Bitcoin money definition for kids
Although there are hundreds of cryptocurrencies in active use today, Bitcoin is by far the most popular and widely used — the closest cryptocurrency equivalent to traditional, state-minted currencies. Like traditional fiat currencies such as the U. Like all cryptocurrencies, Bitcoin is wildly volatile — far more so than most fiat currencies — but the general value trend has been upward. Bitcoin is the most versatile cryptocurrency around. It can be used to purchase goods from an ever-growing roster of merchants that accept Bitcoin payments, including recognizable companies like Expedia , Overstock. It can be exchanged with other private users as consideration for services performed or to settle outstanding debts.
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Cryptocurrency: What is coin burning and why it should be a part of every investor’s calculus?
What comes to mind when you think of money? Some might envision the humble dollar bill. Others might hear the clink of pennies and other coins filling a piggy bank.
In today's modern, electronic world, however, much of the time our money only exists as numbers on a screen. Your paycheck can be direct deposited into your bank account. You can then spend that money online or pay bills electronically. Unless you go to a bank or use a debit card to request paper money, your money will remain purely digital.
Even though it remains in a virtual , digital realm , your money is still based upon currency issued by a government. It's also controlled and regulated by large financial institutions, such as banks.
But what if a system of money could be created that existed apart from any government and didn't involve any financial institution? That was the thought that led to the creation of Bitcoin. Bitcoin is a cryptocurrency sometimes called virtual currency or digital currency. It's a new type of money that's totally virtual. It's stored in a "digital wallet" application on computers and smartphones. Instead of relying upon governments and financial institutions to create and manage it, Bitcoin relies upon a vast, decentralized network of computers used by individuals or groups known as "miners" to validate and keep track of transactions using cryptography and advanced mathematics.
The worldwide financial crisis of prompted the invention of Bitcoin by Satoshi Nakamoto. No one knows who Nakamoto is, but many people suspect it's a pseudonym used by a group of programmers who created the fundamental technology underlying Bitcoin: the blockchain.
The blockchain is like a publicly-distributed ledger. It's an ever-expanding computer file that contains the history of the creation of every Bitcoin in existence, as well as every Bitcoin transaction ever conducted. As Bitcoins are created and transactions take place, they are made part of a collection of data known as a block.
When a block is filled, it is added to the chain of blocks in sequential order after it has been validated by miners in the Bitcoin network. Miners possess specialized computer equipment capable of performing the advanced mathematics and cryptography required to validate Bitcoin transactions.
They compete to be the first to validate new blocks, because the winning miners are issued newly-created Bitcoins for their efforts. This is how new Bitcoins are created.
As new blocks are added, the blockchain is updated and relayed to all the computers called nodes in the Bitcoin network. This makes Bitcoin very secure, since hackers would have to break into nearly all nodes simultaneously to steal Bitcoins. Most experts consider this an impossible task. When Bitcoin began, each Bitcoin was worth almost nothing. A lot has changed in the last decade.
The cryptocurrency is extremely volatile, though. Its value quickly decreased to less than half its peak and continues to fluctuate wildly based upon numerous factors, including the fact that many countries are attempting to regulate or ban cryptocurrencies altogether.
However, Bitcoin might not suffer from devaluation in the future the way government-issued currency often does. When central governments print more money, the value of current money decreases. To prevent this problem, Bitcoin was designed in a way that limits the total number of Bitcoins that will ever be issued to 21 million. Experts estimate the last Bitcoin will be mined in May How do you get Bitcoins today? You can buy them with government-issued money.
You can also sell things and ask people to pay you with Bitcoins. Finally, you can become a miner, although it's difficult and expensive to acquire the technology needed to mine Bitcoins. More and more online stores are accepting Bitcoin as payment. You may never be able to pay your taxes with Bitcoin, however.
Nevertheless, many people still find Bitcoin attractive because it's not controlled by governments or banks and it allows transactions to be completely anonymous as long as you don't give out your Bitcoin wallet identification code!
Are you ready to learn more about cryptocurrencies? Be sure to explore the following activities with a friend or family member:. We think that Bitcoin is super interesting, too! Did you know that you can add your own questions to our Wonder Bank , and your question could be the inspiration for a Wonder of the Day?
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Should today's kids invest in cryptocurrency? Investing in cryptocurrency isn't the only way to make money on the Bitcoin craze, though. Can you imagine publishing your first book at such a young age?
And on such a complicated subject? If you're still having a little trouble wrapping your mind around cryptocurrency, check out this unique illustrated explanation meant to be simple enough for young children to comprehend: My First Bitcoin and the Legend of Satoshi Nakamoto.
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How Does Bitcoin Work?
Kelsie Nabben does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment. Bitcoin continues to trade close to its all-time high reached this month. First launched in as a digital currency , Bitcoin was for a while used as digital money on the fringes of the economy. It has since become mainstream.
The Basics Of Bitcoin And How To Get Started Investing In It
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What is cryptocurrency and how does it work?
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Bitcoin Is Still Concentrated in a Few Hands, Study Finds
How to give bitcoin, ether as a Rakhi gift to your sister
Wild swings in the value of cryptocurrencies have once again raised questions about the fundamental role and function of cryptocurrencies such as Bitcoin. Is Bitcoin a digital currency that represents the future of money? Is it a form of digital gold — a stable store of value and an inflation hedge? Or is Bitcoin a purely speculative asset that is prone to massive price swings? To tackle these questions, one must first grasp the unique status and role of money in modern economies. They accept it in exchange for goods and services because they have faith in it. Economics is closer to religion than science.
Still Don't Get Bitcoin? Here's an Explanation Even a 5-Year-Old Will Understand
You might be using an unsupported or outdated browser. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website. Financial media eagerly covers each new dramatic high and stomach churning decline, making Bitcoin an inescapable part of the landscape.
Nestle Gives Cocoa Farmers a Bonus for Keeping Kids in SchoolRELATED VIDEO: How Cryptocurrency ACTUALLY works.
How to Store Your Bitcoin. All the transactions that have ever happened, from all time, in digital apples, will be recorded in it. Especially if it got really big. The rules of the system were already defined at the beginning.
Its ownership is still concentrated in just a few hands. The top 10, individual investors in Bitcoin control about one-third of the cryptocurrency in circulation, according to a study by the National Bureau of Economic Research. Crypto enthusiasts have long pondered who the largest owners of Bitcoin are since the early days of the its existence. However, by using a data collection method that differentiated between addresses belonging to intermediaries and individuals, NBER researchers were able to find the former controlled about 5.