What is Bitcoin?
Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars – they’re produced by people, and businesses (Ikea for example), running computers all around the world, using software that solves mathematical problems.
It’s the first example of money known as crypto currency. It is traded on exchanges just like the stockmarket. The difference being that bitcoin can be traded on a variety of exchanges 24/7. Altcoins are other coins that can also be traded such as ethereum, litecoin, dogecoin etc. There are roughly over 2,000 alt coins. However many get delisted and go nowhere. Trading altcoins on exchanges once you know the ropes can be very profitable if one is patient and sensible.
Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, which are also traded digitally. However, bitcoin’s most important feature, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This means that banks can’t control your money. You in fact are your own bank.This currency isn’t physically printed. Instead, bitcoin is created digitally, by a community of people that anyone can join. Bitcoins are ‘mined’, using computing power in a distributed network.This network also processes transactions made with the virtual currency, effectively making bitcoin its own payment network. The bitcoin protocol – (the rules that make bitcoin work) – say that only 21 million bitcoins can ever be created by miners. However, these coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the supposed founder of bitcoin).
Bitcoin isn’t based on gold; it’s based on mathematics. Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available, so that anyone can check it. The software is also open source, meaning that anyone can look at it to make sure that it does what it is supposed to.
The bitcoin network isn’t controlled by one central authority. Every machine that mines bitcoin and processes transactions makes up a part of the network, and the machines work together.
To use bitcoin you will need a bitcoin wallet. This would be your first step in entering the world of bitcoin currency. It's easy to set up. Conventional banks make you jump through hoops simply to open a bank account. However, you can set up a bitcoin wallet in seconds, no questions asked, and with no fees payable.
Users can hold multiple bitcoin addresses, and they aren’t linked to names, addresses, or other personally identifying information. However purchasing bitcoin will require identification to prevent fraud and keep things secure. So you can open a wallet in seconds but it may take 24 hours to purchase your first bitcoin or part thereof at some exchanges……bitcoin stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain. The blockchain tells all. If you have a publicly used bitcoin address, anyone can tell how many bitcoins are stored at that address. They just don’t know that it’s yours.
There are measures that people can take to make their activities more opaque on the bitcoin network though, such as not using the same bitcoin addresses consistently, and not transferring lots of bitcoin to a single address.
Your bank charges huge fees for international transfers. Bitcoin doesn’t. It does however charge a miners fee which is the compensation given to those who are using those computers to confirm the tens of thousands of transactions a day.
You can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment. Sometimes lately this can take a while if the blockchain is bogged with transactions as it has been as the currency gains in popularity and usage but they are continuously tweaking things to address this issue.
When your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever. It's important to get the send address right and the receive address.