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What is Bitcoin

Posted on by Corey CoinCrack

Bitcoin is a new form of money that is entirely digital aka a virtual currency.  Here’s a simple explanation of Bitcoin:

The core innovation of Bitcoin is that it is distributed, meaning no single entity controls Bitcoin. Every Bitcoin transaction ever made is kept in a public ledger that’s distributed across millions of computers all over the world. These computers which maintain the ledger and process the transactions are awarded with a little bit of Bitcoin for their hard work. This process is known as Bitcoin Mining and it’s how new Bitcoins come into existence. For a deep dive into how Bitcoin technology works under the hood check out this video.

How many Bitcoins are there?

There will only ever by 21 million Bitcoins in existence.  As of right this moment on 1/23/14 12,302,425 Bitcoins have been mined.  It is estimated that the final Bitcoin will be mined sometime near the year 2140.  Bitcoin’s limited supply coupled with it’s growing demand is what gives Bitcoin value.  But there’s a catch.

Since Bitcoin’s code base is open source, people can create their own versions of Bitcoin known as Alternative Currencies or Alt Coins by copying the codebase, making a tweak and calling it something new. There are literally hundreds of Alt Coins and new coins are popping up every day.  So when you think about it this way, the number of coins in the virtual coin universe is infinite. But even still, very few Alt Coins are believed to have true value. Why does any currency have value? What’s stopping you from printing a new form of money?

What is the value of one Bitcoin?

The average value of one Bitcoin right now (on 1/23/14) is $826.59. That means that the Bitcoin economy has a total market cap of $10,169,061,481 (total coins * current coin value = market cap). Yes, that’s over 10 Billion US Dollars. That’s a lot of cheddar, but when you consider the multiple trillion dollar industries that Bitcoin is set to disrupt – you see we are only just getting started. Some speculate that a single Bitcoin could be worth over $100,000.

Aren’t Bitcoins to expensive to use?

One thing most people don’t realize is that you can transact using fractions of Bitcoin.  They think that since 1 BTC is worth almost a thousand dollars they can’t participate.  They are very wrong. Bitcoin can be divided down to 8 decimal places. 0.00000001 is known as a Satoshi. Here is a table showing different amounts of bitcoin.

Who created Bitcoin

Bitcoin was created by someone calling themselves Satoshi Nakamoto.  Satoshi wrote the original white paper describing Bitcoin and then a few years later, vanished.  There is a lot of speculation regarding Satoshi but for the most part, it’s believed he disappeared for the betterment of the Bitcoin community. More on Satoshi can be found here.

.00000001 BTC = 1 satoshi
.000001 BTC = 1 uBTC (micro)
.001 BTC = 1 mBTC (milli)
1 BTC = 1 BTC
1,000 BTC = 1 kBTC (kilo)
1,000,000 BTC = 1 MBTC (mega)

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