What is bitcoin (BTC) ?

What is bitcoin ?

In order to cut through some confusion around bitcoine, we need to separate it into two components. On the one hand, you have bitcoin-to-token, a snippet of code that represents the ownership of a digital concept - like a virtual IOU. On the other hand, you have Bitcoin (BTC)-e-Protocol, a distributed network that has a bookkeeping account of the balance-to-token. Both are known as "bittoin".

BITCOIN

The system enables sending payments between users without passing a central authority, such as a bank or payment gateway. It is made and held electronically. Bitcoin are not printed, such as dollars or euro - they are produced by computers around the world using free software.

This is the first example of what we call cryptocarcency, a rising asset class that shares some characteristics of traditional currencies, with cryptography-based verification.

Who made?

In 2008, the software developer, a pseudonym called Satoshi Nakamoto, proposed a bidcoin (BTC) as an electronic payment system based on mathematical proof. This idea was to produce means of exchange, which was independent of any central authority, which could be electronically transferred in a safe, verifiable and irreversible manner.

To date, nobody knows who really is Satoshi Nakamoto.

Bitcoin can be used electronically for payment of things, if both sides are ready. In this sense, it is like a traditional dollar, euro or yen, who also do business digitally.

But it is different from fiat digital currencies in many important ways:

1 - Decentralization

The most important feature of bitcoine (BTC) is that it is decentralized. No organization controls the Betoken network. This volunteer is maintained by a group of coders, and is operated by an open network of dedicated computers spread across the world. It attracts individuals and groups who are uncomfortable with the control that they have the money for banks or government institutions.

Bitcoin resolves "the problem of double spending" (where digital assets can be easily copied and reused) through electronic combinations through a simple combination of cryptography and economic incentives. In electronic fiat currencies, this function is accomplished by banks, which gives them control over the traditional system. With bitcoin, the integrity of the transaction is distributed and maintained by the open network, which is not owned by anybody.

2 - Limited supplies

There is unlimited supply of Fiat currencies (Dollar, Euro, Yen, etc.) - Central banks can issue as much as they want, and try to manipulate the value of currency relative to others. Holders of money (and especially small option citizens) bear the cost.

On the other hand with the bitcoin, the supply is tightly controlled by the built-in algorithm. Every hour a large number of new bitcoins trick, and until it reaches a maximum of 21 million, it will continue to decrease. It makes bitcoin more attractive as property - in theory, if the demand increases and the supply remains the same, the value will increase.

3 - Pseudonym

While the senders of traditional electronic payments are usually identified (for validation purposes, and for compliance with anti-money laundering and other laws), in theory, Bitcoin users work in semi-Anonymous. When the request for transaction is submitted, the protocol checks all previous transactions to confirm that the sender has the right to send the necessary bidcoin as well. The system does not need to know its identity.

In practice, each user is identified with the address of his wallet. Transactions, with some effort, can be tracked in such a way. Also, law enforcement has developed ways to identify users if necessary.

In addition, most exchanges are required by law to check identities on their customers before allowing buy or sell bitcoins, from which track of the usage of bitcoin can be tracked.

4 - indispensable

Bitcoin transactions can not be changed against electronic fiat transactions.

This is because there is no central "helper" who can say "well, return money." If transaction has been entered on the network, and if more than an hour has passed then it is impossible to modify.
Although it can reject something, it means that no transaction on the Bitcoinn network can be tampered with.

5 - Partition

The smallest unit of bitcoin is called satoshi. It is one hundred million (0.00000001) of a bitcoin - at today's prices, about one hundred percent. It can enable estimates that can not make traditional electronic money.