What is Bitcoin?

The value of virtual currency Bitcoin is at the highest it’s ever been – one Bitcoin is now worth more than £7,000 – and its value could go even higher.

Bitcoin it’s like an online version of cash. It is a cryptocurrency, digital currency, type of money that is completely virtual. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether.

Each Bitcoin is basically a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer.

People can send Bitcoins (or part of one) to your digital wallet. Every single transaction is recorded in a public list called the blockchain. This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own or making copies.

There are three main ways people get Bitcoins.

  1. You can buy Bitcoins using ‘real’ money.
  2. You can sell things and let people pay you with Bitcoins.
  3. Or they can be created using a computer.

There are lots of things other than money which we consider valuable like gold and diamonds. The Aztecs used cocoa beans as money! Bitcoins are valuable because people are willing to exchange them for real goods and services, and even cash. Some people like the fact that Bitcoin is not controlled by the government or banks.