Bitcoin is a new digital currency that you can store and transfer electronically. It is a type of cryptocurrencies. An unidentified person or group of persons, Satoshi Nakamoto, has created bitcoin in 2008. Individuals or companies can digitally produce bitcoins with open-source software; creating bitcoins is called mining.
You can use bitcoins to purchase items or services over the Internet, like any other currency. Bitcoin trade is like trading other currencies electronically. You can buy and sell bitcoins for other currencies like USD or EUR, using credit cards, debit cards, or you can transfer money from your bank account. The Bitcoin Exchange is available all over the world.
Bitcoin differs from traditional currencies. It has a peer to peer model; users transfer bitcoins without an intermediary. No financial institution has control over bitcoin, it has no central repository or an administrator, it is decentralized. Bitcoin users do not depend on big banks. The network is independent from any government. No financial or governmental institution can manipulate the bitcoin network; there will be no sudden changes on the market.
There is another difference between traditional currency and bitcoins. Traditional currencies are based on gold or silver. It means that if you give a dollar in the bank, they may return you some gold. Bitcoin is based on mathematics, a mathematical formula to which any individual has free access. Anybody can join the bitcoin network. On the other hand, there is a limit on creating bitcoins; the users of the network, called “miners”, can only create 21 million bitcoins altogether. It is possible to divide bitcoins into smaller parts.
Advantages of Bitcoins
- It is free to create a bank account for bitcoins. You can do it in a few seconds, it is very easy and fast. It is a secure banking option.
- You are allowed to have multiple bitcoin addresses.
- The network is transparent, since bitcoin keeps the details of each transaction in a public ledger, called the block chain. If your bitcoin address is public, everyone can see how many bitcoins you have on it, but they will not know that the address belongs to you. If you want to remain incognito, you can use more than addresses and store only some of your bitcoins at each.
- Transaction fees are very low, whether you transfer bitcoins locally or internationally.
- You can transfer bitcoins very fast, within a few seconds, to any part of the world.