Founded by an anonymous computer programmer known as Satoshi Nakamoto, Bitcoin is a decentralized digital currency that can be used anywhere in the world without the need to trust a central authority. It is created on a blockchain, which is a decentralized digital database that stores all the transactions of the currency. The records on the blockchain are permanently recorded and cannot be changed. This makes it safe to use for transactions that may be illegal, as it is not beholden to any government or authority. It is also very secure since it does not contain any personal information and is completely anonymous.
Since the emergence of Bitcoin, several other cryptocurrencies have also emerged. Some coins are simply a form of payment in software such as video games and apps, while others are used as a unit of exchange. They are also used as a means of lending money. Others function as investments or are a form of payment for illegal activities. The value of some cryptocurrencies is volatile. The value of some cryptocurrencies can fluctuate up to several thousand dollars every day.
Despite the popularity of cryptocurrencies, the Internal Revenue Service (IRS) does not consider them as legal tender, and does not track the gains or losses of investors who trade them. Unlike traditional stocks, crypto gains are not reported by exchanges, wallets, or wallet owners. Likewise, tax authorities have not always been clear about how gains and losses should be reported.
Cryptocurrencies have grown in value in recent years. However, the price volatility is making it difficult to determine the future value of a given coin. The price of a single Bitcoin has fallen since its peak in 2021, and one is currently trading around $20000. It is possible to get rich on a single coin, but the risk of losing money on a crypto asset is high. Many cryptocurrencies have a limited supply. As demand increases, the supply will decrease. The final number of coins in the system will be around 2140.
The first cryptocurrencies were launched during a chaotic financial environment in the U.S. in 2009. At the time, 119 million American households were unbanked and 500 banks had failed. These conditions led to a lot of distrust in the U.S. banking sector and in the governments. This led to the development of a new form of money.
The creators of cryptocurrencies wanted to create a system that was less dependent on the banks and central governments. They wanted to avoid the use of fiat money, which was created by debt. They also wanted to avoid the use of traditional currencies, which they felt were too trustworthy. They also wanted to avoid using central banks and governments, which they believed had too much power.
Ultimately, Satoshi envisaged a new form of money, one that was not backed by a government or bank. He believed that a new form of money would allow people to buy and sell without the need for a credit score. This would also allow people to lend money without having to rely on traditional banks.