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Bitcoin explained in 120 seconds
Your 2-Minute dose of Genius!
Sika Republic
January 18, 2024
Whether you’re up on what's trending or not, you’ve certainly heard about Bitcoin. If you’ve wondered what it is, you're not alone.
Bitcoin, the world's first to launch and most well-known cryptocurrency, is a digital currency that’s been making headlines since its inception in 2009.
In today’s 2-Minute Masters, we'll demystify Bitcoin and help you better understand what it is and why it matters.
How it began
Bitcoin emerged as a response to the challenges posed by the financial crisis of 2008. Finance was heavily reliant on banks as middlemen for all transactions, but Bitcoin’s anonymous creator(s), Satoshi Nakamoto, had an alternative vison. Unlike traditional currencies which are controlled by governments, Satoshi’s idea was to eliminate the need for banks in financial transactions and establish a direct, peer-to-peer decentralized payment system not controlled by any single person, company or government.
How it works
Bitcoin transactions are recorded on a decentralized public ledger called a blockchain that is maintained by a network of computers around the world. Unlike traditional currency, bitcoin isn't physical. Instead, everyone who holds bitcoin has a digital wallet that contains a private key and a public address. The private key is like a secret password that allows the owner to access and control their bitcoins. The public address, on the other hand, is a unique identifier that others can use to send bitcoins to that wallet.
Where its value lies
One unique aspect of bitcoin is its limited supply. There will only ever be 21 million bitcoins (BTC) in existence and over 19 million have already been mined. This scarcity is built into the code to prevent inflation, plus it mimics the scarcity of precious metals like gold. The idea is that as “digital gold” bitcoin’s value may increase over time due to its limited availability.
Bitcoin transcends borders, it exists on a global scale without being confined to any specific country or region. Bitcoin transactions aren't reliant on traditional banking systems, so it opens up access to individuals in regions with limited access to financial services, offering them an alternative means of participating in the global economy.
Bitcoin is a route to financial inclusion because it has the potential to provide financial services to people who are unbanked or underbanked. With just an internet connection, anyone can access and use bitcoin without the need for a traditional bank account. This inclusivity empowers those who are excluded from the traditional financial system to participate in a whole new way.
Today’s Takeaway:
As a digital currency, bitcoin’s price can soar one day and dip the next, partly because it's still a relatively new technology and the market is figuring out its true value. Whether you see its value in the coin’s price growth, or its ability to open up access to communities who have been excluded from the traditional financial system, the Bitcoin blockchain started this cryptocurrency revolution, but from it has grown a whole new ecosystem. This new ecosystem is driving the future of finance.