What is bitcoin - Dowbit

What is Bitcoin?

Bitcoin is a digital currency, which is created and stored electronically.

Who created Bitcoin?

Satoshi Nakamoto, a software developer, proposed an electronic form of money based on mathematic proof. It is possible that Satoshi Nakamoto is a pseudonym to protect the identity of Bitcoin’s inventor, or group of inventors. The core idea was to create a decentralized currency, independent of any government or organization, which could be instantly transferred all over the world with very low transaction fees.

How are bitcoins created?

Rather than being printed by a central bank, bitcoins are created by computers all over the world, using specialized software that solves mathematical problems, which processes bitcoin transactions. This is known as mining. The mathematical formula and mining software code is all publicly available and open source, so anyone can look at it and check that it does what it says it does.

How is the supply of Bitcoin limited?

There are rules that allow for a total of 21 million bitcoins to be created by miners, no more, no less. However, bitcoins can be divided: the smallest unit is a ‘Satoshi’ and is worth one hundred millionth of a bitcoin.

How is the value of bitcoin determined?

The value of bitcoin is determined by economics and the principles of supply and demand.

Characteristics of bitcoin

Bitcoin has several important features that set it apart from traditional currencies.

1. Transparent
Details of every single transaction that ever happened are stored in the blockchain, which is similar to an electronic ledger. Each participant of the market has a copy of that ledger.
2. Anonymous
Bitcoin addresses are not linked to any personal information.
3. Decentralized
The bitcoin network is not controlled by a central organization. No one in power can abuse the system for personal gain. The system will also continue to function if some participants go offline.
4. Easy to use
Opening a bank account is a tedious process with a lot of hurdles. A bitcoin address can be set up in minutes, with no fees and obstacles.
5. Low transaction fees
Banks charge fees for international transfers. Bitcoin does not.
6. Irreversible transactions
There is no way to alter a transaction once it is in the blockchain.

Bitcoin seems to have a very promising future. It has advanced by leaps and bounds since its release in 2009/2010.  Blockchain technology is already changing the way companies do business, and new applications for it are developed every day.

We encourage everyone to learn about cryptocurrencies, and how blockchain technology works.