Does it Store Value? Is it a Currency? Perhaps an Asset? Or Maybe a Payment System?
There is quite a controversy on what Bitcoin (abbreviated BTC) is, so it may be easier to say what it is not.
What it is not, is one of those beautiful shiny coins you see representing Bitcoin with the nice engraving. No, Bitcoin was created to be and is all digital. A set of protocols and processes that represent a value.
Bitcoin has remained the most successful of all attempts to create a digital currency and has a commanding lead in market capitalization over it’s imitators who have come on the scene after Bitcoin and has maintained this status over a decade of it’s history.
In 2008, when a person calling himself Satoshi Nakamoto introduced Bitcoin, he also introduced a Public Ledger for it to run on called a Blockchain. As stated, each “transaction” of Bitcoin is publicly stored on the Blockchain (a public ledger) for anyone to see and cannot be deleted or manipulated, creating an environment where Trust is not needed.
Over time many other Crypto-currencies have come into being, and other Blockchains have been created to run those Crypto-currencies on using similar cryptography. For example: Etherum has it’s own blockchain which is geared to “smart Contracts”.
The Blockchain stores transactions chronologically in a single chain called a “block”. Since information is basically 1’s and 0’s it opens up lots of possibilities. Things like emails, marriage licenses, land contracts and just about any type of contract can be put on a Blockchain ledger that would basically takes away the need for a third party intermediary being involved.
Currently Bitcoin on the Blockchain is mostly transaction history, but it could certainly be use at some point as a payment system or a store of value. A consensus would have to be reached in order for this to happen, however.
Etherum’s goal and purpose is to create a platform where “smart contracts” can be made thereby making way for a whole array of decentralized products. Thus, doing away with any third party middlemen and eliminating fees and possible data breaches that seem to happen often.
There is no central party who maintains the Blockchain or “distributed ledger” as this information is stored on computers world-wide. Anyone can download the complete transaction history of Bitcoin or go to any of several sites that parse this information out. There are complicated measures in place for updating the Blockchain Ledger.
Investopia says – Here are some Key Takeaways on Bitcoin:
- Bitcoin is a digital currency, a decentralized system which records transactions in a distributed ledger called a blockchain.
- Bitcoin miners run complex computer rigs to solve complicated puzzles in an effort to confirm groups of transactions called blocks; upon success, these blocks are added to the blockchain record and the miners are rewarded with a small number of bitcoins.
- Other participants in the Bitcoin market can buy or sell tokens through cryptocurrency exchanges or peer-to-peer.
- The Bitcoin ledger is protected against fraud via a trustless system; Bitcoin exchanges also work to defend themselves against potential theft, but high-profile thefts have occurred.