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In 2008, there was a major financial crisis in the world. In the same year, Bitcoin was born. In a white paper, an anonymous programmer named Satoshi Nakamoto explained his alternative. A decentralized electronic version of a monetary system. Whether the name “Satoshi Nakamoto” is a woman, a man or a group is still unknown.

Nakamoto criticized the trust model of today’s financial system, not because trust is bad, but because it is inherently open to abuse. He made a proposal with a computer system that cannot be cheated using secure cryptography.

The so-called cryptography, from which the term cryptocurrency is also derived, is a technology for secure communication.

It is used especially in finance, online banking and the military, so that data cannot be manipulated or intercepted. Nakamoto used cryptography in Bitcoin to create a payment system that no one can manipulate. For this purposes, the Bitcoin software is executed on the computer of the respective users. Each participating computer in the network, works as the Bitcoins software dictates. It follows consensus rules, which ensure that no one can spend more Bitcoins than they have.

Fraud is noticed in this public and distributed network and thus such transactions, automatically become invalid. To ensure that every network participant knows how many Bitcoins each of them owns, the decentralized network has, in addition to the consensus rules, a ledger in which every transaction that has ever been made is recorded; the so-called blockchain.

What does this mean for Bitcoin?

Bitcoin is like money, just electronically. It can be managed on computers and smartphones using software called a wallet. You can send it to anyone in the world who has a wallet, no matter where they are.

Bitcoin takes about 10 minutes for a transaction. In comparison, a normal bank-to-bank transfer takes several days.

You own your Bitcoins, no credit institution stands between the transactions, so you always have sovereignty over your money. Even if another banking crisis occurs, your Bitcoins still exist. Only 21 million Bitcoins are distributed at most, which are successively generated by the miners. That also, is regulated by the code of Bitcoin.

So instead of fiat money, of which central banks print any number of new money, Bitcoin does not lose value over the years, but instead gains in value. This also makes Bitcoin interesting for all those who are looking for an alternative to stocks.

So all you need is a working internet connection and the wallet software and you’re good to go.

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