Bitcoin- What Is It Exactly, And What's The Big Deal?

You’ve probably heard the term “Bitcoin” thrown around a lot lately, along with related terms like “cryptocurrency” and “blockchain”. But what is it exactly, and what’s the big deal?

- Adora Wong

Let’s start with the basics: the type of money we’re used to is known as fiat currency – currency that has been issued by the government. Then there’s cryptocurrency, a kind of digital currency that isn’t backed by the government and that operates on a type of technology.

“Cryptocurrency is enabled by blockchain technology. Blockchain is essentially a new means of organising data,” says Alrick Oh, Communications and User Operations Specialist at Coinhako, a crytopcurrency wallet service provider based in Singapore. “It works by recording and storing data in little pockets known as ‘blocks’.”

Blockchain can be tricky to understand, but Alrick has an analogy to illustrate how it works: “Think of it as a jury in court. Just as how the group of people is asked to help pass judgment so the court can make a non-biased decision, the blockchain structure allows data to be processed across many [computers]. This increases the integrity of information stored on the network,” he explains.

What is Bitcoin?

While we’ve only started hearing about Bitcoin recently, it has actually been around for close to a decade. It’s widely recognised as the world’s first cryptocurrency and emerged in 2009, following the 2008 financial crisis.

In a nutshell, Bitcoins are pieces of computer code that represent monetary units. They’re like gold: we’ve collectively decided to accept them as a payment form. And just like gold, you can mine Bitcoin or buy it. There will only ever be 21 million Bitcoins generated and, as of today, there are about 17 million in circulation.