Bitcoin is a type of cryptocurrency in which you can invest. To understand it, you need to understand what cryptocurrencies are.

Bitcoin, explained

Cryptocurrency is a virtual or digital currency typically doled out as “coins” or “tokens.” While their makers vary widely, the general idea is the same: to create a decentralized network of currency that bypasses central banking systems and government regulations.

Although there are thousands of altcoins jostling for a spot on the big stage, only a handful have made the big time since 2009. You’re most likely familiar with Bitcoin – after all, it was the first, and the first to be legitimized.

While many cryptocurrencies have headlined in recent months as speculation about their future becomes commonplace, none have featured so frequently – or with as much furor – as Bitcoin. There are only 21 million bitcoins that will ever exist.

Then there's Bitcoin Cash or BCH. BCH is one of the earliest and most successful “hard forks” off Bitcoin. This newer model increased the currency’s storage capacity from 1MB to 8MB per blockchain, thereby allowing for more – and speedier – transactions. This sounds great but some argue that this increased speed comes with reduced security. The market cap for Bitcoin Cash is $10 billion.

What this means for you

Cryptos function on the principles of cryptography, or the mathematical and computational encoding and decoding of data. While we won’t go too far into the specifics, it’s cryptographical processing that allows makers to create and transact these digital currencies. This means that currencies can flow from person to person, entirely bypassing institutions that may process, track, and even take a chunk of such payments.

Cryptos work via blockchain technology, in which a decentralized system is spread across many nodes. These nodes – computers with special processors – then manage and record transactions. Blockchain systems are unique in the virtual space because their infrastructure means they’re incredibly secure (though not infallible, as we’ll discover shortly).

While learning how to invest in Bitcoin and trade can feel complicated, Q.ai makes it easy with our very own Crypto Kit. Learn more.