Bitcoin is a decentralized digital currency, generated and stored electronically. No one person controls the Bitcoin network. Instead its maintained by the users and community through a process called mining. Mining maintains the network confirming transactions and solving math problems. Businesses and people all over the world join their computing power to keep Bitcoin running.
Its the first cryptocurrency. Bitcoin was the start of the digital currency revolution! The absolute original.
What makes bitcoin different from regular currencies?
Bitcoin can be used to buy things online. In that way its like regular currency like dollars, euros, or yen, which are also traded digitally.
However, bitcoin’s main characteristic, and the thing that makes it different from regular money, is that it is decentralized. Meaning that no one person controls the bitcoin network. Which is a benefit because it means that not one bank can control its price. Instead the users and community have control.
Who created bitcoin?
There is a lot of controversy surrounding bitcoins founder. Many believe the founder of bitcoin too be a man named Satoshi Nakamoto. He is missing from the picture and no one knows his true identity. All anyone knows about him is that he was a software developer in Japan. Its only fitting it be this way. Thats the only way bitcoin could be truly decentralized from authority.
Who Makes bitcoins?
The people that make bitcoin participate in the mining of bitcoin. Blocks when found by a bitcoin miner or bitcoin mining pool receives the reward for finding the block. The current block reward is 12.5 btc. However in the future such as the year 2020 the block reward will halve again down to 6.25 btc. A block is found roughly every 15 minutes. Not all pools get the same results when it comes to equal rewards. Some pools and solo mining networks are so big they win the majority of blocks. So make sure that when mining bitcoin to connect to the biggest pool you can. So that you can get more block reward splits.
Is there a limited number of bitcoins?
Yes that’s right! There is only a limited amount of bitcoins. The rules that make bitcoin work say only 21 million coins can ever be created by mining. However these coins can be divided into smaller units. one bitcoin can be dived by the hundred millionth. So there is plenty of coin to go around. It just gets into decimals of coins instead of whole bitcoins.
What is bitcoin based on?
When it comes to regular currency most are backed by gold or silver. Unlike regular currency bitcoin is based on mathematics.
People from all over the world are using software programs that follow a mathematical formula to create bitcoins. The mathematical formula is freely available for anyone to view it.
The software is open source, which means that anyone can look at it to watch over and make sure it does what its supposed to.
What are bitcoins characteristics?
Bitcoin has seven important features that makes it uniquely different from regular government currencies.
- Its decentralized
The bitcoin network is ran and maintained by bitcoins community. Machines ran by businesses and regular people called miners run the bitcoin network. Instead of regular currency which is controlled by a central bank. Bitcoin is setup this way so that it would be more stable to last for the long term. In theory not one central figure could cause bitcoin to have a meltdown. It would take everyone to suddenly stop supporting it for that to happen. Bitcoin lives and dies through the community of its users.
- It’s easy to setup
Setup up of a traditional bank account can be painful and setting up a merchant account forget about it. However with bitcoin you can create a bitcoin address and start receiving funds in seconds. Check out a website called Coinbase. They are a long existing bitcoin exchange and wallet service.
- It’s anonymous
Wallet addresses aren’t attached to any names, addresses, or other personally identifying information.
- It’s completely transparent
The bitcoin network stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain. Everything is on the blockchain shows all.
Having a public bitcoin address means that anyone can see how much bitcoin is stored on your address. What keeps bitcoins anonymity in tact is your address cant be tracked to a name or other personal information.
For those concerned about being anonymous there ways to have a smaller foot print. Such as not using the same bitcoin address for all of your transactions and not sending large amounts to one address.
- Transaction fees are small
Regular banking fees for international transfers can cost lots. Sending bitcoin international costs next to nothing comparatively.
- It’s fast
Sending bitcoin payments to any where in the world takes just minutes. The funds will confirm when the bitcoin network confirms the transaction. Making it not only fast but stopping double spend.
- It’s non refundable
When bitcoin moves from one wallet to another you cannot reverse the transaction. In other words no charge backs for vendors and merchants. Only accepting bitcoin can be a measure to fight back on wrongful charge backs.
Now that you are aware of what bitcoin has to offer get excited the digital currency revolution has begun. Make sure to educate yourself more on the subject by keeping up with the latest bitcoin technology news, here on our website. Also continue going through the guides in our Blockchain 101 learning section.