What Is Bitcoin?

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Bitcoin can be many different things.

Bitcoin can mean something different to each person who uses it.

We think that learning about bitcoin —  and its potential to create a fair and open financial system — is important for everyone to know. 

That’s why we put together this page. The goal was to create a resource to help answer the question “What is bitcoin?” But developing a simple answer to “what is bitcoin?” is challenging, mainly because bitcoin is multi-layered and dynamic. 

Bitcoin as an information network, and bitcoin the digital currency continue to grow, see more adoption, and go mainstream worldwide. And as bitcoin matures, new use cases start to emerge, which show the utility of the network and the adaptability of a computer code-based money system like bitcoin. 

Here are a few bitcoin uses cases that get people excited:

  • Bitcoin as a peer-to-peer digital cash systemThis was how bitcoin was first conceived and why it was originally created. It was envisioned as a way for people to send money using the internet and without the need for a trusted third-party such as a credit card company or a bank. This decentralized peer-to-peer model spawned an entire industry, which over the last ten years has grown up and improved upon our existing finance system through decentralization. Bitcoin remains the world’s most robust peer-to-peer network in the world today.
  • Bitcoin as a store of value. This use case has really caught on especially as the price of bitcoin  —  both the price of an individual bitcoin and the total market capitalization of all bitcoin —  has continued to steadily rise on a yearly basis. People looking to convert other financial assets and store them in an asset that has a chance of being more valuable in the future are turning to bitcoin. Traditionally, assets such as gold or other precious metals were considered stores of value because of the built-in scarcity and the historical performance of predictable price increases. While bitcoin’s price on a daily, weekly, or monthly chart continues to be volatile (and likely will for the foreseeable future), the overall price trend has been positive. Additionally, having a very portable and digitally-based store of value is attractive to many.
  • Bitcoin as an investment. Bitcoin is one of the best performing financial assets of the past decade when viewed by rates of return. In October 2010, bitcoin hit a milestone  when one BTC was worth $0.125. Ten years later, in October of 2020, the price of one bitcoin is hovering around $13,000. Additionally, research shows that bitcoin is a great diversification asset to traditional investment portfolios consisting of stocks and bonds. The reason? Bitcoin has traditionally been uncorrelated to other financial markets.
  • Bitcoin as an information networkThe foundation of bitcoin is the bitcoin blockchain. The blockchain functions as a distributed ledger that is not in the control of any single company, corporation, government, or interest group. The bitcoin blockchain is global (some people are working to make the network even more resilient by launching space-based nodes). Bitcoin’s open, distributed, and permissionless (meaning anyone can join and use the network) setup makes it truly unique and useful. With enough time and community support, bitcoin will be a tool that overcomes some of the shortcomings of the current commercial internet such as censorship, information monopolies, surveillance capitalism, and identity stewardship.
  • Bitcoin as a global reserve. When you combine all of the bitcoin use cases outlined above, you start to get a sense of bitcoin’s true value. Sure, it is a fun and exciting technological innovation. Or, it’s an unprecedented investment opportunity. Maybe the ideas of financial and personal freedom resonate with you. Regardless, even if bitcoin only lives up to a fraction of its potential, it would still make a great global reserve currency. Think about it: A good global reserve should act as a store of value, be usable in different contexts for collecting and settling transactions, and not be beholden to any centralized government or central bank —  all of which sound exactly like bitcoin.

What is bitcoin? A Coinme guide.

We can go on and on with the list above, because bitcoin is a lot of things. To take a deeper dive, here are a few recommended posts. We are continually adding to this list as we create new educational resources, so be sure to check back regularly.

The birth of bitcoin — This post is all about how bitcoin came to be. It walks through some of the projects that preceded bitcoin and talks about why bitcoin came about when it did. Bitcoin was first created by the mysterious Satoshi Nakamoto. The ideas that would eventually become bitcoin were first outlined in the bitcoin whitepaper, titled “Bitcoin: A peer-to-peer electronic cash system.”

Learn about bitcoin —  This page is a good place to get familiar with bitcoin-related terminology. Since day one, bitcoin and bitcoin users have developed a unique culture —  complete with a new lexicon. This is the spot to learn more about hodl, stackin’ sats, and FUD.

How can I use bitcoin? —  There are a number of ways to use bitcoin. From easily (and quickly) sending money across borders, to buying gifts on Etsy, this guide has you covered.

The bottom line is that there are a lot of entry points to bitcoin. While the technology that makes bitcoin work can sometimes feel daunting to understand, bitcoin is still accessible for all. The best way to learn more about bitcoin is to start using it, and learn along the way.

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Coinme Team

What Is Bitcoin?

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