Bitcoin is a distributed electronic cash protocol. BitCoin is not Fiat money, or ‘Real Money’, it’s an online currency. Virtual tokens that can be exchanged for goods and services at places that accept it. In addition, BitCoins can be swapped with other users for several real currencies such as the US Dollar, British Pounds, Euros etc.
Bitcoin uses cryptographic technologies and a network of computing power to enable users to make and verify irreversible, instant online Bitcoin payments, without an obligation to trust and use centralized banking institutions and authorities. Dispute resolution services are not made directly available. Instead it is left to the users to verify and trust the parties they are sending money to through their choice of methods.
The Bitcoin, the digital currency unit within the system, is issued according to rules agreed to by the majority of the computing power within the Bitcoin network. The core rules describing the predictable issuance of Bitcoins to its verifying servers, a voluntary and competitive transaction fee system and the hard limit of no more than 21 million Bitcoins issued in total. Bitcoins do not have the backing of and do not represent any government-issued currency. Instead, Bitcoins are directly backed by the continued actions of the computing power within the Bitcoin network. It is the first of a new breed of cryptocurrencies that do not require a central authority.
The Bitcoin network came into existence on 3rd January 2009 with the issuance of the first Bitcoins. In the same month the creator, Satoshi Nakamoto (thought to be a pseudonym), released the original Bitcoin client as open-source software.
Prior to the invention of Bitcoin, electronic commerce systems could not securely operate without relying on a central authority to prevent double-spending. Nakamoto sidestepped this requirement for Bitcoin by employing a proof-of-work approach in a peer-to-peer network to reach consensus in a network of computing power that validates the transactions.
Bitcoins is a digital currency, that can be bought and sold in every major currency. Bitcoins has proven itself to be a reliable universal currency that allows for quick and easy transactions without any huge fees or fuss. It does provide a lot more elements of security and anonymity than any other comparative traditional digital currency’s.
Over the past few years it has developed many business’ that are based almost entirely around bitcoins, from bitcoin currency exchanges, to it’s own securities market. As well as games and micro-payment services that are quick and simple.
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Note: Bitcoin has gone through a lot of changes and the Crypto-currency field has advanced alot since this article was written.
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