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What is Bitcoin? How does it work? Why should I care?

Bitcoin hits an all-time high of just under $20,000. Credit: Shutterstock via CNN

SALT LAKE CITY — On Sept. 7, El Salvador became the first country in the world to make the cryptocurrency Bitcoin legal tender. The country’s president, Nayib Bukele, said legalizing it would help the 70% of Salvadorans who don’t have access to “traditional financial services.”

Bukele also said it would be an effective way to transfer the billions of dollars in remittances that Salvadorans living outside the country send back to their homeland each year, the Associated Press reported.

What is Bitcoin?

1 Bitcoin = $ 44,575.90 US Dollars (as of 09/23/21)

Bitcoin is an electronic currency that people use the same way they spend fiat money, which is

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inconvertible paper money made legal tender by a government decree. But you don’t carry it around in your pockets. It is electronic cash that lives in computers and on mobile devices.

No central bank, government or authority on Earth can control or regulate Bitcoin. With it, an individual can transfer funds with no restrictions and without involving any intermediary.

All the transactions are irreversible.

Banks have hours of operation, and are closed on holidays and Sundays, whereas Bitcoin is open 24/7, 365 days a year.

Because a person doesn’t need to provide any sensitive information when making a Bitcoin payment, there is zero risk for that person’s identity or financial information of being stolen or compromised.

Instead of gold, which is heavy, bulky and difficult to transport and store, major institutional investors use Bitcoin as a hedge against inflation, according to coinbase

Investopedia says it can be purchased with standard national money and placed into a bitcoin wallet that is accessed most commonly through a smartphone or computer.

What is a blockchain?

The blockchain contains a record of every time someone sent or received bitcoin, which anyone can view and verify, i.e. a financial ledger. The blockchain data are permanently recorded. 

A blockchain stores data in blocks that are chained together. As one block is filled with data it is chained to the previous block in chronological order.

The most common use of a blockchain is as a ledger for transactions. Bitcoin miners confirm every transaction manually. Since the introduction of this cryptocurrency in 2009, no hacker has managed to infiltrate it, according to Ftn News.

A blockchain allows the online transfer of value without the need for a bank or credit card company. A blockchain allows secure payments between strangers without verification from a bank. How does a cryptocurrency transaction work?