It is widely known that Bitcoin quickly became the most popular form of electronically created digital currency. One of its main assets is that it is not controlled nor possessed by anyone; nor is it printed like the regular currencies. Bitcoin is generated by hundreds of thousands of people and companies all over the world, who are using their computing powers altogether and using specialized software that solves complex mathematical algorithms, this way “finding” new Bitcoins.
When purchasing goods or services electronically, you can safely make transactions through bitcoin – exactly as you would use traditional currencies such as the Euro or Dollar. The most important advantage is that Bitcoin is decentralized – which means that it is not regulated by any governing authority, and there’s no single institution that controls it. This feature makes it preferred by people who aren’t happy with the idea of a bank having control over their funds.
Who created Bitcoin?
Bitcoin was founded by software developer Satoshi Nakamoto. His project was based on an idea of having an electronic payment system, completely based on mathematical algorithms. This idea developed into a new type of currency, completely independent on any central authorities and with extremely low transaction fees.
How are new Bitcoins being produced?
Unlike the traditional currencies, Bitcoin is not printed. With a normal currency, central banks would simply print more in order to cover national debt, which ultimately results in the currency losing its value. However, this is not possible with Bitcoin – since it has its own set of rules. It is created exclusively online through a process known as “mining”, that anyone can participate in. Based solely on complex mathematical algorithms, people around the world are using specialized computer software to produce Bitcoin.
Only 21 million Bitcoins are said to ever be produced.
The “Bitcoin Protocol”, which consists in the rules that allow the currency to work smoothly, says that no more than 21 million Bitcoins will ever be produced by miners. Speculations claim that this will tremendously improve its value. Bitcoins can be divided in small fractions, of up to a one hundred millionth of a single Bitcoin (0.00000001 BTC) – this unit is called “satoshi” as a reference to the original creator of Bitcoin, Satoshi Nakamoto.
What are some of the main characteristics of Bitcoin?
There are many advantages when it comes to using Bitcoin, and it is not uncommon to see many people who are not yet familiar with all of them. We have gathered some, which we consider to be the most important, and we will do our best to explain them thoroughly.
Decentralization: One of the most fascinating facts about Bitcoin is that it is not controlled by a central authority. Every single machine that takes part in this complex process represents a very essential part of the network. All of these machines combine their computing powers. Theoretically, no single central authority will ever be able to impact the monetary policies of Bitcoin.
Ease of setup: With conventional banks, a lot of paper work is required when you want to open an account, and you very often have to follow some rough procedures that can take up a lot of time. This is not the case with Bitcoin – anybody can get started extremely easy and set up a Bitcoin address where you can send/receive money in seconds.
Anonymity: The Bitcoin protocol makes it extremely easy to create multiple addresses for sending and receiving money, without being required to link them to their names, aliases, or any personal information.
Transparency: The details of all the transactions that ever took place are securely stored in a “book” that is accessible online, called the BlockChain. If you have a Bitcoin address you can know how many Bitcoins are in that address and what transactions went through it, without knowing who the owner of that address is.
No Fees: Everyone knows that when transferring money through normal means such as banks, a percentage of the transferred amount is usually held by the banks. More often than not, these costs can be extremely high. Bitcoin completely eliminates this inconvenience for its users, by not charging any fees for the transactions.
Fast transfers: Another extremely popular asset that Bitcoin has to offer is that transfers usually happen within a matter of minutes. As soon as the request is securely processed and verified through the Bitcoin network, the funds arrive immediately.
Ever since its creation, Bitcoin has been continuously revolutionizing the worlds of technology and currencies. During the short period of time since its establishment, it has never failed to prove its strength and development. The tremendous growth that Bitcoin has been going through is making more and more people jump in the world of cryptocurrencies, either for long term investments or daily trading.
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