What is Bitcoin?
Bitcoin is a digital means of payment known as a “cryptocurrency”. This means that, instead of taking the form of notes or coins, it exists solely on hard drives or computers. The name is a portmanteau made up of “bit”, the basic unit of information in computing, and “coin”.
A New Technology: the Bitcoin Blockchain
Bitcoin is akin to a currency as we understand the term, and can be transferred directly between senders and recipients at any time, anywhere in the world. Transactions are recorded in the Bitcoin blockchain. To put it simply, the blockchain can be described as a large, unalterable public ledger that anyone can access and inspect. A Bitcoin transaction is documented in the blockchain as a change in account balances, as Bitcoin itself is not a tangible entity.
The outline for the Bitcoin blockchain was published in 2008 following the global financial crisis in a document authored under the pseudonym Satoshi Nakamoto. The Bitcoin network is operated and secured by specific participants known as “miners”. The system rewards these miners for their work with new Bitcoins.
Bitcoin as a Currency and Payment System
Bitcoin is both the name of the payment system and the currency used in this system. The abbreviation for the Bitcoin currency is BTC, just as the Euro is abbreviated to EUR or the US dollar to USD. Fractional units of a BTC are called Satoshis.
The Bitcoin system uses so-called peer-to-peer technology; this means that all participants are equal and operate in a network without a central authority. Similar to the Internet, which has become a revolutionary milestone in human history, blockchain technology is also seen by many as having the potential to engender ground-breaking developments.
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