What is Bitcoin?

What is Bitcoin?

Bitcoin is an electronic currency. It is not issued by any government or central bank, and is not backed by any material asset such as gold or silver. Instead, it is a “crypto-currency”, meaning that it is based on cryptography, and therefore has no intrinsic value. Bitcoins are produced through a process called “mining”, in which computers solve complex mathematical problems in order to verify transactions and create new bitcoins. This is done using a public ledger of all transactions, known as the “block chain”.

Who created Bitcoin?

Satoshi Nakamoto is the pseudonymous creator of Bitcoin. He created the first version of the Bitcoin software in 2009, and published the source code online. The Bitcoin network was launched in January 2010, and the first bitcoins were mined on 3rd August 2010.

How does Bitcoin work?

In order for a user to send money to another user, they must first create an account with a Bitcoin exchange. Once the account has been set up, the user can send money to other users by simply sending them an email with the bitcoin address of the recipient. This is a unique string of letters and numbers that identifies each transaction. When the recipient receives the money, he or she then needs to go to the Bitcoin exchange website, and enter the bitcoin address of the sender. The recipient’s computer will then automatically download the bitcoin from the exchange’s servers, and then send it to the sender’s bitcoin address.

Why should I use Bitcoin?

Bitcoin is currently the most popular digital currency, with more than 6 million users. This means that it is one of the fastest growing currencies, and has attracted many users who are interested in alternative payment systems.

The main advantages of using Bitcoin include:

  • * There is no need for a third party to store your money, so you don’t have to trust a bank.
  • * It is not possible for governments or banks to control the supply of Bitcoin. This means that it is less likely to be affected by economic fluctuations.
  • * There are no transaction fees, making it much cheaper to send money around the world than traditional banking methods.
  • * Bitcoin is anonymous, meaning that you do not need to reveal your identity when sending money.
  • * Bitcoin is completely decentralised, meaning that there is no single point of failure.

Disadvantages of using Bitcoin include:

  • * Bitcoins are difficult to store securely.
  • * There is a high risk of theft, as the private keys to your bitcoins are stored on your computer.
  • * You cannot easily convert your bitcoins into other currencies.
  • * The Bitcoin network is vulnerable to attack by hackers, who could potentially steal your money.
  • * It is not accepted by many businesses, meaning that you may have difficulty buying goods and services.

Where can I buy Bitcoins?

There are many places where you can buy Bitcoins. The easiest way to get started is to visit a Bitcoin exchange website. These websites allow you to trade bitcoins for cash, or for other types of virtual currency such as PayPal, Amazon vouchers or gift cards.

The biggest Bitcoin exchanges include:

  • * Bitstamp
  • * Coinbase
  • * MtGox
  • * BitQuick
  • * Kraken
  • * LocalBitcoins
  • * Paxful

These sites also offer trading services for beginners, allowing them to purchase bitcoins with cash or credit card. Some of these sites are even available via mobile apps.

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