies (such as yen or dollars), bitcoins can be easily stored and transferred electronically. However, unlike national currencies, bitcoins tend to increase in value, in time, rather than steadily and assuredly decrease in value every year, as national currencies tend to.
(It's true that the value of a bitcoin can fluctuate wildly and decrease in the short run. It is our view, however, that this is a temporary phenomenon — a “growing pain” of sorts; if Bitcoin sees widespread adoption, comparable to a large national currency, we could expect its value to be similarly stable.)
Who uses/accepts Bitcoin?
There are literally thousands of businesses and individuals that already accept Bitcoin as a payment method today — and that number grows daily!
Where can I get my own bitcoins?
Depending on the country you are in, there are various exchanges which you can link your bank account and buy/sell an array of digital currencies. Once you have traded for digital currencies, you will want to store them in a hot or cold wallet.