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A cryptocurrency,Bitcoin is digital money that moves around the internet without the need for a central authority. Like other forms of money, it serves as a medium of exchange and store of value. It’s also portable, divisible and, unlike gold, it can be used to facilitate transactions with a degree of privacy.
While Bitcoin’s roller-coaster price fluctuations garner most of the attention, a quiet revolution is happening underneath: an evolution in the way we think about money and finance. The question of what exactly is Bitcoin is a complex one that touches on many aspects of society, from tax policy to global terrorism.
Bitcoin Mining: Unraveling the Process Behind Cryptocurrency Creation
The simplest explanation is that Bitcoin was invented as a way to conduct transactions online without the need for a middleman. A person or group identifying themselves as Satoshi Nakamoto published a paper explaining the system in 2008. Bitcoin is not backed by any government or bank, and its creator remains anonymous.
Instead of a central authority, the Bitcoin network uses cryptography to verify transactions and record them in a public ledger called the blockchain. This ensures the integrity of the Bitcoin ecosystem, while simultaneously keeping track of who owns what. Each transaction is recorded as a “block,” and the block’s cryptographic signature is verified by the network using computing power known as mining.
When you send or receive a Bitcoin, the transaction is irreversible. This is an important difference from credit card or other conventional online payments, and it makes it difficult for unauthorized users to misuse your Bitcoins.