What is Bitcoin?
What is Blockchain?
What is Cryptocurrency?
Get simple answers to these questions, and find out why we believe that cryptocurrency and blockchain technology will change the world for the better.
“An investment in knowledge pays the best interest.”
— Benjamin Franklin
What is cryptocurrency?
Cryptocurrency is basically digital cash. It’s similar to regular money, except there are no bills or coins to carry around. Kind of like the electronic money you see in your online bank account.
How is cryptocurrency different from regular money?
Cryptocurrencies and regular money are indeed very similar in terms of what you can do with them — for example, you can use both of them to buy things or you can transfer them electronically — however, they are also different in some very interesting ways, here’s a couple:
- No single group, country, government, or individual controls it.
- Its value is based mostly on supply and demand as well as the electricity and computer costs required to “create” it.
- It’s secured by an open network of computers that anybody can join, which verifies every transaction.
- There are no physical bills or coins, it requires the internet to exist.
- You can buy anything with it, anywhere in the world as long as the merchant accepts it.
- It’s controlled by the government that issues it.
- Its value is based on confidence in the government that issues it and its military and industrial power.
- It is secured mostly by third parties like banks and governments, which means average people can’t participate.
- Usually, there are physical bills or coins, so it’s usable without the internet, but it requires the government that issued it to function.
- You can buy anything with it, mostly in the country that issues it.
What types of cryptocurrency is there?
Bitcoin is the first and most well-known cryptocurrency, however today there are hundreds if not thousands of them. The most notable ones are Ethereum – which is programmable money, but more on that later and Litecoin, which shares Bitcoin’s core characteristics but explores new ways to process transactions.
What is a blockchain?
Remember when we said that cryptocurrency is secured by an open network of computers that verifies transactions?
A blockchain is the list of those transactions that anyone can view and verify. The Bitcoin blockchain, for example, is a list of every time somebody sent or received Bitcoin in history, it’s public and everybody can check it out, which makes it fundamental because it enables secure payments to be made between people who don’t know each other with no bank or government in between.
What makes blockchain technology exciting is that it has many uses outside of cryptocurrency such as improve the sharing of healthcare records, verify people’s identity, and so much more.
How do you store cryptocurrency?
Cryptocurrency is accessed via virtual wallets, similar to your online bank account where you can see your balance, as well as send and receive funds.
The crypto wallet, however, does not store your cryptocurrency physically but instead provides access to it in the network.
In fact, information about how much cryptocurrency you own is stored only on the blockchain, and access to a wallet can only be obtained by providing the corresponding secret key to that wallet.
Every cryptocurrency has its own wallet with a public and a secret key where only you know the secret key, which guarantees the security of your funds – kind of like the password to your online bank account.
You can read more about that here.
Why is crypto special?
Cryptocurrency is the fastest, safest, cheapest, and most easily accessible way for people to exchange value that currently exists.
Why do cryptocurrencies have value?
The economic value of cryptocurrency, like almost any goods and services, comes from supply and demand. Supply refers to how much of something is available on the market, for example – how much Bitcoin is there for people to buy at any given moment. Demand means people’s collective desire to own that same thing — as in how many people want to buy Bitcoin and how much are they willing to give for it. The value of a cryptocurrency will always be a balance of both factors.
What makes cryptocurrency a bit unique, however, is the fact that “creating” a new Bitcoin requires a lot of computing power which equals a lot of electricity, putting the costs of doing so between 6000$ and 9000$ as of July 2020, for reference, the price to print one 100$ bill is about 12.3 cents.
What is cryptocurrency mining?
Mining is the process of validating people’s transactions with a computer and then adding them to the public list of all transactions – the blockchain. In exchange, miners get rewarded with newly generated cryptocurrency.
Anyone can become a miner, all they need is an internet connection and a computer. As we previously said, mining cryptocurrency requires a lot of electricity and computing power which means that it may not always be profitable if, for example, the price of electricity is high in your area.
Do I have to own a whole coin?
Much like traditional currencies, you don’t have to own a whole Bitcoin or Ether.
You can own as little as 0.00000001 Bitcoin or, 1 satoshi.
You will find out in a minute why it’s called that!
Is cryptocurrency anonymous?
The short answer is – no. While there are a few cryptocurrencies that are truly anonymous, most of them, including Bitcoin and Ethereum are not anonymous.
All Bitcoin and Ethereum transactions are publicly available, the only thing that makes them “pseudo-anonymous” is the fact that using cryptocurrency doesn’t necessarily require you to identify yourself.
However, using almost any platform to buy, sell, or store cryptocurrency, such as Finansiv, will require ID verification by law which helps prevent fraud and makes such platforms much more trustworthy.
How can crypto change the world for the better?
Cryptocurrency addresses many of the pitfalls of our current financial system, for example – high fees, hyperinflation, and bank fraud are all unfortunate parts of our present financial system and they’re also just some of the problems that crypto has the potential to address.
What is Bitcoin?
Bitcoin is the first cryptocurrency, which was introduced on October 31 2008 in an anonymous computer science paper that described how it would work. A few months later, on January 3, 2009, the code was released and the first bitcoins appeared.
Who created Bitcoin?
Bitcoin was created by a person or persons, going by the name Satoshi Nakamoto.
Their identity is unknown to this day and while many individuals have claimed to be Nakamoto, none have provided any proof so far.
Their name is the reason why the smallest fraction of a Bitcoin – 0.00000001 BTC is called a “Satoshi”.
Why would somebody buy or use Bitcoin?
As you already know, you can use Bitcoin and most other cryptocurrencies for everyday payments, just like bills or coins.
What makes Bitcoin better than the Dollar or Euro is the fact that as long as you don’t share your secret key,
NO one is able to:
- steal your money;
- destroy your money or wallet;
- stop you from managing your funds;
- confiscate your funds.
