Bitcoin

What is Bitcoin?

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Bitcoin

Bitcoin is an open source, peer-to-peer payment network and digital currency that can be transferred instantly and securely between any two people in the world.

It’s like electronic cash that you can use to pay friends or merchants.

Shorthand: BTC (e.g. 100 BTC)


Origin of Bitcoin?

Introduced in 2009 by pseudonymous developer “Satoshi Nakamoto”.

How does it work?

· Users send payments using client software on a personal computer, mobile device, or web service.

· Transactions transfer ownership of bitcoins, the unit of currency.

· A decentralized network of specialized computers verifies and timestamps all transactions using a proof-of-work system.

· The operators of these computers, known as “miners”, are rewarded with transaction fees and newly minted bitcoins.

Little More about Bitcoins…

Blockchain

It is a public transaction ledger and log which shows who owns how many bitcoins currently and records the participants in all prior transactions as well.

The blockchain is maintained not by a central body but by a distributed network of computers that run a program to solve cryptographic puzzles relating to information in the blockchain.

Miners

Users who devote computing power to maintaining the blockchain. The mathematical calculations performed by miners’ computers serve to verify that each transaction is valid and add the information to the blockchain.

They are awarded in bitcoin when they are the first to solve such puzzles.

Note: This mining is how new bitcoins are generated.

Payment Processing

In order to make a payment, a user transfers an amount of bitcoins from his or her account into the account of the recipient, and then the transaction is validated by others in the network and recorded in the blockchain ledger of all Bitcoin transactions.

Wallets


Bitcoin functions using public-key cryptography, in which a user generates a pair of cryptographic keys: one public and one private.
Only the private key can decode information encrypted with the public key; therefore the keys’ owner can distribute the public key openly without fear that anyone will be able to use it to gain access to the encrypted information.
Anyone wishing to use Bitcoin can create one or more Bitcoin addresses, which are collected and tracked in “wallets”. Anyone can send bitcoins to the public address provided by the owner of the wallet, while the private key must be entered by the wallet owner to send bitcoins.
Securing and protecting the private key is the essence of wallet security.

How do I get Bitcoins?


The four main ways to get Bitcoins are:

  • Exchanges, where you can buy and sell Bitcoin for flat currency
  • Transactions between individuals using Bitcoin Wallets
  • Online content or services paid through the site owner’s Bitcoin Wallet
  • Mining

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