What Is Bitcoin?
What is a Bitcoin?
Bitcoin is a digital currency created in January 2009 following the housing market crash. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous Satoshi Nakamoto. The identity of the person or persons who created the technology is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies.
Bitcoin is a form of digital currency, No one controls it.
There are no physical bitcoins, only balances kept on a public ledger than everyone has transparent access to, that – along with all Bitcoin transactions – is verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Despite it not being legal tender, Bitcoin charts high on popularity, and has triggered the launch of hundreds of other virtual currencies collectively referred to as Altcoins.
Bitcoins aren’t printed, like dollars, rupees or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
What makes it different from normal currencies?
Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, euros, or rupees, which are also traded digitally.
Bitcoin is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.
Who created it?
A software developer called Satoshi Nakamoto proposed bitcoin, which was an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees.
What are its characteristics?
Bitcoin has several important features that set it apart from government-backed currencies.
- It's decentralized
The bitcoin network isn’t controlled by one central authority.
Every machine that mines bitcoin and processes transactions makes up a part of the network, and the machines work together.
- It's easy to set up
Conventional banks make you jump through hoops simply to open a bank account.However, you can set up a bitcoin address in seconds, no questions asked, and with no fees payable.
- It's anonymous
Well, kind of. Users can hold multiple bitcoin addresses, and they aren’t linked to names, addresses, or other personally identifying information. However…
- It's completely transparent
…bitcoin stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain. The blockchain tells all.
- Transaction fees are miniscule
Your bank may charge you a 1000 Rs fee for international transfers. Bitcoin doesn’t.
- It’s fast
You can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment.