They Asked What Bitcoin Is and Demanded an Answer in Layman English

Cherry O Dear Friend

You asked me to explain what Bitcoin is,  in Layman,  and I ended up breaking down the entire concept of cryptocurrencies in simple language. 

I wrote this cordial letter because it’s upon Bitcoiners to bring in more friends into this space.

Well, this is a cordial and open letter to all folks without technical knowledge in blockchains, Cryptocurrencies (or Bitcoins so to say), and decentralized technologies. 

So what is Bitcoin? Simply Bitcoin is a type of cryptocurrency. 

A cryptocurrency is a currency just like the US dollar, the Nigerian Naira, or the South African Rand. However, unlike the Naira, the Rand, or the Dollar, cryptocurrencies are maintained on a decentralized system. 

Remember normal currencies such as the Dollar are controlled by a centralized authority or system which in most cases is a central bank. The central bank verifies and records transactions taking place across national currencies. 

But when it comes to bitcoins and other types of cryptocurrencies, the decentralized systems allow participants on the network to verify and record the transactions on a blockchain. 

Simply put, a blockchain is a decentralized system or decentralized ledger.

You are most likely to hear the following terms during bitcoin conversations: 

Glossary of Common Terms

  1. Decentralization – Decentralization is the dispersion of functions, organization, and activities across users. 
  2. Blockchain – Cryptocurrency transactions take place on the blockchain. It is simply a link between several peer-to-peer computers. 
  3. Altcoins – Altcoins are other cryptocurrencies that came after the launch of Bitcoin. The term means alternative coins or better alternatives for bitcoins. There are approximately 8,000 altcoins to date and the number keeps growing. Examples of altcoins are Ethereum, Dash, Litecoin, Ripple(XRP), Bitcoin Cash, Bitcoin Gold e.t.c (Note Bitcoin Cash is different from Bitcoin Gold and the original bitcoin).

So you might wonder,  what’s this hype with Bitcoins? 

Isn’t it fascinating that one Bitcoin now costs $56,142.00? Had you bought one 100 Bitcoins when each bitcoin cost $1  – you’d be now spending your millions on some Caribean Island. 

But well, here is what most people missed the opportunity and why you are also likely to miss Future investment opportunities of Bitcoins. 

Bitcoins and the rest of altcoins are highly volatile. Any asset with high volatility is highly risky for investment. In 2017, Bitcoin rose from $900 to almost $20,000. The numbers indicate some people woke up millionaires. However, the coin’s stay around the top was short-lived and it dropped by over 20%. 

This shows you how volatile the currency is. Last year on a date like today, the currency’s price was only $13K. Now it’s selling at $56K.

To some extent, it seems individuals willing to invest in Bitcoins have to take a long-term approach. 

People are also using Bitcoins for payment and cross-border transfers. Folks who want to buy some Bitcoins or any other altcoins can do so through a peer-to-peer cryptocurrency exchange such as Localcrypto. This exchange supports Bitcoin, Litecoin, Dash, and Ethereum. For folks who plan to trade cryptocurrencies can do so on a cryptocurrency exchange such as Coinbase or Binance. 

If you have any questions regarding this topic, don’t hesitate to leave them in the comment section. I wrote this guide for the absolute beginner and I understand you got questions or additions to the topic. 

Have a Wonderful Time.

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