What is Bitcoin?
Bitcoin is a form of currency that is produced and held digitally, with no single individual or organization controlling it. Bitcoins aren’t printed, like euros or dollars, rather generated by individuals running computer systems all over the globe, making use of software programs that resolve mathematical computations.
It’s the leader in an expanding classification of money called cryptocurrency.
Why is Bitcoin different from regular money?
The thing that makes Bitcoin’s completely different from other forms of currency is decentralization. There is no single solitary establishment controlling the network, which puts users at ease because this means that large financial institutions can not regulate the value of their money.
Bitcoin is a simple way to make online purchases, so in this way, it’s like standard money that is also traded electronically.
Who created Bitcoin?
A programmer named Satoshi Nakamoto was the first to come up with the idea for Bitcoin. It was based on a digital exchange system of mathematical evidence. His original idea was to generate an independent kind of currency with no centralized authority, that could be immediately and digitally transferred with minimal fees involved.
Who prints Bitcoin?
No one-single person prints Bitcoin. This cryptocurrency isn’t printed by a reserve bank that is not accountable to the populace and sets its own guidelines. Those financial institutions can just generate additional currency and use it for the public debt, hence lowering the value of their money. See the problem?
Rather, Bitcoin is produced electronically, by a group or community that anyone wishing to do so can sign up with. Bitcoins are ‘extracted,’ making use of the calculating power of a huge network.
The bitcoin network processes all transactions made with the cryptocurrency, acting essentially as a payment settlement network.
Can you create limitless bitcoins?
The short answer is no. The rules and policies of the system state that no more than a mere 21 million bitcoin will be generated by Bitcoin miners. Nevertheless, these coins may be split into smaller sized components, the smallest being just one hundred millionth of a coin. This coin has been dubbed a ‘Satoshi,’ after the originator of Bitcoin.
So what is Bitcoin actually based on?
Standard currencies has always been based on silver or gold. In theory, if you give a dollar to your financial institution, you might get gold in return (though in practice, this didn’t turn out too well). Bitcoin isn’t based on silver; it’s based upon simple (or not so simple) math.
All over the world, people are utilizing a piece of software that adheres to a specific math formula used to generate bitcoins. They call this process “Mining”. This math formula isn’t a secret, it’s a formula that is openly available to ensure that anyone at anytime is able to check to make sure it is doing what it’s supposed to.
What characteristics set Bitcoin apart?
Bitcoin has a number of features that make it different from government-sponsored currency, but here are a few of the main points you should educate yourself on:
It is not centralized.
The network isn’t really managed by one main authority. Everyone who mines Bitcoin and processing transactions is actually a part of the network. This means that one main authority cannot dabble with financial stability, trigger a disaster or take an individual’s Bitcoins from them, much like the Central European Bank tried to do in 2013. If a component of the Bitcoin network were ever to go offline, the cash would continue to flow.
Bitcoin is very easy to setup
Traditional financial institutions make you leap through countless hoops to establish a checking account and often denying customers the right to open an account based on previous credit or banking history. Establishing a merchant account is an additional nightmare task, dripping with beaureaucracy, while with Bitcoin you can establish a new address in seconds, with very little hassle and without fees.
Bitcoin is confidential
Well, sort of. Customers can hold numerous addresses and they typically aren’t connected to any directly identifying information.
It is entirely transparent
All transactions within the bitcoin network are stored in a basic electronic ledger called the blockchain.
If you’ve used bitcoin, any individual could find out the number of bitcoins that are saved in the wallet you used to receive funds. They wouldn’t, however, have any idea that the person at the address is you.
Individuals can take steps to make transactions less transparent within the network such as not making use of the same bitcoin addresses regularly and also not making large quantities of bitcoin transactions from one single address.
All transaction charges are small
While your financial institution may charge exhorbinant fees for worldwide transfers, Bitcoin does not.
It’s extremely fast
You can send funds anywhere in the world and it only takes minutes for the network to settle the transaction.
It’s not retrievable
When you send Bitcoins there simply is no way to get them back unless the user decides to return your payment. The flipside to this is that customers can not issue fraudulent chargebacks either.
So it should be clear by now just how much Bitcoin has to offer and you should be wondering how you can buy Bitcoin yourself, right? Check out the next section where we will explore the different options for buying Bitcoin on and offline.