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What Is Bitcoin? The Simple Bitcoin Explanation

Bitcoin (BTC) is a virtual, digital currency — known as Cryptocurrency — that can be used for everything from reimbursing a friend for your share of last night's Chinese takeout to putting down a deposit on a fancy new apartment or sports car.

Of course, there's a little more to it than that. Bitcoin is completely decentralized. This means it isn't regulated by a central authority, so you aren't covered by the same preventative measures your bank provides, like fraud detection. 

The result? Should you happen to fall for a scam, send Bitcoin to the wrong address or a savvy hacker manages to break into your Bitcoin Wallet and drain your account, the funds are gone for good. Your bank won't refund you, nor will your Bitcoin Wallet.

Related: Can You Reverse A Bitcoin Transaction? 

Because it's digital (there's no such thing as physical Bitcoin), there's also no way to send and spend Bitcoin without a smartphone, tablet, computer, or what's known as a Coinbase Visa Debit Card — or another Bitcoin Debit Card — to initiate the transaction.

Who Invented Bitcoin?

Who invented Bitcoin? That's the 300 billion dollar question, as per Bitcoin's market cap at the time of publication. The answer? Satoshi Nakamoto. But who is the man, the myth, the legend, that is Mr. Nakamoto? Well, we don't know. Here's why.

Satoshi Nakamoto invented Bitcoin. There's no disputing that. His name is accredited as the author of the Bitcoin white paper and is all over the original reference implementation. But that's the facts end; Nakamoto is a pseudonym — an alias, of sorts.

That means whoever actually invented Bitcoin is the person behind the Satoshi Nakamoto name. And there's nothing to mean it's just one lone individual; we could be looking at a crack team of developers who wanted to break free from centralization. 

Satoshi Nakamoto's identity is as well kept as the contents of Area 51. There are whispers about who it could be, with most claiming it's one of a number of computer science experts of non-Japanese descent, but that's nothing more than speculation.

Where Is Bitcoin Stored?

Bitcoin is stored in a Wallet, of which there are three types: Cold Wallet, Hot Wallet, and Paper Wallet. There isn't much between the trio other than the former being the most secure (though it's only as safe as the environment it's stored in).

Cold Wallet

A Cold Wallet is a Bitcoin Wallet that's stored offline on a device that's not connected to the Internet when it's not in use. That could be a digital ledger, like the much-loved Ledger Nano S; an external hard drive, such as a USB stick; or something similar. 

Hot Wallet

A Hot Wallet is a Bitcoin Wallet that's located on a device that is connected to the Internet at all times, like a computer, smartphone, or tablet. More often than not, such storage solutions — Coinbase Wallet, for example— are based in the cloud.

Paper Wallet

A Paper Wallet is a Cold Wallet that's kept offline, wherein both Private and Public Keys are printed on a piece of paper, written on a Post-it, or stored on another physical medium (if you wanted to be extra secure, you could encode them in a microdot).

How To Get Bitcoin

You can buy Bitcoin by converting USD to BTC, but that not your only option: You can also Mine it. This isn't as complicated as it sounds. Far from it, in fact. It's as simple as running some software in the background on a computer, tablet, or a Bitcoin Miner.

Related: How To Mine Bitcoin

One way you can do this is with a Coinmine One. It's a Plug-and-Play Bitcoin Miner. All you need to do is take it out the box, connect it to the Internet, tell it which Cryptocurrency to mine (in this case, Bitcoin), and it'll do the heavy lifting for you.