What is Bitcoin? Key cryptocurrency terms and what they mean (2024)

FAQs

What is Bitcoin in simple terms? ›

Bitcoin is a form of digital currency that aims to eliminate the need for central authorities such as banks or governments. Instead, Bitcoin uses blockchain technology to support peer-to-peer transactions between users on a decentralized network.

A private key is a secure code that enables the holder to make cryptocurrency transactions and prove ownership of their holdings. Bitcoin keys specifically feature a 256-bit string displayed as a combination of letters and numbers.

Bitcoin mining is a network-wide competition to generate a cryptographic solution that matches specific criteria. When a correct solution is reached, a reward in the form of bitcoin and fees for the work done is given to the miner(s) who reached the solution first.

Bitcoin (BTC) is a cryptocurrency (a virtual currency) designed to act as money and a form of payment outside the control of any one person, group, or entity. This removes the need for trusted third-party involvement (e.g., a mint or bank) in financial transactions.

‍A: Bitcoin ATMs allow you to sell Bitcoin in exchange for cash. You need to verify your identity, typically through a government-issued ID, phone number, and a picture. You then send Bitcoin to the ATM's wallet and receive cash equivalent. The transaction process can take around 10-20 minutes.

Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries. Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk.

To withdraw your bitcoin, your exchange must initiate a transaction on your behalf by utilizing their private key to transfer the bitcoin to your designated address. This transaction must be confirmed on the blockchain before the bitcoin becomes available.

Tip: The bitcoin private key is just a number. You can pick your private keys randomly using just a coin, pencil, and paper: toss a coin 256 times and you have the binary digits of a random private key you can use in a bitcoin wallet. The public key can then be generated from the private key.

If a user loses their private key, they can no longer access the wallet to spend, withdraw, or transfer coins.

Bitcoin is not controlled by any single group or person. Instead, it is governed by multiple stakeholders — including developers, miners, and users. Developers write the code that makes Bitcoin run; miners validate transactions; and users put the software to work by trading, transacting, holding, and more.

How to get Bitcoin for free? ›

Bitcoin makes money for investors through appreciation, the increase of an asset's market value. There's a lot going on behind the scenes in the Bitcoin network, so here's a detailed primer designed to help you further your understanding of this digital phenomenon.

When you first buy cryptocurrency, you are issued two keys: a public key, which works like an email address (meaning you can safely share it with others, allowing you to send or receive funds), and a private key, which is typically a string of letters and numbers (and which is not to be shared with anyone).

Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank. Bitcoin's creator, Satoshi Nakamoto, originally described the need for “an electronic payment system based on cryptographic proof instead of trust.”

Cryptocurrencies are a portrayal of a brand-new decentralization model for money. They also help to combat the monopoly of a currency and free money from control. No government organizations can set the worthiness of the coin or flow, and that crypto enthusiasts think makes cryptocurrencies secure and safe.

You can start by explaining to them that Bitcoin is a type of currency that exists only online. That means, unlike US dollar bills you'd get for your weekly allowance, there are no physical bills or coins associated with Bitcoin. It's 100% digital.

Yes, it is. But there are some limitations. Several cryptocurrency payment processors allow you to pay your mortgage directly with crypto. These processors typically convert your crypto to fiat currency before sending it to your mortgage lender.

So, who are the top holders of BTC? According to the Bitcoin research and analysis firm River Intelligence, Satoshi Nakamoto, the anonymous creator behind Bitcoin, is listed as the top BTC holder as of 2024. The company notes that Satoshi Nakamoto holds about 1.1m BTC tokens in about 22,000 different addresses.