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What Is Bitcoin?

What Is Bitcoin?


What is Bitcoin?

You have probably heard about Bitcoin, the most popular form of digital currency in the world. Without any control like the monetary currencies, Bitcoin is entirely digital which means that it is produced by people and computers from all around the world – using software that solves mathematical problems.
Bitcoin is also the first term that was related to a growing category of money known as crypto currencies. Since it can be used to buy things electronically, it certainly fits the image of a cryptocurrency. However, bitcoin is decentralized – which means that there is no single institution that controls the network or the virtual money it is based on.

 

Who Created Bitcoin And Who Is Producing It?

Bitcoin was created by a software developed named Satoshi Nakamoto – a guy who proposed it as the first electronic system based on mathematical proof that would eventually become a currency which is decentralized – meaning that there is no authority in charge of it.
Nakamoto designed the creation of bitcoin in a digital way, by forming a community of people that anyone can join and use their computer power in a distributed network. While the network will process transactions made by the virtual currency, it will also make bitcoin its primary networks.
Still, there cannot be unlimited bitcoin churned out in public. That is because of the protocol which says that only 21 million bitcoins can ever be created by miners. However, there is a catch – as these coins can be divided into smaller parts (with the smallest being one hundred millionth of a bitcoin and named ‘satoshi’ after the founder).

What Is Bitcoin Based On And What Are Its Main Characteristics?

While conventional currencies are based on gold or silver, bitcoin is based on something else – the law of mathematics. In other words, bitcoin is part of a mathematic formula that is used in a software program and is also freely available so that anyone can check it. This is why Bitcoin is labeled as open-source, meaning that anyone can look it and make sure of its existence.
Some of the main characteristics of Bitcoin present it as a digital currency that is:
Fully decentralized – Meaning that it isn’t controlled by one central authority

  • Easy to set up – Unlike conventional banks, a Bitcoin address can be set up in seconds with no questions asked and no fees to pay
  • Anonymous – Users are able to hold multiple bitcoin addresses which aren’t linked to names or any personality identifying information
  • Transparent – The network stores detail of every single transaction that has ever happened in history
  • Lacks Transaction fees – Unlike banks and conventional currencies, sending or receiving bitcoin costs nothing
  • Fast and non-refundable – You can send money in seconds in the form of a bitcoin – but without a possibility for a refund or to get them back (unless the recipient returns them)

The process of developing Bitcoin is also known as ‘mining’, relating to the use of software programs in order to produce this digital currency. Below, we are explaining it in detail.

 

Mining Bitcoin – What Is It?

As soon as the network was launched by Satoshi himself in 2009, it made any computer connected to it possible to mine bitcoins. Since there were only a few people mining bitcoin at the start, the protocol supported this process and made sure that everyone connected to the network is helping to produce it.
Unlike governments and paper money, bitcoin operates as a peer-to-peer network, which means that no one decides how much of it will be produced and how it will be distributed. The miners are the ones who run the software on their machines and issue a certain amount of bitcoin in return. This provides a smart way to issue the currency while creating an incentive for more people to join it.
As we said earlier, ‘mining’ bitcoin refers to solving specific math problems using a special software. As more people participate in mining – the more secure the bitcoin network becomes. As soon as one math problem is solved, a node finds the solution, announces it to the other nodes in the network and claims a new batch of Bitcoins to be solved in order for new bitcoins to be produced.

How To Buy And Sell Bitcoin?

The first thing you need to do in order to purchase Bitcoins is to get yourself a bitcoin wallet. This is essentially ‘the place’ where you store your new bitcoins – and something like a bank account for them. Now, there are different wallets with different prices and levels of security. The main options include:

  • a software wallet stored on your computer’s hard drive
  • a web-based wallet
  • a ‘vault’ service that keeps your bitcoins protected online (the most common choice)

Even though most of these have their vulnerabilities, the last seems like the most popular solution when buying and storing your bitcoin. As for buying Bitcoin, some of the best and most popular wallets offering a simple way to buy Bitcoin include the following websites:

  • Coinbase
  • Local Bitcois
  • BitQuick
  • BitBargain
  • CoinCorner
  • Bittylicious

When it comes to selling, the best way to sell Bitcoin is also on some of these networks (Coinbase, BitBargain, Bittylicious etc.). There are three main ways to sell Bitcoin – through direct trades, peer-to-peer trading marketplaces or exchange trades. However, you should always make sure that you are registered as a seller and follow the standard procedures whether you are buying or selling Bitcoin.

The Growth Of Bitcoin

In the end, many people decide to buy Bitcoin just because of its growth and popularity over the years. The truth is, Bitcoin’s price keeps breaking records and could rise up to $100,000 in 10 years according to many analysts and experts.

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