Bitcoin (BTC) is really a new sort of digital currency-with cryptographic keys-that is decentralized to a network of computers used by users and miners all over the world and is not controlled by way of a single organization or government. It’s the first digital cryptocurrency that has gained the public’s attention and is accepted by way of a growing variety of merchants. Like other currencies, users can use a digital currency to buy services and goods online along with some physical stores that accept it as a form of payment. Currency traders can also trade Bitcoins in Bitcoin exchanges.
There are many major differences between Bitcoin and traditional currencies (e.g. U.S. dollar):
Bitcoin does not have a centralized authority or clearing house (e.g. government, central bank, MasterCard or Visa network). The peer-to-peer payment network is managed by users and miners all over the world. The currency is anonymously transferred directly between users through the internet without going through a clearing house. Which means transaction fees tend to be lower.
Bitcoin is made through a process called “Bitcoin mining”. Miners around the world use mining software and computers to solve complex bitcoin algorithms and also to approve Bitcoin transactions. They’re awarded with transaction fees and new Bitcoins produced by solving Bitcoin algorithms.
There is a limited quantity of Bitcoins in circulation. According to Blockchain, there were about 12.One million in circulation as of Dec. 20, 2013. The issue to mine Bitcoins (solve algorithms) becomes harder as more Bitcoins are generated, as well as the maximum amount in circulation is limited to 21 million. The limit will never be reached until approximately the entire year 2140. This will make Bitcoins more valuable as more people use them.
A public ledger called ‘Blockchain’ records all Bitcoin transactions and shows each Bitcoin owner’s respective holdings. Everyone can get the public ledger to verify transactions. This makes digital currency more transparent and predictable. More to the point, the transparency prevents fraud and double spending of the same Bitcoins.
The digital currency can be had through Bitcoin mining or Bitcoin exchanges.
The digital currency is accepted by way of a select few of merchants web in some brick-and-mortar retailers.
Bitcoin wallets (just like PayPal accounts) bring storing Bitcoins, private keys and public addresses and for anonymously transferring Bitcoins between users.
Bitcoins aren’t insured and are not protected by government agencies. Hence, they can’t be recovered in the event the secret keys are stolen by way of a hacker or lost to some failed hard disk drive, or because of the closure of your Bitcoin exchange. When the secret keys are lost, the associated Bitcoins can’t be recovered and could be out of circulation. Visit this link with an FAQ on Bitcoins.
I believe that Bitcoin will grow in acceptance from the public because users usually stays anonymous while buying services and goods online, transactions fees tend to be below credit card payment networks; the general public ledger is obtainable by anyone, which can be used to avoid fraud; the currency supply is capped at 21 million, as well as the payment network is run by users and miners instead of a central authority.