You should also know that unlike conventional currencies that are constantly subject to inflation, Bitcoin is much less affected because there is a technically determined maximum amount of Bitcoins that can ever be created which is 21 million.
This feature makes Bitcoin similar to gold since it is also a finite number and no one is able to “create” more gold, but unlike gold, if the secret key for a Bitcoin wallet is destroyed, then that amount of Bitcoin in that wallet is forever lost and removed from circulation.
Is it possible for the Bitcoin to lose its value entirely?
History is full of cases where currencies collapse and are no longer in use with the most recent one being the Venezuelan Bolívar which has lost more than 90% of its value in the last 5 years.
In practice, hyperinflation is impossible with Bitcoin, as there is no way to suddenly “issue” a large amount of Bitcoins (the total number of Bitcoins that can ever exist is 21 million).
However, there is always the theoretical danger of technical collapse or the emergence of better cryptocurrencies to displace Bitcoin.
As a general rule, no currency is insured against collapse.
This applies to both Bitcoin as well as the Euro, Dollar and British Pound, which, for example, because of the events surrounding Brexit, has lost about 30% of its value against the Euro in the last year.
Bitcoin has proven its place over the years since its inception and has huge potential for development.
However, no one is able to predict what the future of Bitcoin is and what its exchange value will be in the future.
What is Ethereum?
Ethereum is the second-largest cryptocurrency by market capitalization. It is a decentralized open-source blockchain featuring smart contract functionality. Or, to put it simply – it’s programmable digital cash.
Who created Ethereum?
Ethereum was first introduced as an idea in late 2013 by Vitalik Buterin, a Russian cryptocurrency researcher and programmer. Development was crowdfunded online in an ICO (initial coin offering) in which people participated with Bitcoin. After the ICO, which gathered around $18 million the Ethereum blockchain went live on 30 July 2015.
What makes Ethereum different?
Although Ethereum is a cryptocurrency, based on blockchain technology, just like Bitcoin, the main difference between them is the fact that while Bitcoin is simply a currency, on Ethereum you can write code that controls digital value and always runs as programmed.
Now, in simple terms.
Imagine being able to make your money automatically go back to your bank account if your counterparty breaks a contract between you two! That’s what you can do with Ethereum via a smart contract.
Imagine being able to automate crowdfunding? You can also do that via a smart contract.
You can also automate P2P lending, tokenize property by creating new tokens on the Ethereum network and so much more.
Are there any real-world examples of this technology in use?
Here are just some of the applications which utilize Ethereum’s technology in different sectors:
- Brave Browser pays users for their attention to advertisements and users can pay publishers to support them, via the Basic Attention Token.
- hCaptcha Bot prevention CAPTCHA system which pays web site operators for the work done by users to label data for machine learning. Now deployed by Cloudflare.
- Santander Bank bond issuance and settlement.
- Societe Generale bond issuance.
- Cadence bond offering and tokenization for FAT Brands.
- Sila banking and ACH payments infrastructure-as-a-service.
- Tinlake receivables financing via tokenized real-world assets such as invoices, mortgages, or streaming royalties.
Notarization of data:
- BBVA details of finalized loans are hashed and recorded on Mainnet.
- Splunk data integrity can be ensured by periodically writing hashes of indexed data to Mainnet.
- ANSA Italy’s largest news agency fights fake news and enables readers to verify the origin of news stories by recording them on Mainnet.
Supply chain management:
- CargoX bill of lading and document transfer provider.
- Morpheus.network supply chain automation platform which implements a hybrid of private chains with notarized data on the Ethereum Mainnet and is in use by companies such as Canadian food, oil & gas distributor Federated Co-op Ltd. and Argentinian pet food provider Vitalcan.
- Minespider supply chain tracking.
- ShipChain public sidechain of Ethereum and enterprise system for supply chain visibility and trust, especially for multimodal logistics.
- Follow Our Fibre viscose supply chain traceability.
Verification of credentials or certifications:
- Utah Counties issuing digital marriage certificates on Ethereum.
- Two Italian high schools digital diplomas issued on Ethereum Mainnet.
- The University of St. Gallen pilot project to verify degrees by a Swiss university.
- Malta all educational certificates recorded on Mainnet by Hyland.
- Pohang University of Science and Technology South Korean university issues blockchain-stored diplomas to its new graduates.
- OpenCerts issues blockchain education credentials in Singapore.
- BlockCerts developed an open standard for blockchain credentials.
- SkillTree online skill training and certifications which can be configured with expiration triggers or dependencies on other skills.
How do I buy or sell crypto?
You can buy and sell crypto in many ways. You can trade directly with another person, which carries its risks, use a Bitcoin ATM, which usually means higher fees, or use a trusted platform, such as Finansiv.
Which cryptocurrency should I buy?
On Finansiv, you can buy Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC). While we can’t recommend one currency over another, an easy and straightforward approach would be to buy some of each.
Keep in mind that investing can lead to losses and you should never invest more than you can afford to lose!
When is the best time to buy cryptocurrency?
Like many financial decisions, it depends on a lot of factors and there is never a generic answer.
What we can recommend is to always be skeptical of articles, social media posts, or any individual or company that claims to know which cryptocurrency to buy or when to buy it. The authors may have an interest in affecting the price of a cryptocurrency they recommend. Instead, always do your own research or seek help from a certified financial advisor before making a decision about which cryptocurrency to buy and when.
How do I buy Bitcoin on Finansiv?
Create an account
Getting started takes less than 5 minutes and is fast and secure.
Verify your identity
You’ll need to verify your ID or passport so we can prevent identity theft or fraud.
Get started with as little as € 25, and you can pay with a bank account, AdvCash or Payeer.