Bitcoin is an online currency and is used to make payments online. This was invented by an unknown programmer, who issued the digital currency under the name Satoshi Nakamoto. It was released back in 2009, during the global financial crisis, as a response to the current, centralized banking system.The transactions occur between two individuals online without any mediation of a financial institution. And the transactions are recorded in a public ledger called a blockchain. Bitcoin is the first ever decentralized digital currency. For this reason, it is considered to be a financial system that is truly ‘of the people’.
Even though it was created as a reward but today it is used instead of other currencies in both legal and illegal markets.
What makes it different from normal currencies?
What makes it different is that it is decentralized. Also, bitcoins are like electronic dollars that you can use to buy things online, from real estate to SEO, to home goods , to smart drugs. No institution controls the bitcoin transactions.
Who created it?
A software developer called Satoshi Nakamoto invented this and what made it so special is that this currency is independent of any central authority, are electronically transferred in a faster way with a very low transaction fee.
Who prints it?
Basically, no one prints it. Bitcoins don’t have any physical existence are not printed by the bank. Banks print money to get rid of national crisis and devalue their currency. Instead, bitcoins are made by anyone in a specific community online. Bitcoins are ‘mined’, using a distributed network.
This network also processes transactions made with bitcoins.
So you can’t churn out unlimited bitcoins?
You cant. The bitcoin law says that only 21 million bitcoins can be created by. But these coins can be divided into smaller parts called a ‘Satoshi’.
What is bitcoin based on?
Bitcoin is not based on gold and silver, or on fiat, like currencies. Instead, it is based on a mathematical formula which is a free software open for everyone. Anyone can use that software to see how it works.
What are its characteristics?
- It is decentralized
Bitcoins are not centralized by a single authority like what happens in banks. Here multiple machines mine bitcoins and thus connect together. So you are not actually having a single authority to control this process.
- It is easy to set up
Typical banks ask for a lot of things before opening up an account. You are asked for your personal details copy of bills photos and what not. Even after this, the entire procedure is still long. But bitcoins are simple and can be registered easily in your address within seconds.
- It’s anonymous
A user can own multiple bitcoin addresses without any personal pieces of information thus no one can know you. Thus you can transact anonymously.
- Low transaction fees
Unlike any other banks, buying and trading bitcoins won’t cost you a lot of money for transactions.
- It’s fast
This process is not as slow as a postcard. You can send money anywhere within minutes.
- It’s non-repudiable
Once you send or pay someone through bitcoins you can never claim or get it back unless the person whom you sent is willing to send you back.