What’s Bitcoin? A beginner’s guide to the world’s first cryptocurrency

Bitcoin (BTC-USD) — the world’s first digital currency — has been a hot topic in financial circles for at least the last few years, and arguably needs no introduction.

Surveys suggest a majority of Americans have at least heard of it. In layman’s terms, Bitcoin is a virtual currency (aka cryptocurrency) which can be exchanged through online transactions, and is stored on a digital ledger. Once trading for pennies on the dollar, one unit now costs nearly $40,000 with a market capitalization of nearly $750 billion.

Although outlets that accept cryptocurrency are still limited, Bitcoin is arguably the most easily exchangeable of all the cryptocurrencies. A small but growing number of service providers accept the virtual currency, which can be used to buy goods in video games, exchanged for U.S. dollars or other fiat currencies — and even pay for goods and services at a few places.

Cloudy beginnings

Bitcoin was founded in 2008 by an unknown individual or group going by the name Satoshi Nakamoto. Though feverish speculation has surrounded Nakamoto’s true identity — and some have claimed to be Nakamoto — it remains unconfirmed.

Nakamoto began work on the code that would eventually serve as the backbone of Bitcoin in 2007. In 2008, a whitepaper for the cryptocurrency was first published, which created the original software reference implementation (the program which set forth the technical standards for Bitcoin), and served as an effective starting point for the cryptocurrency.

Bitcoin was then created as open-source code, meaning effectively anyone could use it. To date, there are an estimated 11,000+ cryptocurrencies on the market today.

Somewhat appropriately given its libertarian beginnings, Bitcoin’s chief distinctive feature is its decentralized nature. Unlike other forms of payments, no one centralized organization or entity controls the currency or has the power to regulate the creation of more Bitcoin nor transactions occurring with it.