5 May

About Bitcoin

Bitcoin is a form of digital currency, created and held electronically. It isn’t controlled by any one person. They aren’t printed like dollars or euros, instead Bitcoin is produced by people and businesses, running computers all around the world, using a software that solves mathematical problems. It’s the first example of a growing category of money known as cryptocurrency.

How is it different from normal currencies?

It can be used to buy things electronically. It’s more like conventional dollars, euros or yen, which are also traded digitally. However it’s most important feature is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means their money isn’t controlled by a bank.

Who created it?

A software developer called Satoshi Nakamoto proposed bitcoin, an electronic payment system based on mathematical proof.

Who prints it?

No one. It isn’t physically printed by a central bank. Banks can simply produce more money to cover the national debt, in the meanwhile devaluing their currency. Bitcoin is created digitally by a community of people that anyone can join. Bitcoins are ‘mined’, using computing power in a distributed network.

Can you churn out unlimited bitcoins?

No you can’t. The rule that makes bitcoin work say that only 21 million bitcoins can ever be created my ‘miners’. Although these coins can be divided in to smaller parts.

What is it based on?

Conventional currency is based on gold or silver. Bitcoin on the other hand, isn’t based on gold; it’s based on mathematics. Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. This formula is freely available, so anyone can check it. The software is also open source meaning any one can look at it to double check its doing what it’s supposed to. 


 

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