Digitisation of coinage
Bitcoin is a digital currency started in 2009 by a mystery figure named Satoshi Nakamoto, whose true identity is still unknown. It is unlike traditional currencies because it has no central bank, nation state or regulatory authority backing it up.
To spend them, users buy bitcoin and conduct transactions with them using exchanges such as San Francisco-based Coinbase. Rather than a central authority validating transactions, they are all recorded on a public ledger, called the blockchain.
Bitcoin has a finite supply of 21m of which more than 15m are in circulation, which supporters claim make it more stable than government-backed currencies that can be devalued by central banks printing money. However, it has been very volatile.
Bitcoin are digital keys stored in a “digital wallet”, which exists either in the cloud or on computers, and can be linked to bank accounts. Typically, you can pay by bank transfer, mobile payments or with a Visa or Mastercard. There are also bitcoin ATMs, which allow for bitcoin to be exchanged for cash.
A growing list of firms accept Bitcoin, including Tesla and Microsoft, but it is often used as an anonymous way to carry out large cross-border money transfers, so has become linked to drug dealing and money laundering.