Bitcoin was invented in 2008, and has enjoyed astronomical growth in both popularity and value ever since. To understand the answer to ‘what is bitcoin’, it is necessary to understand what bitcoin offers that traditional currencies don’t.
Traditional currency, also known as ‘fiat’ currency (from the Latin word for a legal decree, not the Italian carmaker) such as USD, EUR or GBP, is managed by a central authority such as the Federal Reserve or the Bank of England. These organisations control the amount of money there is and insure that money isn’t fake. Traditional currency is also tightly controlled by financial institutions and law enforcement, so purchases can be tracked easily.
Bitcoin does not have a central authority, and allows for privacy in purchasing. The legitimacy of bitcoin is insured by an open-access record of transactions – known as a blockchain – which is impossible to fake. Because bitcoin is anonymous and isn’t centralised, it is perfect for online transactions around the world.