Does it do anything? It is essentially “Proof” of a transaction, which in turn gives it value, but
we’ll talk more about what really creates this value.
How much Bitcoin is there? The protocol determines that there will be a finite amount of 21
million bitcoin once all are mined, making it a scarce form of “money”.
What is mining? Computers will use their computing power to solve extremely complex
equations, once these are solved, more bitcoin is generated into circulation, and this mining is
also used to verify transactions between two parties that will forever stay on the “blockchain”.
Where is all the bitcoin stored? There is no central bank or server room for the Bitcoin Network.
The blockchain is stored among the thousands of computers that are connected to the
transactional network. It is what’s known as a peer-to-peer system.
Blockchain? Huh? This is the public ledger where all transactions of Bitcoin take place, picture a
massive web of “blocks” and those blocks are each transaction performed on the network. This
web is copied and updated each time two wallets perform a transaction. Making each
transaction public and indisputable for all who are connected. This makes it immensely immune
to any form of hacking.
So what gives it value? Think about gold. Gold is a finite precious metal that many countries
have used as a store of value for centuries. Gold is limited in supply, can be used to trade for
goods, and is a store of value. The value of gold is determined by supply and demand, as it is
separate from fiat currency (Think dollars). Now look at bitcoin as almost a digital version of this:
Finite, Transactional ability, and independent from banks. Bitcoin’s value is determined by
supply and demand, as it gains more traction and more people buy it, the price of a whole
bitcoin increases.
Who made Bitcoin? This is shrouded in mystery, a white paper was published by a Satoshi
Nakamoto in 2008, who also mined the first Bitcoin. This individual (Or Group) was never
publicly identified. They proceeded to step away from the project in 2011 via an email to a
developer, with the intention of allowing the protocol to work on its own.
So Nobody owns it? Technically no, it is a decentralized protocol that cannot be altered or
controlled by any single owner or central body.
So why do people buy it? While bitcoin started as a niche form of transaction among a small
population, it has gradually grown into a massively adopted store of wealth. From companies
like BlackRock, to entire governments and sovereign wealth funds. There are characteristics
that make bitcoin attractive, as said earlier. The term “Digital Gold’ or “Digital Capitol” have been
heard more and more among those in the technology and investment space. Bitcoin is finite,
can move with the click of a mouse, and cannot have its value inflated by any entity.
What does the future hold? That is almost impossible to predict, but due to recent widespread
adoption, it is assumed that Bitcoin will continue to become more relevant as time goes on.
More countries will likely hold it similarly to how they hold gold, more major banks will likely offer
it as a form of asset-backed investments. As more wealth is transferred into bitcoin, the price
will continue to increase, but there's no telling where any asset this new can go. This is not
financial advice, it is purely for education. I encourage anybody to do their own research, and
make the decision whether or not bitcoin belongs somewhere in your portfolio. If you so choose
to purchase some, Jean will be with you along the ride.
