What Are Bitcoins?

  Bitcoins are a type of digital currency that can be created via a free software
application and transferred across the Internet without the use of financial
institutions or clearinghouses. This means that there is no physical form of this
currency; it is not like a U.S. Dollar or a Euro, or even like a piece of gold or silver.
You cannot touch bitcoins and be in physical possession of them like you can those
aforementioned physical currencies.

The best way for you to understand digital currency is by thinking of it as a code.
The strength of the code makes the currency stronger. Cryptography ensures that
the code cannot be accessed without proper authorization. This code has never

How can Bitcoins be used then? A computer, Smartphone, tablet, or any device
with Internet access can easily transfer Bitcoins from one person to another, even
in transactions between a user and a business website. The number of bitcoins
you have are stored in your “digital wallet,” which is similar to screens you see
when you use online banking forms to authorize transactions.
When a Bitcoin transaction occurs, the bitcoin miners communicate over a Webbased network and add the transaction to transaction logs that record all Bitcoin
transactions.

Peer-to-peer file-sharing technology allows all transactions to be processed and
documented. An electronic signature is added, allowing the transaction to be stored
on the Bitcoin network. This transaction is free for all to see, though you can use
multiple bitcoin accounts and not transfer large amounts of bitcoins to each account
in order to help camouflage your activities. This hides your accounts from other
Bitcoin users, so they do not know which accounts are yours.
Bitcoin is unlike other currencies because it is decentralized; no one agency (world
or national) controls the regulation of it. You may think because Bitcoins are a
digital currency that there would be an unlimited supply of them, much like the
space on a digital or virtual server.

However, thanks to a schedule planned by Bitcoin itself, there will be 21 million
bitcoins in the year 2140. This number will be reached by each update being
reduced by half every four years until 2140. At that time, there will be no more
Bitcoins mined.