Bitcoin is a digital form of currency developed by Satoshi Nakamoto in 2008, and introduced as open-source software in 2009. It operates on a vast P2P network, which is currently compromised of thousands of systems. Bitcoins are decentralized, which means there is no government, bank or financial institution that controls its network. It is therefore resistant to wild inflation and corrupt banks.
How are bitcoins created?
Unlike conventional currencies, bitcoins are not created in a mint. They are rather created by computers through a process known as mining. This process entails the solution of complex mathematical problems. You are only rewarded with a bitcoin after the solution is found. The mathematical problems are not easy to solve, and if attempted by your average computer, it may take years to solve them. The goal behind this it to reduce the creation of unnecessary currencies and make them prized possessions. To maintain its value, only 21 million bitcoins will ever be made. Computer with dedicated and fast processors have been developed with a sole purpose of mining bitcoins.
What are the requirements of using bitcoins?
To start using bitcoins, you need to have a bitcoin wallet. An E-wallet allows you to store your bitcoins. Since bitcoin is a virtual currency, you cannot hold it physically, unless you exchange it for the goods and services. E-wallets are easy and convenient to use. There are many bitcoin e-wallet providers, which means you will not have a problem finding one.
What are the key features of bitcoin?
It is decentralized: The bitcoin network is not controlled by one central authority. Every machine that mines bitcoin makes up part of the network, and the machines work together.
It is anonymous: Users can have multiple bitcoin addresses, since the address are not linked to names, address or other personally identifying information.
It is completely transparent: All transactions that take place in the network are recorded to a special general ledger called the block chain. If you have used your bitcoins address publicly, one can easily determine how many bitcoins are stored in your address.
These are just some of the major benefits of using bitcoins. Apart from being fast and efficient, bitcoins are generally the cheapest way to make international payment. You can easily set up your bitcoin address and there are no fees required.