Bitcoin is basically a consensus network which enables a new payment-system & purely digital money. It’s the first decentralized peer to peer payment network which is powered by its’ users without a central authority or/and middlemen. From a customer’s or user’s perspective, Bitcoin is a lot like money for the Internet/web. Bitcoin may also be viewed as one of the most prominent triple-entry book keeping system in existence.
It is the 1st implementation of the concept called “crypto currency”, that was 1st described in the year 1998 by Wei-Dai on cypherpunks mailing-list, suggesting a idea of a type of new form of cash which uses cryptography in controlling its’ creation & transactions, instead of a central authority. 1st Bitcoin specification & proof of the concept was initially published in the year 2009 in a cryptography-mailing list by someone going by the name Satoshi Nakamoto. He left this project in the late 2010 without-revealing much details about himself. Bitcoin community has since grown quite exponentially with many different developers working-on Bitcoin. Satoshi’s anonymity usually raised various unjustified concerns, most of which are linked-to misunderstanding of the open source nature of Bitcoin. Bitcoin protocol & software are published quite openly & any developer from around the world may review the codes or make their very own modified versions of Bitcoin software.
Bitcoins may be used to purchase merchandise anonymously. In-addition, international payments are rather easy and quite cheap because the bitcoins are not-tied to any specific country and are not subject to regulation. Most small businesses may like/prefer them since there are no-credit card fees. There are some people who just buy the bitcoins as a form of investment, hoping they will go up in market value.
- Buying them on an Exchange: Several market places called “bitcoin-exchanges” allow users to buy and sell their bitcoins using various different currencies.
- Transfers: People may send the bitcoins to one another using their mobile apps or computers. It is similar to sending money digitally.
- Mining: Users compete to “mine” the bitcoins using their computers to solve various complex math puzzles. That’s how the bitcoins are normally created.
Bitcoins are usually stored in a “digital-wallet,” which exists in the cloud or/and on the user’s computer. A wallet is a type of virtual bank-account which allows the users to receive and send the bitcoins, pay for the goods bought or/and save money.
Although each bitcoin-transaction is basically recorded in the public log, the names of the buyers and the sellers are never ever revealed, only the wallet IDs. While this keeps the bitcoin users transactions quite private, it also allows them sell or buy anything without tracing it back-to them easily.
How Bitcoins work
From a user’s perspective/view, Bitcoin is nothing more-than a mobile application or a computer program which provides a Bitcoin wallet & lets a user receive and send bitcoins using them. Behind the scenes, Bitcoin network is typically a sharing a public-ledger that’s called the “block-chain”. The ledger contains every single transaction that has ever been processed, allowing the user’s computer or mobile to verify the validity-of each and every transaction. The authenticity-of each of the transactions is well protected by digital-signatures which correspond to the sending addresses, letting all users have full control-over sending their bitcoins from their very own Bitcoin addresses.