Bitcoin is the first decentralized digital currency. Meaning, no single entity controls the currency.
It was invented under the name Satoshi Nakamoto. The real identity of the creator(s) is not public knowledge. It was released as open-source software in 2009.
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Bitcoin works peer-to-peer. Meaning transactions take place between users directly without the need for an intermediary. Transactions are verified by nodes on the network and recorded in the blockchain.
Bitcoins is divisible up to 8 decimal points. Meaning, you don't have to send someone a whole bitcoin. You can send 0.00000001 bitcoin.
There are a finite number of bitcoins that will ever exist. 21 million. That means, unlike cash, new bitcoins can't be printed. That is why many have treated bitcoin as a rare commodity like gold or platinum.
Bitcoins are created as a reward for mining. A process of solving complex mathematical problems to help power the bitcoin network. This incentive mechanism for powering the network is what makes the blockchain work. In other decentralized systems, like BitTorrent, there's no financial incentive. Thus, mining incentives are one of the key concepts that makes bitcoin unique.
- The most straight forward use case is peer to peer payments. Eventually it will be possible for an American to easily send money to a starving person in Africa. Without the need for services like Western Union that charge exorbitantly high fees.
- The other use case for bitcoin, which is arguably bigger, is the blockchain. There are many applications for using the blockchain as a distributed database. Copyright, real estate titles and identity to name a few.