What You Should Know About Bitcoins

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.

Features That Make Bitcoins Different From the Normal Currencies

Bitcoin is a form of digital currency and is not controlled by any institution. It is created and used electronically. Bitcoins are not printed, like euros or dollars; they are produced by lots of people running computers all around the world.

The fact that bitcoin network is decentralized puts many people at ease, because it means that a large bank can’t control their money. There are other characteristics that make Bitcoin different from other digit currencies, they include:It is easy to set upOpening a bank account is always a process with many requirements to fulfill before you get one. Even setting up a merchant account for payment can give you a real headache. However, you can set up a bitcoin address within a short time, no answering questions and you are not required to pay fees.

It is completely transparentAll details of every transaction that ever happened in the network are stored in the block chain. This means that it is possible to tell how many bitcoins are stored at the address that you used publicly. However, it is not possible to tell who the owner is. There are two things that one can do to make their transactions opaque, and they are:Ensure that they don’t transfer too much Bitcoin to a single addressAvoid using the same bitcoin addresses consistentlyIt is fastIt takes few minutes to send money anywhere you want. The recipient receives the money as soon as the bitcoin network processes the payment.

The payment is irrevocable or irreversibleOnce you have made a bitcoins payment, it is not possible to repudiate that payment unless the recipient returns them to you.It is anonymousIn bitcoin network, there is no personal identifying information. Normally, the users can hold multiple bitcoin addresses which are not linked to names or addresses.

Since bitcoins are created by machines using software, every machine that mines and process transactions make up a part of the network. This means that the machines in the network work together. The good thing is that even if some part of the network goes offline for some reasons, the money keeps on flowing as it is not dependent on any controlling central bank.