Summary
- Bitcoin is a currency.
What is Bitcoin?
Bitcoin is a currency.
What's unique about Bitcoin?
What makes Bitcoin unique is that transactions of the currency occur peer-to-peer (i.e. without the need of a central entity, such as the Bank of England), and the supply of the currency is limited (at 21 million coins).
The main benefit of transacting on a peer-to-peer, decentralised network (rather than a centralised network) is that there is no real single point of failure in the network. In a centralised network, if the central entity fails, then the whole network - and currency - fails (i.e. there is a single point of failure in the network), whereas in a decentralised network, becasue there is no central entity, there is no real single point of failure, and therefore the network - and currency - is likely to last for much longer, possibly forever.
For example, the world's first ever known currency is the Mesopotamian shekel, and it was operated by a central entity (The Kingdom of Lydia). When the central entity failed, so did the currency.
Another key benefit of a decentralised network is that transaction costs are lower.
Competition
| Item | Bitcoin | Ether | US Dollar |
|---|---|---|---|
| Does the currency operate on a decentralised network? | Yes | Yes | No |
| Is the supply of the currency limited? | Yes | No | No |
| High likely is the currency to act as a store of value? | High | Low | Low |
| Item | Bitcoin | Ether | XRP |
|---|---|---|---|
| Does the currency operate on a decentralised network? | Yes | Yes | No |
| Is the supply of the currency limited? | Yes | No | No |
| High likely is the currency to act as a store of value? | High | Low | Low |
Actions
To invest in Bitcoin, click here.