What is bitcoin?

What is bitcoin?

The world's first widely accepted cryptocurrencyDigital money can be sent directly over the internet securely using Bitcoin.

Satoshi Nakamoto, an unreal person or team, briefly gave information about Bitcoin in a whitepaper they published in 2008. The concept was attractively simple: Bitcoin is digital money and enables secure peer-to-peer transactions over the internet.

Unlike services like Venmo and PayPal, which require traditional financial systems for permissions to transfer funds to existing bank/credit accounts, bitcoin is decentralized: Two people anywhere in the world can send bitcoins to each other without the involvement of any bank, government or other institution.

Every Bitcoin-related transaction is tracked on the blockchain. This is similar to a bank ledger or journal entry of customers' resources entering and leaving the bank. In simple terms, it is a record of all transactions made using bitcoin.

Unlike the bank ledger, the Bitcoin blockchain is distributed across the entire network. No company, country or third party can control this and anyone can be a part of this network.

There will only be 21 million bitcoins. In this way, the digital currency cannot be inflated or manipulated in any way.

It is not necessary to buy a whole bitcoin: you can buy only a portion of it according to your needs.

Important Questions

What is BTC?

BTC is the abbreviation of bitcoin.

Is Bitcoin a cryptocurrency?

Yes, bitcoin is the first widely accepted cryptocurrency, namely digital money.

Is there a simple definition of bitcoin?

Bitcoin is a digital currency that provides secure and seamless peer-to-peer transactions on the internet.

What is the price of Bitcoin?

I can find the current Bitcoin price on the Coinbase website.

Is Bitcoin an investment opportunity?

Like any other asset, you can make money by buying BTC low and selling it high, or lose money if vice versa.

At what price did Bitcoin start?

One BTC was worth less than one US dollar penny in early 2010. In the first quarter of 2011, it exceeded one dollar. After its rapid rise, its value approached $20,000 in late 2017. You can follow the Bitcoin price here.

Bitcoin is a digital currency that provides secure and seamless peer-to-peer transactions on the internet.

What is Bitcoin? Coinbase CEO Brian Armstrong Buy your first Bitcoin Get started with as little as $25

Bitcoin Basics

Since the inception of Bitcoin, thousands of new cryptocurrencies have been launched, but bitcoin (abbreviated as BTC) is still the largest cryptocurrency in terms of market cap and trading volume.

bitcoin

Depending on your goals, bitcoin performs the following functions:

- investment tool

- a store of value similar to gold

- a worldwide method of transferring value

- even a way to explore emerging technology

Bitcoin is a currency native to the internet. Unlike government-issued currencies such as the dollar or the euro, Bitcoin allows online transfers without an intermediary such as a bank or payment processor. Removing these intermediaries allows money to move around the internet faster and cheaper globally. It also creates a range of new opportunities for individuals to have maximum control over their own wealth.

Bitcoin is legal to use, own and exchange. It can be used in everything from travel to donations to charities. It is accepted as a payment method by various businesses, including Microsoft and Expedia.

Is bitcoin money?

It is used as a barter, a store of value and a unit of account, which are essentially the functions of money. However, it is only available digitally. There is no physical version.

Who created Bitcoin?

Going to the beginning of the story will make it easier for you to understand how bitcoin works. The answer to the question of who created Bitcoin is quite interesting. Because ten years after the invention of technology, its creator is still anonymous. Despite research by journalists and members of the crypto community, the answer to this question has yet to be found.

The principles behind Bitcoin were first described in a whitepaper published online in late 2008 by a person or group called Satoshi Nakamoto.

This document was not the first to mention digital money in the field of cryptography and computer science. In fact, the document referred to earlier concepts. But online, where people could hide behind pseudonyms (like the creator of bitcoin) or be physically on the other side of the world, it offered a uniquely clever solution to the problem of establishing trust between disparate people.

Nakamoto devised interlocking concepts: the Bitcoin private key and the blockchain ledger. You control your bitcoins with a private key made up of random numbers and letters, which is used to open a virtual safe containing your purchase. Each private key is tracked in a virtual ledger called the blockchain.

