Chances are if you have been on the internet in the last few years at all you have heard of Bitcoin. However, there stills seems to be a lot of confusion regarding what Bitcoin actually is. It is a form of currency that is fully digital that is both created and stored electronically; it is the first of many kinds of currency that is referred to as crypotcurrency. Therefore it is not tangible in any way like dollars or pounds are. Unlike other forms of currency, there is not one central authority of Bitcoin. This means that it is decentralized, which means that it is not controlled by one big bank. Bitcoin is produced by individuals and corporations. In order to produce it, it is necessary to use software that solves mathematical formulas. People are creating Bitcoin all over the world.
Like conventional money, Bitcoin can be used to purchase things. However, it is still unlike normal currencies.
Bitcoin was originally created by Satoshi Nakamoto, who had the idea to invent a type of online payment system with a base of mathematical proof. Nakamoto liked the idea of having a kind of currency that was not controlled by one governing body that could be transferred to one person to the other electronically in an instant with an inexpensive transaction process.
As we mentioned above, Bitcoin is an electronic currency that is not printed. In this way there are less strict rules about how it can be used. Essentially anybody with the resources to do so can join the community of people creating Bitcoin. Using computer power, Bitcoin is “mined” by using computing power, which means that it is not possible to produce an unlimited amount of it. According to Bitcoin protocol, only 21 million can be made. Ever. It is for this reason that it is being divided into fractions of a bitcoin. The smallest amount that a Bitcoin can be is what is referred to as a “Satoshi” (named after Satoshi Nakamoto) is one hundred millionth of a Bitcoin. It is then transferred from one account to the other electronically.