The best way to explain Bitcoin is as a digital currency that is created and held electronically – in a decentralized network with no authorities. Unlike banks which are actual institutions that regulate the flow of money and print them, Bitcoin is a digital (crypto) currency which is not printed but instead produced using a software that solves mathematical problems.
Who Invented Bitcoin?
Satoshi Nakamoto is the guy who invented Bitcoin. Nakamoto is a software developer who had an idea of developing a currency that is fully independent and not controlled by any authorities. The currency was also meant to be transferred electronically with very small fees and with fast transactions. That is how Bitcoin was born.
What Makes Bitcoin Different From The Normal Currencies?
Knowing that there is no printed or physical form of Bitcoin, it is safe to say that Bitcoin is a fully digital currency which exists as such – but also can be converted to euros and dollars. The most important characteristic that differs it from normal currencies is the fact that it is decentralized.
This basically means that there is no single institution in charge or control of the Bitcoin network, making it unique and different to conventional money. Thanks to this factor, a lot of people are comfortable using it and know that their money cannot be controlled as with banks or other financial institutions.
Can One Produce Unlimited Bitcoins?
The answer is no – because there are certain rules in terms of how Bitcoin works. In fact, the Bitcoin protocol as the set of rules says that only 21 million Bitcoins can ever be created by miners. Even though this number can be easily reached, the Bitcoins can also be divided into smaller segments – with the smallest being one hundred millionth of a Bitcoin, known as Satoshi (by the name of the Bitcoin founder).
What Is Bitcoin Based On?
Bitcoin is not based on gold or other factors similar to conventional currencies. Instead, it is based on mathematic formulas that are solved by a software in order to produce this digital currency.
What Makes Bitcoins Great?
Some of the things that make Bitcoins great include the following:
- They are easy to set up – You can set up a Bitcoin address in seconds and purchase Bitcoins straight away, just like withdrawing Bitcoin in the form of money
- They are anonymous – No one will know how many Bitcoins you have and every user can hold multiple Bitcoin addresses in the decentralized network
- They are transparent – Every Bitcoin stores details of every single transaction that happened in history, making a ‘journal register’ which is known as blockchain
- They are decentralized – Bitcoins are decentralized and no authority can control them – just like every machine that processes the transaction and mines Bitcoins
- The transaction fees are slight to none – While banks charge $10 for a single transfer, Bitcoin doesn’t
- They are fast – Everybody can send Bitcoins as a means of payment anywhere and enjoy the lighting speed of transaction
Now you know everything about Bitcoin! Are you ready to invest in this digital currency?