When Bitcoin first emerged, it marked a significant advance in computer science. Because he had succeeded in solving a fundamental problem with trading on the Internet: How to transfer value between two people without a reliable intermediary (like a bank) in between? Solving this problem had wide-ranging consequences for the invention of bitcoin: As a currency designed for the Internet, it allowed cross-border financial transactions without the involvement of banks, credit card companies, financial companies, or even governments. The fact that any two people can send payments to each other without these intermediaries, regardless of where they live, creates the potential for a much more efficient, free and innovative financial system. This is the short description of bitcoin.

Bitcoin offers the potential for an open financial system that is more efficient, freer and more innovative.

How Bitcoin Works

Unlike credit card networks like Visa and payment processors like Paypal, bitcoin is independent, meaning it's not owned by an individual or company. Bitcoin is the world's first fully open payment network that anyone with an internet connection can join. Bitcoin was designed to transact over the internet. No banks or private companies are needed to process transactions.

One of the most important elements of Bitcoin is the blockchain, which tracks who owns what, similar to the way a bank tracks assets. What distinguishes the Bitcoin blockchain from a bank's ledger is its decentralization. So everyone can see it and this ledger is not controlled by a single institution.

Some details on the way it works:

Special computers known as "mining rigs" perform the equations needed to verify and record a new transaction. In the early days, a typical desktop computer was powerful enough to join the blockchain. Thus, anyone who wanted to try mining had the necessary equipment. These days, however, this requires enormous and specialized computers. Usually these computers are owned by companies or multiple individuals pooling their resources. (Mining a bitcoin in October 2019 required 12 trillion times more computing power than when Nakamoto mined the first blocks in January 2009.)

The collective computing power of the miners using the ever-growing ledger is used to ensure the accuracy of this ledger. Bitcoin is inextricably linked to the blockchain: every new bitcoin is recorded on it, along with the existing coins that preceded it.

How does the network motivate miners to participate in the essential work needed to protect the blockchain by verifying transactions? The Bitcoin network runs a perpetual lottery where all the mining rigs in the world compete to be the first rig to solve a math problem. Approximately every 10 minutes, the winner is determined and this miner updates the Bitcoin ledger with valid new transactions. The reward changes over time. In early 2020, 12.5 bitcoins were awarded to the winner of this lottery.

Initially, a bitcoin was technically worthless. As of the end of 2019, one bitcoin was trading around $7,500. As Bitcoin's value increased, divisibility (the ability to buy a small fraction of a Bitcoin) became a key feature. A bitcoin is currently divisible to eight decimal places (100 millionths of a bitcoin); The Bitcoin community calls the smallest unit 'Satoshi'.

Nakamoto managed to prevent oversupply by setting the network to limit the number of Bitcoins to 21 million. There are currently 3 million bitcoins that can be mined. This production process is constantly slowing down. The last blocks will be mined in 2140, according to estimates.

Crypto and traditional currencies have some common features. For example, the way you use them to buy things and the way you transfer them electronically are the same. But crypto and fiat money diverge in interesting ways. Here we will mention a few important points.

Bitcoin is the world's first fully open payment network that anyone with an internet connection can join.

important question

Where does Bitcoin's value come from?

At its core, from the same place as traditional currencies: It can be easily used to trade products, services or other assets, as it has proven to be a reliable and consistent way to store value. Being constrained, secure, portable (compared to, for example, gold) and easily divisible, it allows transfers of any size.

Owning bitcoin

The easiest way to buy Bitcoin is to use online exchange platforms like Coinbase. Coinbase makes it easy to buy, sell, send, receive, and store bitcoins without having to store them using tools called public and private keys.

Buying Bitcoin with Coinbase CEO Brian Armstrong

However, if you choose to buy and store bitcoin outside of the online exchange platform, the process works differently.

Everyone who joins the Bitcoin network is provided with a public key, which is a long string of letters and numbers that you can think of as an email address, and a private key that acts as a password.

When you buy (or send/receive) Bitcoin you get a public key, which you can think of as a key that unlocks a virtual safe and gives you access to your funds.

Anyone can send you bitcoins using your public key that belongs to everyone. However, once sent, only the owner of the private key can access bitcoin in the "virtual vault".

