What is Bitcoin (BTC)?

Bitcoin is a decentralized digital cryptocurrency that isn’t controlled by a central bank or government. Transactions involving Bitcoin use peer-to-peer networks without involving banks or other financial institutions.¹

The Role of Bitcoin

Because Bitcoin is a decentralized currency, no single agency dictates its value. The number of bitcoins in circulation is limited to 21 million.² Bitcoin is a highly secure digital currency; while one can easily hack into a network and access online accounts, cracking a node in the blockchain world is extremely difficult. It requires the attacker to control multiple nodes simultaneously to pull off such a hack.³

The cost of international transfer of funds is expensive and can take a few days, especially over a weekend. Bitcoin has the ability to transfer funds within a few seconds, seven days a week. Bitcoin has also been adopted in several businesses due to its flexibility. However, the volatility in price is a significant deterrent for adoption.

Example

The popularity of Bitcoin can be witnessed in the futures contract launched by CME involving USD and Bitcoin. To allow smaller investors to participate, micro contracts have also been created wherein a fraction of a Bitcoin is the underlying asset in the futures contract.⁴

Sources

1. What is Bitcoin and How Does it Work? Forbes.
2. Bitcoin Definition. Investopedia.
3. Can Bitcoin Be Hacked?
4. Why Micro Bitcoin Futures are a Game Changer. Reuters.

Please note that this article is for informational purposes only. The example above is for illustrative purposes only. Actual crypto prices may vary depending on the market price at that particular time. Alpaca Crypto LLC does not recommend any specific cryptocurrencies.

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