Bitcoin is the first cryptocurrency to be created and the best known. Satoshi Nakamoto created bitcoin in 2009. Bitcoin makes it possible for two people to transfer currency (cryptocurrency) anonymously, immediately and securely without a bank or other body to certify it.
Bitcoin is not regulated by any bank or government, its management is decentralized in a huge network of anonymous computers (miners) and therefore its price does not depend on the economy of any country, but on supply and demand. The supply of Bitcoins is limited to 21 million, which will be reached in the year 2140, all of them produced by the miners.
Bitcoins are produced thanks to mining, which consists of a network of computers solving certain complex algorithms and in exchange each miner obtains bitcoins. Each bitcoin has a unique key, which means that they can only be spent once and cannot be duplicated or counterfeited, making it a very secure currency
The technology behind the operation of this network is called blockchain. When we make a payment or a transaction in Bitcoins, it is that network that verifies and certifies that payment, from your account is subtracted the amount of Bitcoins indicated and is added to the account of the other party, without the need for intermediaries, which eliminates the management costs that occur with traditional currencies.
Bitcoin is a virtual and digital currency and therefore has no physical currency. However, by selling Bitcoins it is possible to obtain traditional money in exchange.
If we want to get Bitcoins we can do it in three ways:
- The first is to become miners, which means to dedicate our computer to perform processes to "mine", i.e. to solve mathematical algorithms, in exchange for which we will receive bitcoins. This way is not very efficient since there are more and more bitcoins in the market and this makes the operations to be solved to get bitcoins more and more complicated and getting bitcoins more and more costly in time.
- The second way is to buy bitcoins. This can be done in the so-called Exchanges, which are financial markets in which cryptocurrency is traded. It is important to know that since it is a very volatile market, its price varies a lot and sometimes very abruptly.
- We can receive Bitcoins as payment for a product or service, i.e., we can be paid in Bitcoins
Once we have Bitcoins, since it is a virtual currency, we can only store them on the Internet. Bitcoins are stored in a "wallet" which is a digital wallet that we can store in the cloud, in our computer, in a pendrive or similar.
Of course, at any time we can sell the Bitcoins in exchange for any physical currency, such as euros, dollars, pesos, etc. However, there are more and more places where we can buy and pay directly in Bitcoins, both on the Internet and in physical stores.
Bitcoin is the first cryptocurrency that was created and the most widely used, but there are already many others that have become very important, such as Ethereum and Ripple.