Bitcoin can be stored in many, both online and offline. The simplest and most convenient solution is a virtual wallet. If you want to transfer money from your wallet to a bank account after selling Bitcoin, the Coinbase app makes it as easy as transferring money from one bank to another. Similar to traditional bank transfers or withdrawals from ATMs, exchange platforms like Coinbase set a daily limit and the transaction can take anywhere from a few days to a week to complete.

The easiest way to buy Bitcoin is to use online exchange platforms like Coinbase.

important question

What is the difference between Bitcoin and Blockchain?

All bitcoin transactions and public keys are recorded in a virtual ledger called the blockchain. The notebook is essentially a chronological list of transactions. This ledger is copied exactly to every computer connected to the bitcoin network and is constantly checked and secured using massive worldwide computing power. After the concept of blockchain was understood to be powerful and adaptable, blockchains began to be used for non-cryptocurrency related purposes such as supply chain management. "Bitcoin Blockchain" means the virtual ledger that records bitcoin transactions and private keys.

Using Bitcoin

In 2013, bitcoin aficionado named Laszlo Hanyecz announced that he would give 10,000 BTC (worth about $25 at the time) to anyone who would deliver two pizzas to his home in Jacksonville, Florida. Legend has it that these two pizzas another early bitcoin enthusiast bought from a local Papa John's were the first example of non-virtual purchases of goods using bitcoin. Fortunately, using bitcoin is now much easier!

Pretty Simple: Transactions with BTC are no different than using a credit or debit card. But instead of entering the card information, you enter the payment amount and the merchant's public key (similar to the email address) through the wallet app. (A QR code is usually displayed to facilitate in-person transactions using a smartphone or tablet. When you scan the code, your wallet app automatically enters the relevant information.)

It's private: One of the advantages of paying with Bitcoin is that you have to share less personal information when doing so. You only need to provide your name and address when you purchase physical items that must be shipped.

Flexible: What you do with the Bitcoin you own is entirely up to your personal choices. Here are some ideas:

You can turn it into cash by selling it through the exchange office or Bitcoin ATMs.

Using a Bitcoin debit card, you can make purchases with it online or in physical stores, as with any other currency.

You can keep all or part of it as part of your investment or savings strategy.

You can choose whatever you feel like (exit).

What if you have a big budget and unfulfilled astronaut dreams? Richard Branson's Virgin Galactic lets you join one of the upcoming space tourism expeditions by paying with BTC.

Due to the cryptographic nature of the Bitcoin network, bitcoin payments are basically more secure than standard debit/credit card transactions.

What makes Bitcoin a new kind of money?

Bitcoin is global. You can easily send Bitcoin anywhere in the world. It's as easy as paying with cash in the physical world. It's not closed on weekends, you don't have to pay to access your funds, and there are no arbitrary limits.

Bitcoin cannot be recovered. Bitcoin is like cash in that the sender cannot undo transactions. Conversely, payments made with credit cards, traditional online payment systems, and banking transactions can be recovered (sometimes months after the initial transaction) due to centralized intermediaries completing transactions. This creates a higher fraud risk for merchants and may result in higher charges for credit card use.

Bitcoin protects your privacy. There is no need to provide bank statements or unnecessary personal information to the seller when paying with Bitcoin. Bitcoin transactions do not contain any identifying information other than bitcoin addresses and related amounts.

Bitcoin is secure. Due to the cryptographic nature of the Bitcoin network, bitcoin payments are basically more secure than standard debit/credit card transactions. When paying with Bitcoin, there is no need to send sensitive information over the internet. The risk of your financial information being compromised or your identity stolen is very low.

Bitcoin is open. Every transaction on the Bitcoin network is publicly disclosed, without exception. Thus, it does not allow the manipulation of transactions (except for the very unlikely 51% attack scenario) or the manipulation of the bitcoin supply. The software that forms the core of Bitcoin is free and open source. So anyone can review the code.

Bitcoin is secure. For more than a decade, no attempt has been made to attack the bitcoin network. Because the system is permissionless and open source, countless computer scientists and cryptographers have been able to study the network and its security in all its aspects.

Where does bitcoin come from?

Bitcoin "mining" is done virtually by a large, decentralized (also known as 'peer-to-peer') computer network that constantly verifies and secures the authenticity of the blockchain. Each bitcoin transaction is recorded in this ledger, and new information is collected in a “block” that is periodically added to all previous blocks.