What is Bitcoin?

Basic Facts You Should Know About Bitcoin

A visual representation of the digital Cryptocurrency, Bitcoin.
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The Basics of Bitcoin

Bitcoin is a form of digital “currency”. It is created and held electronically on a computer. Bitcoins are not paper money like dollars, euro or yen by central banks or monetary authorities. Bitcoin is the first example of a cryptocurrency, which is produced by people and businesses all over the world using advanced computer software that solves mathematical problems.



Bitcoin is a fixed asset; there is only a total of 21 million coins. Solving the advanced mathematical problems results in the mining of Bitcoins. However, Bitcoin is divisible so the growth potential for the exchange medium is unlimited. One of the most interesting inventions that came alongside Bitcoin is blockchain or distributed ledger technology (DLT). DLT has amazing potential when it comes to traditional operations and settlement ramifications for businesses in the financial as well as other industries.




Is Bitcoin a Currency?


  • Circulation as a medium of exchange
  • General use, acceptance, or prevalence
  • The quality or state of being present
  • Paper money in circulation
  • A comment article used for barter
  • A medium of verbal or intellectual expression



Is Bitcoin a Commodity?


Throughout the course of history, many commodities and even some manufactured products have served as currency. Probably the best examples are gold and silver. Gold and silver were not only used as a medium of exchange, or currencies for thousands of years, they were backing for many paper currencies around the world until only recently. Central banks and monetary authorities around the world continue to hold vast gold reserves and categorize their holdings as “foreign exchange reserves.” Therefore, both gold and silver can be thought of in the same class as Bitcoin.

Moreover, over the course of history salt served as a medium of exchange in ancient times. More recently, cigarettes or blue jeans have been employed as currency in certain areas of the world over recent decades. As you can see, the classification of Bitcoin as a commodity is both dubious and understandable, at the same time. It is hard categorized Bitcoin because it is so new and different from other assets available to market participants. One thing seems certain, the growth of interest in the cryptocurrency over recent years means that it is an asset that deserves our attention.

The Future for Bitcoin

Technology has made the world a smaller place over recent years. Bitcoin is a child of the technological revolution. As the first pan-global currency (or commodity) that can be used by people all over the world as a medium of exchange without involving governments, the cryptocurrency will continue to attract interest and resistance.

In nations where currency flows are subject to stringent government control, Bitcoin offers a method to transfer wealth to regions of the world where restrictions are less onerous. Additionally, since Bitcoin transactions are anonymous, the cryptocurrency will continue to attract transactions connected to nefarious and outlawed activities.

It is clear that Bitcoin is gaining interest and use around the globe. In 2016, the majority of Bitcoin transactions occurred in China. In fact, the massive volatility in Bitcoin’s value at the beginning of 2017 that took the price from $1129 to under $800 on the same day was likely due to speculation from China. Bitcoin, and its operational child, blockchain technology, have a future in the world markets. However, it is likely that governments all over the world will resist a pan-global asset that operates beyond their reach and can facilitate activities that run counter to their laws and rules or political agenda.