Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary.
These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Bitcoin can be purchased on online exchanges and some physical stores.
The owner of a bitcoin transfers it by digitally signing it over to the next owner using a bitcoin transaction, much like endorsing a traditional bank check. A payee can examine each previous transaction to verify the chain of ownership. Unlike traditional check endorsements, bitcoin transactions are irreversible, which eliminates risk of chargeback fraud.
A user sends bitcoins by broadcasting digitally signed messages to the network using bitcoin wallet software. Transactions are recorded into a distributed, replicated public database known as the blockchain, with consensus achieved by a proof-of-work system called mining. Satoshi Nakamoto designed the system so that new bitcoins are created as a reward for miners who secure and verify bitcoin transactions (blocks).
Miners are rewarded with transaction fees and newly created bitcoins. As of May 2018, miners gain $3 billion worth of new bitcoins per year from block rewards alone.
In general, Bitcoin is still in the process of maturing. Volatile price swings should be expected and embraced as part of the process.
While prices could go down as well as up, the long-term trend is almost certainly up! So don’t hesitate to get started today! You can begin earning small amounts of Bitcoin just by completing simple tasks or exchanging your existing goods and services for Bitcoin on websites like LocalBitcoins or Paxful. You could also mine Bitcoin using your own computer or join a cloud mining pool to earn more Bitcoin more quickly!.