What is bitcoin?
Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made without intermediaries, that is, without banks! Bitcoin can be used to book hotels on Expedia, buy furniture on Overstock, and buy Xbox games. But much of advertising is about getting rich through trading. The price of bitcoin shot into the thousands in 2017.
Why bitcoin?
Bitcoins can be used to buy goods anonymously. Also, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like it because there are no credit card fees. Some people simply buy bitcoins as an investment, hoping that they will increase in value.
Buy bitcoins
Buy from an exchange
Many markets called "bitcoin exchanges" allow people to buy or sell bitcoins using different currencies. Coinbase is a leading exchange, along with Bitstamp and Bitfinex. But security can be a concern: bitcoins worth tens of millions of dollars were stolen from Bitfinex when it was hacked in 2016.
Mining
People compete to "mine" bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins approximately every 10 minutes.
Bitcoin wallet
Bitcoins are stored in a "digital wallet", which exists in the cloud or on the user's computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods, or save money. Unlike bank accounts, bitcoin wallets are not insured by the FDIC.
The future of Bitcoin in question
Nobody knows what will become of Bitcoin. It is mostly unregulated, but some countries such as Japan, China and Australia have started to evaluate the regulations. Governments are concerned about taxes and their lack of control over the currency.
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