Since its invention in 2009, Bitcoin (BTC) has managed to retain the top spot as the largest cryptocurrency by market cap, surged in value, and matured into an asset class of its own.
If you’re new to investing in Bitcoin, here’s how you can get started, including where and how to buy it in the UK.
What is Bitcoin?
Bitcoin is a decentralised digital currency that is exchanged on a peer-to-peer network without any intermediaries. Unlike traditional currencies, Bitcoin doesn’t require a central bank to regulate its exchange.
Developed by an anonymous person called Satoshi Nakamoto, Bitcoin uses open-source software to facilitate transactions.
All Bitcoin transactions are recorded in a distributed ledger called blockchain which is maintained by a group of equally privileged users. All blocks included in the blockchain carry a timestamp which makes it impossible to alter the data, thereby ensuring information security and preventing fraudulent activity.
Bitcoin uses a decentralised consensus protocol called proof of work (PoW) to mine new tokens. The validation of transactions is achieved by an agreement among members of a network on the order of transactions that must be added to the blockchain. The same protocol is used to enter new bitcoins into circulation through a process called Bitcoin mining.
Though many cryptocurrencies have been launched in recent years, Bitcoin has managed to retain the top spot as the largest cryptocurrency by market cap and has matured into an asset class of its own.