Demystifying Bitcoin

Demystifying Bitcoin

Demystifying Bitcoin

What is it and how is it worth $50,000?

What is it and how is it worth $50,000?

Text: Siena Ballotta Garman

You've probably heard of Bitcoin by now, but it can be difficult to truly understand this emerging currency. It's not just you; Bitcoin is something of a mystery. For one thing, we still don't know who invented it. The software was released in 2009 under the pseudonym Satoshi Nakamoto. Though its origin story is murky, we can understand how this software works – and why it has revolutionary potential.

A bitcoin mining farm in Iceland. KOLBEINS/AFP/GETTY IMAGES.

What is it?

Bitcoin is a form of cryptocurrency – the world's most valuable – meaning that there are no physical coins involved. The success of Bitcoin has driven the creation of other types of cryptocurrency, but Bitcoin remains the most mainstream.

Why is it useful? 

Bitcoin creates a way for online transactions to occur without the middlemen of banks and credit card companies. This means that no third party takes a cut of payments, and it is cheaper to make online purchases. Like cash, Bitcoin is anonymous, so you can spend it without privacy concerns.

How does it work? 

All Bitcoin transactions are kept in a blockchain – a ledger of transactions stored in computers around the world. Computers update the ledger with each transaction and are paid in Bitcoin to do so. The process of earning Bitcoin for maintaining the ledger is called "mining." No central power controls Bitcoin, which means that it offers a powerful alternative to government-dependent currencies.

Why the recent success?

Bitcoin's success has not come without challenges. When it first emerged in 2009, anger toward big banks following the 2008 market crash fueled customers' enthusiasm about this new, decentralized form of cash. In 2017, however, Bitcoin plummeted in value amid growing skepticism. So why has the value of a single bitcoin now surpassed $50,000?

It probably helps that Bitcoin is gaining more mainstream support. Services like Paypal and Square now allow their users to buy and sell Bitcoin. Tesla also recently announced an investment in Bitcoin, and major investment banks are having to contend with Bitcoin's rise.

Can I buy some? 

Absolutely. If you're ready to bet on this promising cryptocurrency, there are many ways to get involved. You can purchase Bitcoin using websites like coinbase and Robinhood. Use Spendabit to find out where Bitcoin is accepted today. If Bitcoin keeps gaining traction at this pace, the list of businesses that accept it is sure to increase as well. Best of luck on your Bitcoin journey!

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