What is Bitcoin? Bitcoin is a digital currency that is electronically created (minted) and kept. No one controls the currency.
Bitcoin is the best-known example of fast-growing digital cryptography. Below we explain our experiences with Bitcoin and the most important features of the digital currency.
What is Bitcoin and how does it differ from other digital currencies?
Bitcoin can be used to acquire items electronically. It is therefore a kind of conventional money such as the dollar, euro or yen, which can also be traded electronically.
The most important feature of Bitcoin, however, is that it is decentralized. No single institution controls the Bitcoin network. This means that no central bank can control the assets of the owners.
A software developer named Satoshi Nakamoto has allegedly created the BTC. The idea was to create a digital currency that can be separated from the central institution and transmitted electronically at very low cost.
How many Bitcoins are there?
The Bitcoin protocol has been developed for a maximum of 21 million Bitcoins, which can be mined by miners. These coins can be divided into smaller parts (the smallest part is a hundred millionths) and are called “Satoshi” – named after the inventor.
What is Bitcoin based on?
Conventional currencies are usually based on gold or silver. Everyone knows that you can theoretically go to the bank to exchange your money in gold. Bitcoin is not based on gold; Bitcoin is based on mathematics. People worldwide use software that follows a mathematical formula to generate bitcoins (also known as mining). This formula is freely available.
The software is also a so-called “open source” software which means that everyone can check what this software does exactly and whether it fulfills its purpose. The Bitcoin underlying technology is known under the name “blockchain” and, like Bitcoin, is currently attracting much interest from many companies, institutions and governments.
What is the Bitcoin characteristic?
The Bitcoin network has many important features.
1. Bitcoin is decentralized
The network is not controlled by any central institution. Each computer of the bitcoins is calculated and transferred is part of the network and they all work together. This does not mean a central institution can get the upper hand over bitcoin with a monetary directive – or take the bitcoins away from the users, as for example. In Cyprus with the European Bank. If the system should go offline for some reason, the coins still remain.
2. Bitcoin is easy to handle
Conventional banks often make it difficult to open an account or a business account, which is often associated with many bureaucratic hurdles. Anyone can open a Bitcoin account (wallet).
3. Bitcoin is anonymous
Users can have multiple BTC accounts (wallets), and they are not assigned names, addresses, or other personal information.
4. Bitcoin payments are 100% transparent
The network stores each, really every single transaction in a huge register, also called BlockChain. The BlockChain knows everything. If someone has a public BTC address, everyone can see how many bitcoins are on that account. You just do not know who owns this address. Many users still use changing addresses and only transfer bits of bits to an address.
5. Transaction costs are negligible
A bank already requires 15 euros for an international banktransfer. Bitcoin is not.
6. Bitcoin is fast
Bitcoin can be sent anywhere and it only takes a few minutes for the network to confirm the payment.