Home >> What is Bitcoin? How Does it work?
If you want to know what Bitcoin is, how you can trade it without floundering into technical details; this guide is for you.
Bitcoin has come far in a relatively short time. Today, a skyrocketing number of companies accept bitcoin as a form of payment. Billion
dollar businesses such as
PayPal and Microsoft do too. Websites promote it, publications such as Bitcoin Magazine publish its news, forums discuss cryptocurrency and trade its coins.
It has its application programming interface (API), price index, and exchange rate.
On the other hand, people in third world countries may find Bitcoin their most reliable channel yet for sending or receiving funds.
What is Bitcoin in-depth?
At its simplest, Bitcoin is a commodity like gold. You can trade Bitcoin through online exchanges, by check, wiring, cash, and through a Bitcoin ATM.
Furthermore, you may insantly trade Bitcoin securely through our user friendly Bitcoin ATM machines.
Cryptocurrency is an internet financial exchange of digital information that allows you to buy or sell goods and services.
The transaction gains its security and trust by running on a peer-to-peer computer network that is similar to a torrent file-sharing system.
Bitcoin Transactional properties:
- Irreversible: After confirmation, a transaction can‘t be reversed by anyone.
Not you, not your bank, not the president of the United States, not Satoshi, not your miner.
- Pseudonymous: Neither transactions or accounts are connected to real world identities.
You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters.
While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real world identity of users with those addresses.
- Fast and global: Transaction is propagated nearly instantly in the network and are confirmed in one to sixty minutes on average. Since they happen in a global network of computers they are completely indifferent of your physical location. It doesn‘t matter if I send Bitcoin to my neighbour or to someone on the other side of the world.
- Secure: Bitcoin funds are locked in a public key cryptography system.
Only the owner of the private key can access and trade their cryptocurrency. Strong cryptography and the magic of big numbers makes it impossible to break this scheme. A Bitcoin address is more secure than Fort Knox.
- Permissionless: You don‘t have to ask anybody to use cryptocurrency.
It is equally available to everybody that wants to trade it for free through numerous available wallet providers.
After you've set up a wallet, you can receive and send Bitcoins or other cryptocurrencies instantly.
Bitcoin works on a vast public ledger, also called a blockchain,
where all confirmed transactions are included as so-called ‘blocks.’
As each block enters the system, it is broadcasted to the peer-to-peer computer network of users for
validation. In this way, all users are aware of each transaction, which prevents stealing
and double-spending, where someone spends the same currency twice. The process is exactly why blockchain users trust the system.
Unlike traditional currencies, which are issued by central banks, Bitcoin has no central monetary authority.
Instead it is underpinned by a peer-to-peer computer network made up of its users’ machines,
akin to the networks that underpin BitTorrent, a file-sharing system, and Skype, an audio,
video and chat service. Bitcoins are mathematically generated as the computers
in this network execute difficult number-crunching tasks, a procedure known as Bitcoin “mining”.
The mathematics of the Bitcoin system were set up so that it becomes progressively more difficult to “mine” Bitcoins over time,
and the total number that can ever be mined is limited to around 21 million. There is therefore no way for a central bank to
issue a flood of new Bitcoins and devalue those already in circulation.