What is Bitcoin?

Welcome back to Poor Sheep, a blog for people who are in the early stages of their journey to learn about the field of Finance. In the last blog, we discussed what Blockchain is all about. In this article, we will move on to talk about Cryptocurrencies (most of which work on blockchain technology) with a special focus on Bitcoin.If you’re unacquainted with the technology of blockchain, you can check out my previous blog — What’s all the hype around Blockchain?Photo by Brian Wangenheim on UnsplashAccording to Investopedia, “A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.”The first cryptocurrency ever created was Bitcoin. It was introduced to the world in 2009 by an individual or group under the pseudonym of “Satoshi Nakamoto.” The true identity of this individual, or group, is still unknown, but a few people do match the profile.About 4,000 cryptocurrencies are currently in existence apart from Bitcoin, which are also known as Altcoins. Some of the most popular Altcoins, based on market cap, are Ethereum, Tether, Binance Coin, Cardano, and Dogecoin. Despite the vast variety of Altcoins available, Bitcoin enjoys a market cap dominance of over 45% in the Crypto market.Bitcoin, to put it simply, is virtual money that can be used for making online transactions. It was created after the Great Recession of 2008 with the idea of disintermediating financial transactions, such that banks would not need to be involved for every single one. It works on the principles of blockchain and is thus “decentralized,” meaning there is no central authority that regulates this Cryptocurrency. Instead, it operates on a peer-to-peer system, and transactions are verified by a mechanism called proof of work.In order to obtain Bitcoin, it can either be mined using…