Bitcoin has been gaining in popularity in the past couple of years, but little do most people know, Bitcoin is actually 11 years old now.
So what exactly is Bitcoin?
It's often described as a cryptocurrency, a virtual currency or a digital currency. Unlike a US Dollar or a British Pound, Bitcoin is completely virtual.
So that means that you can't simply go to the ATM and withdraw 10 Bitcoin to pay for dinner tonight.
While it is completely virtual, you can still use it to buy products and services online. However, not many merchants accept Bitcoin just yet. In fact, some countries have outright banned Bitcoin.
Part of the reason for this is because the price of Bitcoin swings so wildly every single day. One day it could be as high as $12,927, like it was a couple of months ago. Or it could be $7,971 like it now. That's a big swing in just four months. It's an even bigger swing if you look back at the past five years – there was a point where it crossed $20,000.
There are pictures of Bitcoin on the internet, but that is all a novelty. Those Bitcoins would not be worth anything, without the private codes printed inside of them.
There are many different ways that you can buy Bitcoin as well. It works sort of like the stock market, except Bitcoin (and other cryptocurrencies) are bought and sold 24 hours a day, seven days a week. It's also a lot more volatile than just buying a few shares of Alphabet or Amazon.
Essentially, each Bitcoin is a computer file, that is stored in a "digital wallet" app on your smartphone or your computer. This is why we are seeing more smartphones that are even more secure than usual, so users can store their cryptocurrency on them.
You are able to send Bitcoins to other digital wallets, and you can also get them sent to you. Similar to PayPal or Venmo.
Every transaction of bitcoin is recorded in a public list, which is called the Blockchain. This means that you can trace the entire history of Bitcoin, and it makes it safer. As you are less likely to be buying or selling a counterfeit.
You can think of Bitcoin as a virtual currency that you will never actually see in your hand, like you might see a $20 bill.