By now most people must have at least heard of Bitcoin – it’s been all over the news and internet as a hot form of digital money. But if you are new to the world of cryptocurrency, you probably still have a ton of basic questions bouncing around about how exactly Bitcoin works and what the excitement is all about.
For those who are just getting to know about Bitcoin and other cryptocurrencies, we know how confusing all the terminology and technology can be at first. So, we are going to try to provide plain English answers to some of the most frequently asked questions about Bitcoin.
Whether you are just curious about it or considering getting yourself some bitcoins or other cryptos, hopefully this quick Bitcoin FAQs will help get you up to speed!
1. What exactly is Bitcoin?
Simply put, Bitcoin is a digital currency or form of electronic money. But unlike the paper bills issued by governments, Bitcoin has no central bank or authority in charge. Instead, it operates on a decentralized peer-to-peer network system where thousands of computers across the internet work together to process and verify transactions.
There are no physical Bitcoins – they exist as lines of computer code and are created and held electronically. Users can acquire, hold, and send bitcoins online through any internet-connected device.
2. What's so great about Bitcoin anyway?
Bitcoin has some key advantages that make it different from traditional currencies:
· Decentralized – No single entity controls the Bitcoin network. It runs globally on thousands of computers. Makes it hard for anyone to cheat the system.
· Transparent – All Bitcoin transactions are recorded publicly on its blockchain ledger for anyone to view. Helps prevent fraud.
· Secure – Uses tough cryptographic techniques to ensure transactions can't be altered or counterfeited. Very resistant to hacking.
· Global – Bitcoins can be sent to anyone globally instantly with minimal fees. No need to go through banks for international transfers.
· No third-party risks – Users have complete control over bitcoin payments without relying on banks or card companies who can reverse transactions.
3. Who invented Bitcoin?
The original Bitcoin concept was published in 2008 by an unknown person or group using the alias Satoshi Nakamoto. Their real identity remains a total mystery even today. Pretty brilliant idea from this secretive mastermind. However, bitcoin was launched in 2009.
4. How much is one Bitcoin worth?
Bitcoin has no predefined value – its monetary value is purely set by market forces of supply and demand, just like gold or silver. When Bitcoin first launched in 2009, it was worth less than a penny per bitcoin. As of 2022 – 2023, one bitcoin is valued around $40,000. The price changes often.
5. Is there a limit to how many Bitcoins can exist?
Yes, the total number of bitcoins is capped at 21 million. New bitcoins are created on the network at a fixed rate until the 21 million total is reached. As of 2022, about 19 million bitcoins are in circulation. Once 21 million exist, no new bitcoins can be created.
6. What is a Bitcoin "Block"?
The Bitcoin blockchain ledger is made up of a chronological sequence of "blocks" with each block containing a set of recent transactions on the network. All Bitcoin nodes (computers) maintain an up-to-date copy of the entire blockchain, which gets constantly updated as new blocks are completed and added.
7. What exactly is "Bitcoin Mining"?
Bitcoin mining refers to the process where high-powered computers called miners compete to solve complex math problems that validate groups of transactions on the network. Whichever miner solves the next block first is rewarded with newly created bitcoins. This is how new bitcoins come into circulation.
8. Can I Become a Bitcoin Miner too?
In Bitcoin's early days, anyone could mine coins with a regular home PC. However, today Bitcoin mining has become a big specialized industry with miners using expensive, high-tech hardware designed just for mining bitcoins. So solo mining from home is usually not practical anymore.
9. What's a Bitcoin Wallet? Do I need one?
A bitcoin wallet stores the private access keys you need to access the bitcoins associated with a particular address on the blockchain. Wallets come in many forms – software apps, hardware devices, paper printouts, etc. You need a wallet to receive, hold and send bitcoins from your own addresses.
10. Is Bitcoin Legal in Nigeria?
Yes, Bitcoin is perfectly legal to own and use in Nigeria. The Nigerian Federal government recently confirmed cryptocurrencies like Bitcoin, Ethereum, Litecoin etc. are legal investments and assets that Nigerians can freely trade. While not an official Nigerian currency yet, Bitcoin exists in a legal gray area for now.
Final Thoughts on Bitcoin FAQs
Hopefully this FAQ article on Bitcoin will help clear up the most common questions newbies have about Bitcoin. There is still lots more to learn, but consider this as a starting point for understanding the basics of this innovative form of digital money. Bitcoin has shown it has immense potential to change the future of currency and transactions.