What is Bitcoin?
Bitcoin is a digital currency created using encryption known as cryptography. Transactions in Bitcoin are made on a public digital ledger called a blockchain. Each transaction on the blockchain is recorded, open to the public, irreversible and unalterable.
Bitcoin was created by an anonymous person or people under the pseudonym Satoshi Nakamoto between 2008-2010. The first Bitcoin transaction, known as the genesis block, took place on 3 January 2009.
There are a maximum of 21 million Bitcoins and no more can ever be created.
Transactions are made between electronic wallets each having a public address (used to send and receive Bitcoin - like an account number for your bank account) and secret private key (used to access the Bitcoin contained in the wallet - like a password for your bank account)
The key difference between a transaction on a blockchain and a traditional financial transaction, say a bank transaction, is that no single third party acts as a gatekeeper for the transaction. Blockchain transactions are verified by a global network of computers controlled by unrelated parties who are incentivised to record transactions accurately to receive a small transaction fee.
This distributed characteristic is what makes Bitcoin so attractive to many who think that the ‘sky is the limit’ for its future potential uses and applications. Think about it. We live in the age of the ‘middle man’. A typical transaction we make on a day to day basis involves a third party standing between the sender of money and the receiver - banks, credit card companies etc.
Bitcoin allows quick and frictionless transactions directly between the sender and receiver anywhere in the world without incurring time consuming and sometimes costly third party involvement, transaction fees or in the case of international transactions currency exchange fees.
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.