4 Things To Know About Bitcoin
- Bitcoin is a form of currency.Bitcoin is a type of cryptocurrency, which is a digital currency that uses encryption techniques to control its creation and secure transactions, independent from a central bank. These encryption techniques make it very difficult to create any kind of counterfeit form. People can purchase bitcoins or fractions of a bitcoin through online exchanges or from an individual and store them in a virtual wallet. There are hundreds of thousands of retailers that accept bitcoin and millions of dollars worth of bitcoins are exchanged daily throughout the world.
- The creator is somewhat of a mystery.In 2009, a proof of concept was published in a cryptography mailing list under the pseudonym Satoshi Nakamoto. In this paper bitcoin was called “a peer-to-peer electronic cash system.” The first 50 bitcoins were mined, the process by which bitcoins are created, on Jan. 3, 2009 — considered to be Bitcoin’s birthday — by Nakamoto, who is said to have left the project in 2010. The community grew and other developers took over. But ever since the inception of bitcoin, there has been an ongoing debate over the identity of Nakamoto. No one has been able to identify who or what Nakamoto is, but some have tried. Whomever or whatever Nakamoto is, they are believed to own about 1 million bitcoins, which would be worth around $10 billion.
- There is a finite amount.There are only 21 million bitcoins that can ever be created and because of this fixed supply, if the demand goes up, so will the price. Not all of the 21 million have been mined yet, but once they are, no more will be created. However, each bitcoin can be divided up to eight decimal places and, according to bitcoin.org, “potentially even smaller units if that is every required in the future.” Additionally, bitcoin transactions can be done in smaller units called “bits” and there are 1 million bits in one bitcoin. Currently, the total value of all existing bitcoins is more than $160 billion.
- Bitcoin has some high-profile critics and investors.Billionaire Warren Buffetthas been an outspoken critic of bitcoin. He dismissed the cryptocurrency in a 2014 CNBC interview when he urged people to “stay away from it.” He went on to say, “It’s a mirage basically.” JPMorgan Chase CEO Jamie Dimon is also a critic, who once called bitcoin “a fraud.”