Bitcoin can be described as the first bank-free internet money or currency. This digital currency was created in 2009 by Satoshi Nakamoto.
Similar to currencies like the Dollar (USD), Euros (EUR), and Pounds (GBP), Bitcoin can be used as a means of paying for goods and services.
In many ways, Bitcoin is similar to traditional currencies. However, it is also different from these currencies due to its design. To explain our point, let us look at the features of Bitcoin.
Bitcoin is a bank-free currency, which means that no government or bank controls it. By comparison, traditional currencies like the dollar (USD), Cedis, Naira, euro (EUR), and the pound (GBP) are governed by their respective central banks.
- The major difference here is that you can use Bitcoin for buying and selling without the interference of your governments or their agencies.
Since Bitcoin is not under the control of a central bank or government, who controls it?
A public digital ledger maintains all transactions involving Bitcoin. What is a ledger? Think of a ledger as a book used to record transactions.
Let’s illustrate this point using an example.
Mr. Gihangagives his son James money to buy foodstuffs. However, for future records, Mr.Gihanga insists that his son writes down the price of each food item in a book. That book can be called a ledger.
Bitcoin records are kept in the internet ledger, with more than 7000 individuals continuously recording transactions on their computers.
Another example is bank records. Your native bank keeps records of customer transactions on a bank ledger. Hence, you cannot spend or withdraw more than your account balance. Likewise, with Bitcoin, transactions are recorded on a public internet ledger. Hence, you can’t spend more than your Bitcoin wallet balance.
Thus, anyone interested can check the Bitcoin ledger on a computer or laptop at any time. Using a public ledger for Bitcoin is very effective because it prevents cheating and offers safe, secure, and transparent records to users of Bitcoin.
Did we mention that Bitcoin allows you to make anonymous transactions? Yes, indeed, with this digital currency, users can make and receive payments without identifying themselves.
In further lessons, we will see how you can buy and save Bitcoins. In our next lessons, we will see other variants of cryptocurrencies called Altcoins.