What is bitcoin - we explain in simple words

To date, there is probably no person who has not heard the word "bitcoin" at least once.

And if many other terms of the cryptocurrency market cause a lot of questions and doubts, then the vast majority knows that bitcoin is the first and to this day the most popular cryptocurrency in the world, which for many years has not conceded its palm to anyone. That is, it is a decentralized digital currency that can be used to make online payments instead of traditional currencies. The concept of "decentralized" hides the fact that bitcoin is not tied to any one payment system and does not have one clearly defined body controlling its turnover.

Bitcoin is not backed by fiat (conventional) money, gold, raw materials or commodities - in essence, it is a set of mathematical operations and calculations that are performed using powerful computers. And the process of mining new bitcoins by solving cryptographic problems is called mining. And the main basis for the functioning and protection of bitcoin is blockchain technology, which we discussed in detail in our other article. Here we will only briefly recall that the blockchain is a system or chain of blocks in which information about all transactions is stored, while each subsequent block contains data from the previous one.

The history of bitcoin began in 2008, and the identity of its creator Satoshi Nakamoto has not yet been declassified. He initially positioned bitcoin as an alternative to the traditional payment system, which showed all its vulnerability and imperfection during the 2008 financial crisis. Bitcoin should become an anonymous and decentralized coin, which does not need intermediaries in the form of government agencies, financial institutions and banks.

Like any truly revolutionary idea, calculations using bitcoins did not gain popularity immediately. At the very beginning, one bitcoin cost a couple of cents, that is, practically nothing, and in 2021 the rate reached $ 67,000.

A logical question may arise - how many bitcoins can there be? It's no secret that, for example, traditional money cannot be printed indefinitely, otherwise it leads to inflation and the risk of collapse of the entire financial system. In the case of bitcoin, there are also restrictions - the maximum size of its issue is 21 million coins. And by the beginning of March this year, 91.935% of all bitcoins have already been mined. But miners (those who mine bitcoins) do not have to worry - according to experts, due to the increasingly complicated mining procedure, the extraction of the remaining 8% of coins will be delayed for about 100 years.

Thus, bitcoin is a legend of the financial market, which has made a real revolution in calculations and in the understanding of money in general. And if you want to get to know bitcoin firsthand and work with it, then our GRIN4 ecosystem provides you and all other novice traders with this opportunity

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