What is Bitcoin?
History and Characteristics.
Bitcoin is a decentralised peer-to-peer network. No single institution or person controls it.
Bitcoins can’t be printed and their amount is very limited — only 21 million is being created.
Who created Bitcoin?
Bitcoin was developed by programmers under anonymous Satoshi Nakamoto.
Nakamoto himself once claimed to be a 37-year-old male living in Japan. However, because of his perfect English and his software not being labeled in Japanese, there are reasonable doubts about this. Around mid-2010, Nakamoto moved on to other things, leaving Bitcoin in the hands of a few prominent members of the BTC community. Also Satoshi named Gavin Andresen a lead developer.
Who controls Bitcoin?
According to Gavin Andresen, the very first thing he focused on after Nakamoto moved on from the project was further decentralisation. Andersen wanted Bitcoin to continue its existence autonomously, and he was determined to achieve that at any cost.
For a lot of people, the main advantage of Bitcoin is its independence from world governments, banks and corporations. Not one authority can interfere into BTC transactions, impose transaction fees or take people’s money away. Moreover, the Bitcoin movement is extremely transparent — every single transaction is being stored in a massive distributed public ledger called the Blockchain.
Essentially, while Bitcoin is not being controlled as a network, it gives its users total control over their finances.
How does Bitcoin work?
A user sees only amount of Bitcoins on his or her wallet and transaction results.
However, Bitcoin network is sharing a public ledger called the “block chain”. This ledger contains every transaction ever processed. Digital records of transactions are combined into “blocks”.
If someone try to change just one letter or number in a block of transactions, it will also affect all of the following blocks. Due to it being a public ledger, any misdemeanour seen can be easily discovered and corrected by anyone.
User’s wallet can verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses.
Because of the verification process and depending on the trading platform, it may take a few minutes for a BTC transaction to be completed. The Bitcoin protocol is designed so that each block takes about 10 minutes to be able to complete each transaction.
What can I buy with Bitcoin?
Back in 2009, when Bitcoin was first introduced, it wasn’t very clear how and where you could spend it. Now, you can buy virtually everything. For example, giant companies like Microsoft and Dell accept payments in BTC for a variety of their products and digital content. You can fly with airlines such as AirBaltic and Air Lithuania, buy theatre tickets through UK’s Theatre Tickets Direct, get a few bottles of craft beer from Honest Brew, and so on.
Other options include paying for hotels and buying property, picking up bills in various bars and restaurants, joining a dating site, buying a gift card, placing a bet in an online-casino and donating for a good cause. There is also a flurry of diverse online marketplaces, trading in everything from illegal substances to high-end luxury items.
Bitcoin is a relatively new and quite complex form of payment, so it is only natural that the spending options are still limited, but every day more and more businesses — from small local coffee shops to industry giants — are accepting payments in BTC.
Moreover, due to its constantly fluctuating exchange rate, Bitcoin became a prime opportunity for investment. Despite still being an unstable and to some extent unrecognised currency, it became seven times more valuable over the last year, almost reaching a rate of $5000 for one BTC.