What is bitcoin?

If you know me personally or you follow my social media account, you probably know I am interested in bitcoin and even invest in it. Yet, what is bitcoin?

In short, bitcoin is a digital currency which allows you to initiate and receive online payment. Why is it so special? We can use credit card, Alipay, WeChat pay, Venmo or PayPal to pay online. Yes, you are absolutely right. There are so many alternatives for you to process online payment. You don’t really need to use bitcoin.

Let me provide a more detailed definition. Bitcoin is a decentralized digital currency. A currency is usually controlled by the central bank. For example, Federal Reserve issues USD. Bank of England issues British Pound. They can even announce the banknotes you are holding now to be invalid like what Indian government did. In bitcoin case, no single entity can determine when and how much bitcoin they want to issue. That’s why it is decentralized. Theoretically, everyone on Earth (or in the Universe) can issue a particular amount of Bitcoin when certain criteria are fulfilled. The amount and the criteria were determined by the Bitcoin’s founder Satoshi Nakamoto. Once bitcoin reaches a certain scale in which it did already, even the founder cannot alter those rules.

In other words, bitcoin is a digital currency without the control of central bank. Why does it matter? The secret is that the total amount of bitcoin is fixed at 21 million and no single entity can increase it. Theoretically, there is no inflation if total amount of money remains unchanged. That means you can pay 20 dollars to buy a lunch for now and you still pay the same for 1 year or 30 years later. The 20 dollars you have will not depreciate. This is one of the key reason why bitcoin is so special and valuable.

I know you may still have many questions. Please ask in the comment and I will answer you later!