A digital or virtual currency that uses peer-to-peer technology to facilitate instant payments. Bitcoin is a type of alternative currency known as a cryptocurrency, which uses cryptography for security, making it difficult to counterfeit. Bitcoin issuance and transactions are carried out collectively by the network, with no central authority. The total number of Bitcoins that will be issued is capped at 21 million to ensure they are not devalued by limitless supply. They are divisible to 8 decimal places; Bitcoin fractions are called satoshis. Users store their Bitcoins in a digital wallet, while transactions are verified by a digital signature known as a public-encryption key.
The first Bitcoin specification and proof-of-concept was published in 2009 by an individual or individuals under the pseudonym Satoshi Nakamoto. Satoshi left the project toward the end of 2010, leaving the motivation behind setting up Bitcoin an enduring mystery.
Bitcoins are created through a “mining” process that involves complex number crunching by the computers in this network; this process currently creates 25 Bitcoins every 10 minutes. The limit of 21 million is expected to be reached in the year 2140, after which the total number of Bitcoins will remain unchanged.
A basic premise underpinning the Bitcoin is that because it is decentralized and not issued by government, it is supposedly free from interference and manipulation, in stark contrast to the world’s fiat currencies.
However, these same features confer significant disadvantages on the Bitcoin. It is a complex product that is difficult to understand, making its widespread acceptance doubtful. Since it is a virtual currency, it cannot be stored in physical form. As a result, if you have not stored a backup copy of your Bitcoin holdings, your digital hoard can be wiped out by something as mundane as a computer crash. Its anonymity has also made it a favored currency for illegal activities such as tax evasion, smuggling and weapons procurement. Additionally, Bitcoin prices are very volatile thanks to rampant speculation.
Bitcoins are created through a “mining” process that involves complex number crunching by the computers in this network; this process currently creates 25 Bitcoins every 10 minutes. The limit of 21 million is expected to be reached in the year 2140, after which the total number of Bitcoins will remain unchanged.
A basic premise underpinning the Bitcoin is that because it is decentralized and not issued by government, it is supposedly free from interference and manipulation, in stark contrast to the world’s fiat currencies.
However, these same features confer significant disadvantages on the Bitcoin. It is a complex product that is difficult to understand, making its widespread acceptance doubtful. Since it is a virtual currency, it cannot be stored in physical form. As a result, if you have not stored a backup copy of your Bitcoin holdings, your digital hoard can be wiped out by something as mundane as a computer crash. Its anonymity has also made it a favored currency for illegal activities such as tax evasion, smuggling and weapons procurement. Additionally, Bitcoin prices are very volatile thanks to rampant speculation.
Bitcoin as a new kind of money and payment network
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
HOW DO WE GET BITCOINS ?
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