What is Bitcoin? for beginners

What is Bitcoin? for beginners

This is a simple beginners guide for people new to Bitcoin.

Basic Bitcoin Facts

  • Bitcoin is a digital currency.
  • Bitcoin exists only on the internet.
  • Bitcoin was invented in 2009.
  • Bitcoin has a symbol called "BTC" (just like dollars symbol is $).
  • Someone called Satoshi Nakamoto created it, nobody knows who that is. Thus, Bitcoin is not owned by anybody. It was designed to have no specific owner to allow freedom of use.
  • There is only 21 million Bitcoin (BTC) in total. 19 million in circulation, and 3 million yet to be released.
  • Each Bitcoin can be divided into 100 million units called "Satoshis" (just like a dollar can be divided into 100 cents).
  • Bitcoin is also known as a "cryptocurrency" or "crypto" for short.
  • Bitcoin was the first cryptocurrency but now there are more different types, we explain this below.

How does Bitcoin work?

  1. The Bitcoin computer program is called "the blockchain" and it runs on over 10,000 computers worldwide.
  2. This computer program releases 1 new Bitcoin into circulation every 10 minutes.
  3. The newly created Bitcoin goes to the computer that solves a hard mathematical calculation first.
  4. That computer is usually owned by a "Bitcoin Mining" company who sells it to a "Cryptocurrency Exchange".
  5. These "Crypto Exchanges" can then sell the Bitcoin to the everyday person, like me and you.
  6. We can transfer Bitcoin to someone else, in exchange for goods or services.

How much does Bitcoin cost?

  • The Bitcoin price changes constantly.
  • The price is set by supply and demand (how many people want to buy, and how many want to sell).
  • The price varies daily and over time on occasions by significant amounts (see our Bitcoin graph)
  • The price can also be different depending on where you look. This is because some crypto exchanges calculate the price using different methods and exchange rates.
  • The current price is $14,000 AUD (as at 9th June 2020).
  • The highest price was approximately $25,000 AUD in Dec 2017.

Why do Bitcoins have value?

  • The main reason that BTC has value is that, unlike traditional currencies, it has limited supply (see "basic BTC facts” above).
  • BTC only exists on the internet and is not controlled by any national government.
  • It can be used as a medium of exchange on a worldwide basis.

How do you buy Bitcoins?

  • The most common place to buy Bitcoin is online, from Cryptocurrency Exchanges in Australia.
  • You can however, buy it from anyone who wants to sell it to you. But to stay safe you should only buy it from reputable sources.

Where do you store Bitcoins?

  • You store your Bitcoin in a virtual wallet (just like you store your cash in your physical wallet, you store your Bitcoin in your digital type wallet).
  • If you plan to buy a lot of Bitcoin, be sure to store them in a safe place such as a cold hardware wallet. This is something physical like a USB stick which you can store in a physical safe place, offline from the internet.

What are cryptocurrencies?

  • As we explained earlier, Bitcoin runs on a computer program. There has been a number of people that have copied the program and try to run a similar program, these are called "alternative coins" or "alt coins" for short.
  • Bitcoin and "alt coins" are together known as "cryptocurrencies" or "cryptos" for short.
  • There are currently over 5,000 of these cryptos on the internet, and more being created every day.
  • You can read more about cryptocurrencies here

Learn more about Bitcoin