Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain. Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
How does Bitcoin work?
Bitcoin is one of the first digital currencies to use peer-to-peer technology to facilitate instant payments. The independent individuals and companies who own the governing computing power and participate in the Bitcoin network, also known as "miners," are motivated by rewards (the release of new bitcoin) and transaction fees paid in bitcoin.
Bitcoin is unique in that there are a finite number of them: 21 million.
What are the benefits of Bitcoin?
Bitcoin has several benefits compared with traditional fiat currencies:
1. Security: Bitcoin transactions are irreversible and immune to fraudulent chargebacks. Bitcoin wallets can be encrypted to protect your money.
2. Privacy: Bitcoin is a pseudonymous currency, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Transactions are broadcast to the network anonymously.
3. Convenience: Bitcoin can be used to purchase goods and services online as well as in physical stores.
4. Cost: Bitcoin transactions are processed and confirmed by the network in a relatively short time frame, and no third party is required to mediate the transaction.
5. Liquidity: Bitcoin is one of the most liquid digital currencies available, meaning that it can be easily converted into other currencies or assets.
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