What is bitcoin

in #bitcoin4 years ago (edited)

What do you know about Bitcoin? Have you heard that Bitcoin price has doubled every 4 months in average since it was created? Have you heard that it’s the future of financial innovation, or that it can make banks obsolete? Below you will learn what Bitcoin is, how does it work, and why it is special in an easy to understand way.

Bitcoin was activated on January 3, 2009. It is the first decentralized digital currency. Decentralized means no single entity controls Bitcoin. In order to use it you don’t need any middle man, you don’t need banks or any other companies. It is a peer to peer network without a central server, and it is impossible to shut down.

Bitcoin is expected to change the world of finance as it enables everyone with access to internet to participate in global trade. There are many people who don’t have bank accounts. With Bitcoin they can trade freely. Anyone can use bitcoin without asking for permission and your account cannot be frozen because there is no central authority controlling Bitcoin. You can think of Bitcoin as a digital equivalent to currencies like dollar, pound, yen etc. You can send bitcoins to anyone through the internet. It’s like Paypal – just much faster and cheaper.

Merchants can accept bitcoins easily, in a way similar to accepting debit cards. Receiving side does not pay any fees. Merchants accepting credit or debit cards pay transaction fees to the bank so accepting Bitcoin is more profitable for them. Merchants also have the added benefit of no charge-backs. Once bitcoin transactions are recorded in the public bitcoin database – called the blockchain, the bitcoin recipient is the only one who can decide what to do with them. Bitcoin is similar to cash, once paid it is impossible to reverse bitcoin transactions.

To start using bitcoins you need a digital wallet. There are many types of wallets and we’ll cover that in another post. The wallet has both a public and a private key/address. Your public address (similar to your bank account) is your recipient address to receive bitcoin. You use your private key to unlock the balance on this address.

To transact bitcoin you simply enter the amount of bitcoin you want to send and type in the recipient address. That’s all, the wallet and the bitcoin network checks that you have a sufficient balance and confirms the transaction.

Every transaction is signed with the sender’s private key, known only to sender, and is validated by their public key, known to everyone. Transaction information together with the private key create a signature which cannot be forged.

Bitcoin is safe as safe as cash. As long as you keep your private keys safe no one can steal your bitcoins. Loosing your private key is like loosing your cash. If someone sees your private key, it is like they gain access to your cash, and they can spend the amount on this wallet. It is also important to have a backup of your private key. If you loose it, the amount in the wallet is lost forever.

There is different software for wallets. You can have one on your PC and another one on your smart-phone. You can even use the same wallet on more than one device. You can write down your address and private key on paper (to keep away from hackers) or use a hardware device which keeps your keys safe.

Just like the gold is scarce, bitcoins are scarce too. The total amount of bitcoins to ever exist is limited to 21 million bitcoins. As more and more people buy bitcoins, limited supply is causing higher prices.

By now you should be feeling more knowledgeable about Bitcoin. If you would like to dive into more technical details of Bitcoin, I suggest reading Bitcoin design paper (whitepaper) published in 2008. https://bitcoin.org/bitcoin.pdf


Congratulations @shenol! You have completed some achievement on Steemit and have been rewarded with new badge(s) :

You published your First Post
You got a First Vote

Click on any badge to view your own Board of Honor on SteemitBoard.
For more information about SteemitBoard, click here

If you no longer want to receive notifications, reply to this comment with the word STOP

By upvoting this notification, you can help all Steemit users. Learn how here!

Congratulations @shenol! You have received a personal award!

1 Year on Steemit
Click on the badge to view your Board of Honor.

Do not miss the last post from @steemitboard!

Participate in the SteemitBoard World Cup Contest!
Collect World Cup badges and win free SBD
Support the Gold Sponsors of the contest: @good-karma and @lukestokes

Do you like SteemitBoard's project? Then Vote for its witness and get one more award!

Congratulations @shenol! You received a personal award!

Happy Birthday! - You are on the Steem blockchain for 2 years!

You can view your badges on your Steem Board and compare to others on the Steem Ranking

Vote for @Steemitboard as a witness to get one more award and increased upvotes!

Coin Marketplace

STEEM 1.14
TRX 0.14
JST 0.152
BTC 60692.95
ETH 2351.95
BNB 499.06
SBD 8.72