Bitcoin - Simplified For Dummies (FAQ)
-What is Bitcoin?
Bitcoin is a type of digital currency in which encryption is used to regulate units of currency and verify the transfer of funds, operating independently of a central bank or a third party. Bitcoin came out of the cypherpunk movement during the 2008 collapse of the housing market in the U.S, where we saw banks bring the world to the brink of another economic collapse and depression.
-What is Blockchain?
The Blockchain is a digital distributed open ledger, in which transactions made in bitcoin or other cryptocurrency are recorded and are publicly available. Bitcoin is a technology on the blockchain. The sector has evolved, as projects are now using the blockchain for various avenues, such as the secure transfer of digital data, peer to peer, without the worry of double spending issues or the interception of information by a third party. It is a revolutionary point of the internet and how humans interact with one another.
-Is Bitcoin in a 'Tulip mania' style bubble?
Tulip Mania lasted for approximately 1 year and was vastly available without the need for proof of work. Bitcoin is 10 years old and constantly evolving and getting bigger. Blockchain technology is here to stay, as every large tech company is working with the blockchain in one way or another.
-What is the true value of Bitcoin?
The value of Bitcoin is subjective to the free market. Similar to other Fiat currencies that rely on social scalability. As long as bitcoin's technology can be used to increase efficiency, people will continue to add value to it. Price is subjective to the money supply and the confidence of the users. Value depends on what the user needs or wants. For example, if there were no humans on earth, the value and need for gold would not exist. Just like gold, bitcoin is also a commodity, that can be used as a store of value, and also a way to transfer data peer to peer, without the need of a third party. Our email service doesn't offer 'intrinsic' value, however it is one of the most valuable tools that we use today.
-What about other cryptocurrencies?
Other cryptocurrencies, including forks, have their own code. Some coins gain in speed, what they lack in security or social scalability. Bottom line, there can be 10,000 'alt' coins, same as there could be many different kinds of precious metals, all with their own elements and properties, but there is only one Gold, one Bitcoin. The price of alt coins vs. bitcoin will ultimately depend on supply and demand and according to the speed, security and social scalability of a coin.
HODL.