If you’ve hung out with any hipsters, hippies or techies — or even if you just read the news, you might have heard of bitcoin, the virtual currency or cryptocurrency. It’s a way for users of the currency to buy and sell things anonymously and without their money being tied to a central authority like a bank or government. If that sounds good to you, here are the essential things you need to know about how bitcoin works.
What is bitcoin?
So, what are bitcoins? Bitcoin is the most well-known digital currency. Bitcoins are not printed like dollars or coins; they are virtual. Bitcoin information is stored in the cloud and decentralized, meaning no government or bank controls it. Instead, computer networks using distributed ledger technology keep track of who owns what. Thanks to new software systems such as Bitcoin XT, users don’t even need a computer, but can keep and use bitcoins with smartphones.
The amount of bitcoins that can ever be produced has been set at 21 million. This limit was established to ensure the value of the currency. However, bitcoin’s value can and has fluctuated dramatically.
Bitcoins were first introduced in 2008, in a paper by a mysterious computer programmer going