What is a bitcoin, and how does it work? It initially launched as a video game currency in 2009, invented by Satoshi Nakamoto. Within just a couple of years, bitcoin became a massively successful form of Digital Currency [more commonly known as ‘Cryptocurrency’].
Cryptocurrency provides an encrypted and secure network in which any amount of money can be transferred from one person to another globally (and for free) with the use of digital wallets. Cryptocurrency makes expensive bank wires obsolete and gives you the power to ‘be your own’ bank!
Bitcoin is the pioneer of the cryptocurrency financial marketplace with ever-growing global merchant acceptance. As of this writing, bitcoin is accepted as a form of payment by over 500,000 merchants online and brick and mortar locations around the world. Bitcoin is also known as a ‘financial technology’ called ‘the blockchain.’
The question ‘What is a bitcoin, and how does it work?’ is being asked more frequently every passing day as awareness about financial technology has been growing faster than ever thanks to two factors.
- The blockchain and bitcoin have received a lot of attention the past few years and is now being invested in and implemented by the financial institutions and corporations of the world. The industry has spoken! There is a massive opportunity in Cryptocurrency.
- Cryptocurrency [bitcoin specifically] has already created a new generation of wealth with many new multi-millionaires around the globe. These lucky people were able to take action with Bitcoin when it first launched and was still worth just a fraction of a cent per bitcoin.
Interesting story regarding this; a young man from Norway named Kristoffer Koch became famous for ‘forgetting’ he had acquired $26 worth of bitcoin in 2009. He eventually woke up one day to the news that bitcoin had skyrocketed to $1000 per coin. He woke up to find himself in an elite group amongst the first bitcoin millionaires in the world! Imagine if that happened to you, and check out this chart:
Bitcoin went from being worth pennies to $655.24 per coin at Coinbase as of 2:48 PM EST on 10.25.2016. Bitcoin is outperforming sovereign issued global currency every day, by a long shot!
In a recent article ‘Go With Bitcoin, Skip Central Banks’ Billionaire Investment Advisor Bill Gross in explaining the virtues of Bitcoin as a financial solution that is more reliable than the current structure provided by central banks he said:
“Bitcoin and privately agreed upon blockchain technologies amongst a small set of global banks, are just a few examples of attempts to stabilize the value of their current assets in future purchasing power terms [like gold].”
Bill Gross says that bitcoin as a more stable and secure place to put your money than the central banks!
Other very notable successful entrepreneurs have thrown their hat in the ring for bitcoin and blockchain technology as the future of money. Including Bill Gates who said on Bloomberg that:
“Bitcoin is exciting because it shows how cheap it can be,” he told Erik Schatzker during a Bloomberg TV’s Smart Street show interview yesterday. “Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient.”
Popular entrepreneur Richard Branson also stands behind Bitcoin and the blockchain as something that is ‘working’ now in commerce. He explains ‘it’s made many people fortunes’ and that there will be “more technologies that come along that are like bitcoin but even better” as the industry moves forward:
What Is A Bitcoin And How Does It Work?: The Benefits And Flaws Of Bitcoin
Even though you don’t have to understand financial technology to use bitcoin in an everyday transaction, it is powerful to understand the benefits of it. Like why you would want to use it over other payment solutions like cash, credit cards, or banks.
The following short video provides an easy to understand visual explanation answering the question ‘What is bitcoin and how does it work’:
Benefits & Advantages of using Bitcoin:
- You can transfer money person to person using the internet, without having to go through a bank meaning the fees are much lower [think a fraction of a cent per transaction]
- Bitcoin is accepted in every country, and you can take it with you everywhere, thanks to the internet.
- A financial institution or government can’t freeze your bitcoin wallet/account.
- There are no arbitrary limits on the movement of money [a stark comparison to banks]
- Exchanges exist online that allow you to buy and sell bitcoin for dollars, euros, and more.
- Bitcoins are stored in a digital wallet that can be installed on your desktop computer or mobile device.
- Sending bitcoins for payment is as simple as sending an email, and you can purchase anything.
- All bitcoin transactions that ever happen are recorded on the publicly verifiable bitcoin blockchain, which is an immutable ledger/record.
- As a ‘trustless’ technology that will always execute as expected to verify and conduct transactions globally, it replaces the function of central banks with this role.
- Bitcoin is also completely open-source, and anyone can view the code. Nobody owns bitcoin the concept/blockchain. However, a large and growing number of people around the world have adopted the currency and own bitcoins.
- With Bitcoin and cryptocurrency, you can ‘be your own’ bank.
The Flaws of Bitcoin:
- Bitcoin is slow. It can take up to 45 minutes for the bitcoin network to confirm a transaction.
- Since there is no way to instantly convert Bitcoin to fiat currency [cash] via a transaction, merchants must speculate holding the bitcoin until it arrives in their wallet, and they can move it to the exchange and liquidate it.
- The transactions on the bitcoin network are confirmed by miners who run server farms around the world. These ‘miners’ earn bitcoins for the transactions they verify on the network. This task is not something the average person can participate in since it requires specialized knowledge.
- Due to its logistics of using bitcoin miners that require large amounts of processing power, it also consumes a lot of electricity to run the bitcoin network [$400 million a year]. That is not the most sustainable or ‘green’ solution.
- New technologies called ‘Altcoins’ [alternative cryptocurrencies to bitcoin] have been developing over the past few years that are quicker and faster than bitcoin. They also improved massively upon the transaction verification process, and do not require millions of dollars of energy annually to run like the bitcoin network.
- Bitcoin has passed as a ripe financial opportunity for investment with leverage, as is $650+ per coin [as of this post].
- Bitcoin is becoming old technology.
What Is A Bitcoin And How Does It Work?: How To Use A Bitcoin Wallet
Now you know what a bitcoin is, how it fundamentally works, and what are the benefits and flaws to using it. Now you just need to see how easy it is to open up a bitcoin wallet, buy bitcoin, and make transactions with it. Watch the following video for a recap of this article followed by a tour of the most popular U.S. based bitcoin exchange and wallet provider Coinbase:
Just checked out my video and excited about starting up your first-ever bitcoin wallet? Use the following link to sign up, and we will both earn an extra $10 of bitcoin on your first $100 purchase!
GET A COINBASE BITCOIN WALLET <<== CLICK HERE
I hope you enjoyed this latest edition of Crypto 101 and found value here to expand on your bitcoin education. Now you should be able to answer the question ‘What Is A Bitcoin and how does it work’ like a cryptocurrency pro. Great job!
I have a surprise for you in the next one. I’m going to introduce you to a website that lets you watch the real-time movement of money around the world into bitcoin and the cryptocurrency industry!
P.S. So if I told you that you had a second chance to hit it big with Bitcoin, would you be excited? The truth is the opportunity with Bitcoin has passed for the average income person. The second wave of MASSIVE financial opportunity is with ALTCOINS!!! Because these alternative cryptocurrencies that are FASTER than bitcoin are still mere pennies… or even fractions of a cent in value. It’s easy to get positioned for massive gain with altcoins, but it’s essential to become familiar with the best altcoins for trading and investing.
Gain access to a FREE Cryptocurrency Mini-Course that goes into depth about a bitcoin, the blockchain, and these eye-poppingly lucrative ‘altcoins’ I’ve been talking about… just click the following link:
FREE Cryptocurrency Mini Course <<== CLICK HERE
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