What is Bitcoin, anyway?

Freedom - Justice - Truth

You've probably heard about Fitcoin, saw it on the news, read it in the paper, your friends are talking about it. An you may wonder, what exactly is Bitcoin? Where does it come from? What is mining? Can I buy stuff with it, is it legit?

Well, Bitcoin is a peer-to-peer electronic currency, actually it is the first implementation of a concept called "crypto-currency". It was first described in 1998, but the first specification and proof of concept was published in one year later, in 2009 by Satoshi Nakamoto (a Japanese name that roughly translates as "Thinking clearly inside the foundation"). To this day, no one knows who he is, if he is one person or a group of people.

Bitcoin is decentralized, which means no bank, organization or government is controlling it. Currently, here are 12 million coins in circulation and the number of Bitcoins that will ever exist is 21 million. New 25 coins are generated with each block and this will be halved every four years.

So what does it mean the coins are in a block and how do people get them out of it? Well this video explains it very well:

Besides mining, you can obtain Bitcoins by purchasing them in one of the cryptocurrency exchanges by paying with fiat currencies such as USD and EUR.

Another way is to visit sites that are giving you Bitcoins for free, they can be either paid-to-click sites, faucets or even games.

So why does Bitcoin has value? Well, Bitcoins have value because they are useful as a form of money.  As with all currency, bitcoin's value comes only and directly from people willing to accept them as payment. The price of a bitcoin is determined by supply and demand. When demand for bitcoins increases, the price increases, and when demand falls, the price falls.

Nonetheless, there is a possibility that Bitcoin will lose its value, similar to what can happen to fiat currencies. There is always potential for technical failures, competing currencies, political issues and so on. Bitcoin has proven reliable for years since its inception and there is a lot of potential for Bitcoin to continue to grow. However, no one is in a position to predict what the future will be for Bitcoin.

So you may still wonder, is Bitcoin legal? Well, the answer to this question is yes, it is legal, as long as don't you use it for illegal activities, doing shady business and buy/sell black market stuff.