Definition: What is Bitcoin?
Bitcoin is decentralized digital cash that eliminates the need for intermediaries like banks and governments, using instead a peer-to-peer computer network to confirm purchases directly between users.
Fiat money (like the U.S. dollars in your bank account) is backed and regulated by the government that issues it. Bitcoin, on the other hand, is powered through a combination of peer-to-peer technology — a network of individuals, much like the volunteer editors who create Wikipedia — and software-driven cryptography, the science of passing secret information that can only be read by the sender and receiver. This creates a currency backed by code rather than items of physical value, like gold or silver, or by trust in central authorities like the U.S. dollar or Japanese yen.
History of Bitcoin
Bitcoin was launched in 2009 and is regarded as the first cryptocurrency. The concept of blockchain technology had been discussed in academic papers for decades, but a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” helped launch cryptocurrency into reality.
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party,” wrote Satoshi Nakamoto — the pseudonym of the mysterious author of the Bitcoin paper — in a white paper introducing the open-source technology. It’s come a long way since then, now accepted as payment by companies such as PayPal, Microsoft and Whole Foods.
The price of one bitcoin has grown substantially. In April 2011, the price was $1. By April 2021, it reached a record spot price approaching $65,000 before sliding back down. As of early July, bitcoin was trading in a range between $32,000 and $35,000.
