Bitcoin (BTC) is a brand new type of digital money-with cryptographic keys- which is decentralized into a network of computers used by users and miners all over the world and isn’t commanded by one organization or authorities. It’s the first digital cryptocurrency that’s got the people’s interest and is taken by an increasing variety of retailers. Like other monies, users can use the digital money to purchase goods and services online along with in some real shops that take it as a kind of payment. Money dealers may also trade Bitcoins in Bitcoin exchanges.
There are several important differences between Bitcoin and conventional monies (e.g. U.S. dollar): Bitcoin doesn’t have a centralized authority or clearing house (e.g. authorities, central bank, MasterCard or Visa network). The peer to peer payment network is handled by users and miners all over the world. The money is anonymously transferred directly between users through the web without going through a clearing house. What this means is that trade fees are considerably lower.
Bitcoin is created through an activity called “Bitcoin mining”. Miners all over the world use mining applications and computers to solve complicated bitcoin algorithms and to approve Bitcoin trades. They have been given with trade fees and new Bitcoins created from solving Bitcoin algorithms.
There’s a small number of Bitcoins in circulation. The problem to mine Bitcoins (solve algorithms) becomes more difficult as more Bitcoins are created, and the maximum sum in circulation is limited at 21 million. The limitation is not going to be reached until about the year 2140.
- A public ledger called ‘Blockchain’ records all Bitcoin trades and reveals each Bitcoin owner’s individual holdings. Anyone can get the public ledger to confirm trades.
- This makes the digital money more transparent and foreseeable.
- The digital money can be obtained through Bitcoin mining or Bitcoin exchanges.
The digital money is taken by a small quantity of merchants on the internet and in some brick-and-mortar retailers.
Bitcoins aren’t guaranteed and aren’t shielded by government agencies. If the secret keys are lost, the related Bitcoins cannot be regained and would be out of circulation.