What Is Bitcoin?
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What are Cryptocurrencies?
Cryptocurrency is a virtual or digital currency typically doled out as “coins” or “tokens.” While their makers vary widely, the general idea is the same: to create a decentralized network of currency that bypasses central banking systems and government regulations. However, the latter half of this foundation has come under scrutiny as their use has grown, especially from governments concerned about illicit activities — and in some cases, their ability to track and tax transactions.
It’s essential to note that cryptos are somewhat new on the financial scene — Bitcoin was only established in 2009. Still, the last few years has seen a sudden uptick in their production. These altcoins, or alternative coins, often purport to best Bitcoin in features or usability, though none of them have reached Bitcoin’s level of success — or their security features.
This hasn’t stopped them from trying, however: there are literally thousands of altcoins available now, with more developed each month. And now that a fortunate few have entered mainstream conversation, several major companies have begun accepting them as payment for goods and services.
How do cryptocurrencies work?
Cryptos function on the principles of cryptography, or the mathematical and computational encoding and decoding of data. While we won’t go too far into the specifics, it’s cryptographical processing that allows makers to create and transact these digital currencies. This means that currencies can flow from person to person, entirely bypassing institutions that may process, track, and even take a chunk of such payments.
Cryptos work via blockchain technology, in which a decentralized system is spread across many units. These units — typically computers with special processors — then manage and record transactions. Blockchain systems are unique in the virtual space because their infrastructure means they’re incredibly secure (though not infallible, as we’ll discover shortly).
What is Bitcoin?
Although there are thousands of altcoins jostling for a spot on the big stage, only a handful have made the big time since 2009. You’re most likely familiar with Bitcoin — after all, it was the first, and the first to be legitimized.
While many cryptocurrencies have headlined in recent months as speculation about their future becomes commonplace, none have featured so frequently — or with as much furor — as Bitcoin. There are only 21 million bitcoins out there.
Then there’s Bitcoin Cash or BCH. BCH is one of the earliest and most successful “hard forks” off Bitcoin. This newer model increased the currency’s storage capacity from 1MB to 8MB per blockchain, thereby allowing for more — and speedier — transactions. The market cap for Bitcoin Cash is $10 billion.
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