What is a Bitcoin – Bitcoin explained

Posted in Bitcoin explained
at 2016.11.12
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what-is-a-bitcoin-bitcoin-explained

Bitcoin is defined as a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Bitcoin (BTC in short) was invented as a peer-to-peer system for online payments by Satoshi Nakamoto in 2008. Since then Bitcoin has grown into a technology, a currency, an investment vehicle, and a community of users. This article explains what Bitcoin is and how the BTC system works. This website will also provide you insight in how you can earn more BTC, mine for and trade Bitcoins as well as selling them.

What is a Bitcoin? Bitcoin explained

The fundament of a digital payment system is making sure that people cannot spend the same money more than once.  Banks normally provide the assurance for this with bank accounts but with the digital payment industry evolving new systems like PayPal also act as a trusted central authority that verifies all of the transactions.
Bitcoin makes it possible by its technology as a massive peer-to-peer network to verify transactions. This results in a system where payments are non-reversible, accounts cannot be frozen, and transaction fees are much lower.
The video below gives you more insight in what a Bitcoin is

If you want to understand more about what a Bitcoin is, check out this ‘made simple Bitcoin animation’ by The Guardian:

 


People with a visual disability the transcript of the video is included:

0:05 – bitcoin is a digital currency which aims to do away with all the problems we have
0:17 – paying for things online
0:18 – you may think the system we have is pretty good but everything we buy today
0:24 – has to go through a bank or credit card company who take a cut of the
0:28 – transaction and who rely on our trust that they’ll do everything right after a
0:32 – while those payments start to build up and added to that is security
0:37 – you have to trust your card company to keep your details safe
0:40 – many people have tried to work out how to have a payment system without that
0:43 – middleman
0:44 – but then there’s another problem how do you prove that you’ve paid for something
0:48 – or even that you have that money at all without someone vouching for you
0:54 – it’s so serious it has a name
0:57 – the double spending problem
1:02 – then in 2008 a solution was offered by an anonymous program going by the name
1:07 – of satoshi nakamoto Nakamoto left a paper on a popular cryptography blood
1:14 – which proposed a system of currency that solve all of these federally problems
1:18 – his proposal was that instead of a bank or credit card company recording every
1:23 – transaction in one central ledger
1:26 – all of the users would record all of the transactions at the same time as a
1:32 – result
1:32 – any attempt to fool the community would be noticed and the payment rejecting
1:37 – no one user government all thanked can force a fee on a payment or control its
1:44 – flow
1:44 – the result is a cheaper quicker and easier way to spend money even across
1:50 – national borders
1:52 – so this is Bitcoin and it’s already starting to have an impact on people’s
1:56 – lives with a month to the proposal
1:59 – it was being used to buy and sell goods although not always from the most
2:03 – scrupulous of traders but it’s not all shady businesses some shopping sites
2:11 – take it you can buy pints in London and even pay for university tuition
2:23 – as you might have heard there are problems while some are profiting from
2:27 – getting involved early
2:28 – others are losing out from this volatile and young market and people are founding
2:33 – companies to buy out lots of bitcoins but as it’s designed to have a limited
2:37 –  amount ever in circulation that might cause problems down the road
2:42 –  there’s so much uncertainty around Bitcoin some people genuinely think this
2:46 –  is the future
2:47 –  others are terrified it could destroy our economy but many from both sides
2:54 – agree that if we could get Bitcoin to work or something like it if we can
3:00 – trust a digital currency to work without the middle men then the way the world
3:06 – economy functions could be transformed for the better
3:10 – we all know that Stephen Hawking has worked on some of the biggest questions
3:18 – about our cosmos but what are those ideas

 

Where do Bitcoins come from?

Bitcoins come from a process thats called Bitcoin mining. Simply put, users put their computers (or large btc mining farms) to work in order to verify transactions in the Bitcoin peer-to-peer network. Users that contribute with this computing power are rewarded with new bitcoins proportional to the amount of computing power they donate to the network. If you want to know how to earn money by mining Bitcoins, read our article ‘Tips on how you can earn money by mining bitcoins‘.

Who controls Bitcoin?

Instead of a central authority verifying the btc transactions,  there is no central person or central authority in charge of Bitcoin. A community of programmers donate their time developing the open source Bitcoin software and can make changes. These changes in BTC software  subject to the approval of lead developer Gavin Andresen. There are also bitcoin miners who choose to install the new version of the software or stick to the old one, essentially “voting” with their processing power. It is in the btc miners’ best interest to only accept changes that are good for the Bitcoin currency in the long run. This system of  checks and balances make it difficult for anyone to manipulate Bitcoin.

Do you want to get started with Bitcoins?

If you want to start earning your own Bitcoins and become a BTC trader we can help you! Download our free guide ‘How to start with Bitcoins’ with free tips to earn Bitcoins and trade BTC.

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