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Print Posted By Tech Directory on 08/24/2017

What is Bitcoin?

What is Bitcoin?

Bitcoin is a worldwide digital currency created and held electronically. It is decentralized in that it does not depend on a central repository, a bank, government or a single administrator. Bitcoin is based on a peer-to-peer system where transactions take place between users directly with no intermediary. The transactions are verified by network nodes and subsequently recorded in a blockchain, a distributed public ledger. The system was invented by Satoshi Nakamoto in 2009 and released as an open source software.

A research published by Cambridge University estimates that there are up to 5.8 million unique users of cryptocurrency wallets as of 2017; most of them being Bitcoin users. 

Unlike other currencies, digital currencies including bitcoin are never printed but produced by people and businesses using software that solves mathematical problems. The process is known as mining. Miners are rewarded with a certain number of bitcoins for their mining services, therefore, creating an incentive for people to be involved in the mining activity.  

Safety

Safety is an important factor in the digital currency. Bitcoin’s protocol is viewable by anybody. Thousands of security researchers across the world have vetted and scrutinized the protocol and concluded that it is robust and reliable. You use bitcoin in a similar fashion like other private applications on the internet such as online banking and emails where you can only access your account by entering a username and a password to the account. Therefore, a stranger cannot access your bitcoin account.

Value of bitcoin

The value of bitcoin is not pegged to the Dollar or any other currency. Instead, it is determined by buying and selling in the open market, similar to stocks and property. The price changes depending on the number of people who want to buy and those who want to sell at any given time. Bitcoin is traded for other major currencies like the US Dollar and the UK Pound in real time round the clock. The price is volatile and can fluctuate from day to day because it is an emerging technology and not as stable as some traditional currencies like the US Dollar.

Recognition

Bitcoin has been recognized by many large online businesses such as Dell, Overstock and Expedia. Non-profits such as United Way and Wikipedia also accept bitcoin donations. Moreover, there is a large number of merchants who accept bitcoin as a currency. 

Advantages

You can send any amount of Bitcoin to a person anywhere in the world instantaneously without an intermediary such as a bank. Unlike payment processors such as PayPal and credit card networks such as VISA, bitcoin is not owned by anybody or any company. Anybody with the internet connection can participate in the bitcoin payment network. You do not need an ATM or credit card to purchase goods using bitcoin, you simply need to have access to the internet and bitcoins in your e-wallet. The advantages are summarized below.

  • Decentralised

  • Easy to set up

  • Anonymous

  • Transparent

  • Miniscule transaction fees

  • Fast 

  • Non-repudiable


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