What is bitcoin?

Bitcoin is a type of digital currency, created and held through electronic means. No one controls it. We don’t print Bitcoins, like dollars or euros – they’re produced by an ever increasing community of people, businesses, and computers all over the world, using software that solves math problems.

It’s the first instance of a new type of money known as cryptocurrency.

Why is Bitcoin different from normal currencies?

We can use Bitcoin to buy things electronically. As a result, it’s similar to how we digitally trade conventional dollars, euros, or yen.
However, bitcoin’s most important characteristic, and the point that distinguish it from normal money, is that it is decentralized. There is not a single organization that can dictate it. Therefore, lots of people can be relieved because no banks can get a hold of their money.

Who created Bitcoin?

A software developer with an alias of Satoshi Nakamoto brought up bitcoin. It was an electronic system for payment based on math proof. The idea was to produce a currency that doesn’t rely of any central authority, can be somewhat immediately transferred electronically with very low transaction fees.

Who distributes Bitcoin?

No one. This currency isn’t printed in the shadows by a central bank, unaccountable to the population, and making its own rules. Those banks can produce more money to cover the national debt, thus devaluing their currency.
Instead, Bitcoin is created, by a community of people that anyone can join. We use computer’s processing power to “mine” Bitcoin in a distributed network.
This network also keeps track of transactions made using the virtual currency, creating a dedicated payment network on top of Bitcoin.

What is bitcoin based on?

Normal currency normally are based on rare metal such as gold or silver. In theory, you knew that if you deposited a dollar at the bank, you could get some gold in return (although this didn’t actually work in reality). But bitcoin isn’t based on gold; it’s based on maths.
All over the world, people are using software that follow a math formula to generate bitcoins. The mathematical formula is available for free, so that anyone can take a look at it.
The software is also open-source, which means that anyone can modify it to fit their own demands.

What are Bitcoin’s characteristics?

Bitcoin has some important features that distinguish it from currencies supported by the government.

1. It’s decentralized

The bitcoin network isn’t monitored by any single central authority. Each machine that mines bitcoin and processes transactions form a part of the network, and the machines operate together. That means, theoretically, one central authority can’t meddle with monetary policy and cause an upset – or just decide to confiscate people’s bitcoins away from them. And if any part of the network goes offline for any reason, the money keeps on running without interruption.

2. It’s easy to get started

Conventional banks make you go through an endless conveyer of registration to open a bank account. Setting up business accounts for payment is another Kafkaesque quest with exhausting bureaucratic barriers. But, you can set up a bitcoin address in a matter seconds, no questions asked, and without any fees involved.

3. It’s anonymous

Well, sort of. Users can have multiple bitcoin addresses, and no names, addresses, or other personally identifying information will be linked. But there’s a catch.

4. It’s completely transparent

If you have used a bitcoin address publically, anyone can tell how many bitcoins are in there at that address. They just won’t have any idea that it’s yours.
There are ways that people can follow to make their activities somewhat hidden on the bitcoin network, though, such as not using the same bitcoin addresses all the time, and not transferring too much bitcoin to a single address.

5. Transaction fees are insignificant

Your bank may charge you a small fee for international transfers. Bitcoin, on the other hand, doesn’t ask for any.

6. It’s fast

You can send money anywhere and it takes only minutes for that transaction to finish, as soon as the bitcoin network sees through the payment.

Add a Comment

Your email address will not be published. Required fields are marked *