Disclosure: The below is not investment advice or meant to sway you one way or the other. It is for information purposes only. This content uses referral links. Read our disclosure policy here for more information.

There has been a lot of talk these last few months about Bitcoin and it’s skyrocketing price. What is it? Should I invest in it? How can I get some? I’m going to touch on it a bit, as well as cryptocurrencies in general in a multi-part series of posts. I am going to try to keep this as simple as possible as some parts of this are a bit confusing. As always, please reach out with a message or leave comments in the bottom with thoughts or questions.

What is Bitcoin?

Bitcoin is a digital currency. Think of the Dollar or Euro as a physical currency and Bitcoin is the digital equivalent. It is not an actual coin you can hold. 

Who controls the Bitcoin Network?

Nobody owns the Bitcoin network much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world.+

What are the benefits of Bitcoin?

• You can transfer money digitally without using a bank or third party as a go between. For example, let’s say you want to send money to someone internationally. Right now your options are to wire the money through a bank or Western Union/Moneygram, etc. With Bitcoin transactions you are able to send or receive funds directly to/from the other person for little to no cost, as opposed to the  high transaction fees charged by those third party intermediaries.
• Flexibility – You can send Bitcoins anywhere, anytime without having to be worried about bank closures or paper work.
• There is a cap on the number of coins created – With existing physical currencies, more can always be printed. Printing new money typically contributes to the value of that currency going down. The way Bitcoin was designed only 21 million coins can ever be created.
• Fewer risks for merchants – Bitcoin transactions are secure, irreversible, and do not contain customers’ sensitive or personal information. This protects merchants from losses caused by fraud or fraudulent chargebacks.^
• Security and Control – Bitcoin users are in full control of their transactions; it is impossible for merchants to force unwanted or unnoticed charges as can happen with other payment methods. Bitcoin payments can be made without personal information tied to the transaction. This offers strong protection against identity theft. Bitcoin users can also protect their money with backup and encryption.^
• Transactions are public (in a sense). Why is that good? This prevents anyone from trying to manipulate the system. Your actual identity is not linked to a transaction only your Bitcoin address is.

How Do You Send Bitcoins?

You and the recipient will both need a wallet to hold your Bitcoins in. Similar to how you might hold physical currency in a wallet, you hold Bitcoins in a wallet as well. In this case you will hold it in a digital wallet. This digital wallet will also contain is known as a Bitcoin address. Once the recipient gives you their Bitcoin address you can send Bitcoin directly to that address and it goes from your wallet to their wallet.  (Note: There is another way you can hold Bitcoins using what’s called a Paper Wallet but that is a little more complex for right now.)

How Can I Buy Bitcoin?

It’s actually quite easy to purchase and you can purchase fractions of 1 coin. The most popular way for new people getting started is through an exchange called CoinBase. If you are interested in getting started my Referral link is here and will get you $10 worth of Bitcoin for free if you buy or sell $100 worth.

Why is Bitcoin so expensive right now?

My opinion is it’s mostly due to the speculation of what Bitcoin can become. With it gaining in popularity we then have to remember that there is a cap of how many will ever be in circulation. If there is a lot of demand for something but not enough supply available, it will drive the price up for that item.

Why is everyone so excited about it?

Outside of the reasons I mentioned above, there is one key thing that is the most exciting about Bitcoins. It is the underlying technology that runs it called blockchain. In Part 2 we will go more in depth about the blockchain and it’s potential.

+ Source – https://bitcoin.org/en/faq#who-controls-the-bitcoin-network

^ Source – https://bitcoin.org/en/faq#what-are-the-advantages-of-bitcoin