What is Bitcoin?
Bitcoin is a cryptocurrency and a payment system, first proposed by an anonymous person or group of people under the name Satoshi Nakamoto in 2008.
Bitcoin is decentralized, meaning it is not subject to government or financial institution control. Transactions are verified by a network of computers using cryptography and recorded in a public dispersed ledger called a blockchain.
Bitcoin is unique in that there are a finite number of them: 21 million.
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.
How is Bitcoin Used?
Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally. However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized.
No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.
Who Creates Bitcoins?
Bitcoins are created digitally through a “mining” process that requires powerful computers to solve complex math problems. These problems confirm transactions to the rest of the network.
They also produce new bitcoins until there are 21 million in existence.