Stating that Bitcoins are not real money is utterly wrong. Bitcoin is just a digital currency: saying it doesn't have any economical value would be like saying USD or EU don't.
I think the best way to explain what Bitcoin is would be to list its main differences from common currencies, it will probably give you a better idea of what you're dealing with:
I think the best way to explain what Bitcoin is would be to list its main differences from common currencies, it will probably give you a better idea of what you're dealing with:
- How they are spent: Bitcoin is a digital currency, so it can only be used online (they tried to make a physical Bitcoin some years ago, somewhat similar to a credit card, in the US, but the government had to shut it down). Also, being a currency, it means you can trade your Bitcoins for USD, EU or any other currency to spend them anywhere. There are no restrictions.
- How your money is stored: You don't have any physical coins nor bills, you've just got a number displaying how much cash you have, and that number is tied to your online wallet, which is basically the same thing as a bank account number. This is the reason why you're not applied any deposit fees.
Also, this wallet can only be seen by you, as it's not tied to any number. Bitcoin addresses are numbers tied to specific transactions, and not to the wallet itself. This makes them safer, but also easier to lose, so always pay attention to that. - How transactions are handled: As opposed to the way transactions with common currencies are handled, Bitcoin transactions are de-centralized: this means there isn't a central corporation which stores all the money and then transfers it from seller to buyer, but they're always handled by different people (better defined as mining nodes). Transactions are put together in blocks and computed by a different hardware everytime: also, since every transaction is tied to a different address, and all addresses are not bound to any wallet (or even name), tracking down people is practically impossible.
This has also other advantages, aside from safety, like delivery celerity (it takes around 10 minutes to receive Bitcoins after they are sent) and ridicously low transaction fees (their value floats around 0.0005-0.05 BTC, but sometimes you may even be charged nothing). - How many BTC there are: With common currencies, money is constantly being printed and placed on the market. This is not the case for Bitcoins. There's a limited amount of how many Bitcoins can be produced (20,999,839.77085749 BTC, for the sake of accuracy), and mining (which is the process of computing and registering blocks) will stop generating any more of them once we hit that border (15,282,400 as of today; you can check the live number at Blockchain). However, this is not happening anytime soon: the more Bitcoins there are around, the less BTC you are rewarded to get and compute a block, and the estimated year in which the last block will be generated is 2140, so you probably won't have to worry about it.
This is crucial to determine the value of a BTC: as time passes, there will be less and less Bitcoins in the market (supply will decrease), meaning their value will increase (demand will increase). Of course, this is true as long as we assume that Bitcoin will keep going as strong as they currently are, and there's no telling how it will go.
