Bitcoin and other virtual currencies such as Ethereum and even Dogecoin have been in the headlines recently so I put out a guide to answer some common questions about the technology. This is not an endorsement of any digital currency but more of an FAQ about these extremely exciting developments.
So what is bitcoin anyway?
In a nutshell, Bitcoin is the original and most popular cryptocurrency; a digital medium of exchange that lets you buy goods and services. It is much easier to spend pounds and pence but some retailers accept bitcoin.
Note: Bitcoins are not physical coins, rather they are computer files. Some coins like the ones are above are novelties that may contain the code for one bitcoin.
Some people trade bitcoin or use it as a store of value hoping to make a profit if the price rises. Bitcoin is completely virtual and derives its value from its desirability. Bitcoin is the original cryptocurrency; the first one to become popular anyhow and is the best known.
Each Bitcoin is essentially a computer file that is stored in a ‘digital wallet’ app on a smartphone or computer. People can send or receive a bitcoin, or parts of one, as a digital currency. Every transaction made is recorded in a public block. Together these blocks form the blockchain.
The price of a single bitcoin can be quite volatile — ranging from around £145 in 2015 to over £45,000 in 2021. The total value of all bitcoin is estimated at £88 billion as of the first half of 2021.
A Bitcoin can be divided into a unit of cryptocurrency known as Satoshis. The name comes from the believed creator of Bitcoin, Satoshi Nakamoto, though who this person or organisation is remains a mystery.
Each Bitcoin is divisible down to eight decimal places, meaning a single Satoshi is equal to one-hundredth millionth of a Bitcoin. To put it another way, 100 million Satoshis make up one Bitcoin, that’s a lot of Satoshis!