What Is Bitcoin and What Are Its Uses?

While a great number of people in the finance and technology industry are well-versed when it comes to bitcoin, there is still a vast majority of people around the world who aren’t familiar with it. If you are among this group of people or if you are just curious about what bitcoin is and how it works, here’s some info about bitcoin that you might want to know.

Bitcoin in a nutshell

Bitcoin, abbreviated as BTC, is just one of the thousands of available cryptocurrencies available in the market today. Cryptocurrency, or virtual currency, is a digital asset intended to function as a medium of exchange, which operates with the use of cryptography—a method used for securing, processing, and verifying information and communications through the use of codes.
Created and developed in 2009 by a person or a group of people under the name Satoshi Nakamoto, Bitcoin was introduced as a new payment option and a new kind of money. It functions just like cash or fiat money that is utilized today for payment transactions. The only difference is that bitcoin is purely digital and is stored in a bitcoin wallet or digital wallet, which can be accessed through the user’s cloud, computer, or mobile phone.

Another distinct feature of bitcoin is its decentralized system. It does not operate and run under the regulation of any government or higher authority, but rather uses a network where every transaction is recorded and accessible through the public ledger.

Bitcoin mining

Bitcoin is often compared with gold because of notable similarities. One of the most common similarities that these two have is the way how they are acquired. Gold is obtained through hard rock mining that uses underground mining techniques for excavation.

On the other hand, bitcoin is also collected through mining, but digitally. This process is known as bitcoin mining done by people who are so-called “miners” that generate these virtual coins through the use of special software and high-powered computers.

Bitcoins are hidden inside data blocks and are mined using a special algorithm that was designed by its anonymous creator, Satoshi Nakamoto. High-powered and specialized equipment is utilized to solve these highly complicated mathematical problems for mining.

The software used for mining can be downloaded for free, but you have to take note that bitcoin mining can be hard work. Among the most important things that you should know about bitcoin mining, aside from using high-powered computers, is that it will take up a lot of electrical energy and storage space when you start running the entire process. You should also do a lot of reading and research to get familiar with the technical side of the procedure.

Other ways to acquire bitcoins

In the early years of bitcoin, the most common way of obtaining it is only through bitcoin mining. However, as bitcoin and other cryptocurrencies see notable growth in adoption today, buying bitcoins is so much easier now than before.

This is because there are marketplaces for bitcoin that offer hundreds of payment methods that you can choose from. One of these platforms is Paxful, the leading peer-to-peer marketplace for bitcoin that offers over 300 payment methods should you want to purchase fractions of bitcoin.

Buying and holding bitcoins also require having a bitcoin wallet for storage purposes. For those folks who are just starting in their cryptocurrency engagement, Paxful also provides a free bitcoin wallet once you sign up and have your account verified.

Uses of bitcoin

Now that we are done discussing what bitcoin is, who created it and when, and how to acquire it, let’s now proceed to some of the many uses of this leading cryptocurrency.

Crypto trading

Bitcoin, being the leading cryptocurrency in terms of market capitalization, is most commonly seen in cryptocurrency trading. There are over 2,900 cryptocurrencies available in the market today and bitcoin stands still at the top, which makes it a good asset to consider for trading.

Bitcoin trading not only involves buying and selling of coins but also constantly checking the rise and fall of bitcoin’s price. This is usually done in trading accounts and platforms where you can check real-time movements in bitcoin’s price and conduct crypto trading transactions such as buying and selling.

Payment method

Aside from trading, bitcoin is also used as a payment option. While it is not yet accepted as a mode of payment in all parts of the world, bitcoin is widening its reach as individuals, various businesses, institutions, and organizations in different areas of the world are gradually accepting it in exchange for their goods, products, and services.

This function of bitcoin also makes payment transactions to be more convenient because it makes use of paperless or cashless transactions. This saves its users from commonly encountered payment concerns such as delayed transactions and inaccessibility to some banks or monetary institutions. However, if you wish, you can still exchange your bitcoin for cash.

Market investment

Previously, we’ve mentioned that bitcoin has a lot of similarities with gold. Aside from mining, bitcoin is also highly valuable and is considered a scarce asset for it has its maximum supply of only 21,000,000 BTC. Since it is not run by any government body or central banks, it is not possible to add up to the number of its supply unlike with fiat currencies or paper money that can be printed and distributed by central banks when needed.

Bitcoin’s value and price also experience severe rises and falls because it is highly volatile. However, while this characteristic might sound negative to some, this volatility is what makes business people want to try investing in bitcoin.

Remittance

Sending money via traditional money transfer services requires a lot of personal information. Aside from this, transfers usually take days or weeks, depending on the location and amount to be transferred. It also has charges and additional fees which vary on the transaction details.

With its purely digital feature, bitcoin along with other cryptocurrencies makes the process of transferring money fast, convenient, and less expensive as compared to the process of banks and traditional money transfer services. This can be done with just a few clicks on your smartphone or laptop.

Charity donations

Today, there is a growing number of cryptocurrency adopters in the sector of non-profit groups. This prepares the ground for other bitcoin and cryptocurrency holders to enter and engage in charity works and humanitarian aid efforts.

The projects that can be supported through bitcoins include those for research, education, and others. Among the known non-profit organizations and charity groups that are now accepting bitcoin are Red Cross, Save the Children, The Water Project, Autism Speaks, Zamzam Water, among others.

Bitcoin in the coming years

This is just some of the broad information in the ever-widening world of bitcoin. We’ve learned that among the common uses of bitcoin are as a payment method, as a means for charity donations, for transferring money, for trading, and for investment.

While bitcoin is seeing a rise in popularity and adoption, there is still a great number of people all over the world that have no idea about what it is. However, as it continues to be known and gradually accepted in different parts of the world, it is not impossible that in the coming years, we can witness the innovative things it can bring in the monetary system we have today.