Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency, created and held electronically. No one controls it. Bitcoins are not printed bills, like dollars or euros,– they’re produced by people. Yet, they do have value since they are used as a form of money. It’s the first example of a growing category of money known as cryptocurrency.
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 yen, which are also traded digitally. However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. Decentralized currency is a bank-free method used to transfer ownership or wealth without the need of a third party. 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 some sort of currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees.
Who prints Bitcoin?
No one prints Bitcoins. This currency cannot be physically printed in the shadows by a central bank, unaccountable to the population, and making its own rules.
Bitcoin is created digitally, by a community of people that anyone can join. Hundreds of computers around the Internet work together to process Bitcoin transactions. These computers are called “miners” and Bitcoin’s transaction-clearing process is called “mining“.
What is bitcoin based on?
Bitcoin is based on mathematics. It is not like conventional currency which has been based on gold or silver. Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available, so that anyone can check it. That is what makes it reliable. Of course you do not need to know it all about Bitcoin if you intend to use it. Just be aware that this cryptocurrency – like most of them- is likely to be volatile. Make sure you understand these implications and get started!