Bitcoin Definition

Bitcoin Definition

What is Bitcoin?

Bitcoin is the world’s first cryptocurrency founded in 2009 to serve as a decentralized currency alternative for the people. The Global Financial collapse showed the world that traditional fiat currency only creates long-term problems due to the massive dilution of one’s purchasing power over time.

Bitcoin solves this problem because it’s issued in a fixed amount and doesn’t rely on the central bank system to function.

Bitcoin Basic Facts

  • Age: 13 years old
  • Total Max Supply: 21 million
  • Circulating Supply: ~ 19 million (90% of BTC have been mined)
  • Market Cap: ~$800 billion
  • Annual Inflation: 1.77%
  • Network Protocol: Proof of Work (PoW)

Bitcoin Network Benefits

  • Provides a 24/7 365 decentralized financial network that allows anyone to send and receive money without reliance on central governments, banks, or the Federal Reserve.
  • Offers a simple savings account to the billions of unbanked people around the world.
  • Lists every transaction on a public blockchain to provide 100% transparency through the network.
  • Rewards miners who secure the Bitcoin network with a block reward every 10 minutes.

Can Bitcoin Go to Zero?

There is an extremely small chance that Bitcoin falls all the way to zero. For this to happen, nobody in the world will buy Bitcoin and cryptocurrencies will get replaced with a better technology.

Bitcoin’s price is determined by buyers and sellers using bid and ask prices.

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When more people buy than sell, the price of Bitcoin increases.

When more people sell than buy, the price of Bitcoin decreases.

Bitcoin’s first pizza transaction gave BTC a real world value in terms of US dollars and since then Bitcoin has reached as high as $64,000 per coin.

Bitcoiners refer to BTC as “digital gold” and use it as a better store of value than traditional gold, silver, or any other fiat currency.

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Bitcoin’s Fixed Supply Protects It from Total Collapse

Humans value scarce objects more than common things. The more supply there is of any asset or thing, the lower it’s value becomes.

As world governments continue printing more fiat currencies, it loses its value over time due to the unlimited supply.

Due to Bitcoin’s fixed supply of 21 million coins, many holders will always be willing to buy more Bitcoin because it’s scarce and valuable.

There will always be a market for Bitcoin even if a better technology comes along in the future.

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21 million coins is the total max supply and that will never change because it’s written in Bitcoin’s original code.

Risk Factors: A Better Technology May Replace Bitcoin in the Future

While Bitcoin will always maintain some value, I don’t necessarily think it will go up in price forever.

Just as Bitcoin will replace fiat currencies, there may be a better currency that comes along in the future.

I refer to Bitcoin as the best 21st-century form of money but something better could be created for the 22nd century.

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That’s 80 years from now and outside our lifespans for the most part. Our kids and grandchildren may create something even better but I’d say Bitcoin will be the dominant global reserve currency up until 2100.

How to Get Started with Bitcoin

The easiest way is to buy Bitcoin on a trusted cryptocurrency exchange and hold it for the long term. I recommend Coinbase as a simple way to purchase Bitcoin safely.

If you want secondary exposure to Bitcoin without buying BTC then you can invest in Bitcoin-related stocks and ETFs.

Read my articles on the best Bitcoin stocks, crypto mining stocks, and my comparison of GBTC vs BTC to get started.

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