What is Bitcoin?

Bitcoin is a digital currency that is electronically created (gemined) and kept. No one controls the currency. Bitcoins (short: BTC) are not printed like the euro or the dollar physically; They are calculated and stored digitally by many people around the world using computer power.

Bitcoin is the best-known example of a rapidly growing crypt diet. Below we explain our experiences with Bitcoin and the most important features of the digital currency.

What is Bitcoin and how does it differ from other digital currencies?

Bitcoin can be used to acquire goods and services as well as to carry out financial market transactions. Bitcoin performs the same functions as the conventional currencies (Fiat currencies such as the euro or US dollar).

However, Bitcoin's most important character is its decentralization. No institution controls the Bitcoion network. This means that no central bank and no state can control the amount of money and set the framework conditions - the network controls itself.

Who created Bitcoin?

A software developer with the pseudonym Satoshi Nakamoto allegedly created Bitcoin. However, it is still unclear as to whether it is a single person or even a group. Space for speculation and conspiracy theories is thus available to a sufficient extent.

How many Bitcoins are there?

The Bitcoin protocol has been developed for a maximum of 21 million Bitcoins, which can be mined by miners (see Bitcoin Mining). These coins can be divided into smaller parts (the smallest part is a hundred-millionths) and are called "Satoshi" - named after the inventor.

What is Bitcoin based on?

Bitcoin is based solely on mathematics. There is no institutional structure that stands behind Bitcoin and stands for its value. People worldwide use software that follows a mathematical formula to generate bitcoins (also known as mining). This formula is freely available.

The software is a so-called "open source" software, which means that anyone can check what this software is doing and whether it fulfills its purpose. The Bitcoin underlying technology is known under the name "blockchain" and, like Bitcoin, is currently attracting much interest from many companies, institutions and governments. Decisions are made by the network via a consensus mechanism defined in the program code and not by a single instance.

What are the main features of Bitcoin?

• Bitcoin is decentralized

The network is not controlled by any central institution. Each computer of the bitcoins is calculated and transferred is part of the network. This means that no central institution can get the upper hand over Bitcoin with a monetary directive - or remove the bitcoins from the users. If the system should go offline for some reason, the coins will still be preserved. The entire protocol can be stored on the hard disk or even printed on paper.

• Bitcoin is easy to handle

Banks often make it difficult to open an account or business account, which is often associated with many bureaucratic hurdles. Anyone can open a Bitcoin account (wallet) without providing any proof.

• Bitcoin is pseudoanonymous

Users can have multiple BTC accounts (wallets). There are no names, addresses, or other personal information associated with them.

• Bitcoin payments are 100% transparent

The network stores each individual transaction in a huge register, also called a blockchain. The blockchain knows everything. If someone has a public BTC address, anyone can see how many bitcoins are on that account. However, you do not know who owns this address. Many users still use changing addresses and only transfer bits of bits to an address.

• Transaction costs are negligible

A bank already requires 15 euros for an international banktransfer. Bitcoin is not, because it does not matter whether the receiver of the transfer is 1 km or 10 000 km away.

• Bitcoin is fast (peer-to-peer)

Bitcoin can be sent anywhere and it only takes a few minutes until the network confirms the payment. A bitcoin referral is peer-to-peer, i. There is no middleman in between, so the transaction, as opposed to bank transfers, is sent directly from A to B.