There is not any easy way to completely define what Bitcoin is. By analogy, you can say that it is like sending a gold coin via email. With the price of Bitcoin being so volatile, everyone is curious! By consensus, it is a network that enables a new payment system and a complete new digital currency. Where a ledger would normally be controlled by a bank, with Bitcoin, it is distributed over a whole peer-to-peer network of computers.
Bitcoin is the first decentralised peer-to-peer payment network that is powered by the users of bitcoin and not by a central bank or middle man.
How was Bitcoin created?
Bitcoin’s specification and proof of concept for published in 2009 by someone going by the name of Satoshi Nakamato. Satoshi is in fact a pseudonym, and no-one really knows whether it is a man or woman, or in fact possibly a group of people. Satoshi left the project in late 2010 and since then the Bitcoin community has grown significantly.
Concerns have been raised about Satoshi’s anonymity mostly because of a misunderstanding of Bitcoin’s open-source nature. The source code is available to anyone, and any developer can modify the underlying software code. This really makes the identity of the creator as insignificant as the person who invented toilet paper.
But how does Bitcoin work?
Bitcoin is really nothing more than a program on your computer, or an app on your phone which gives you your own Bitcoin wallet and makes it easy for you to receive and send bitcoins.
As we mentioned earlier, the Bitcoin network is a massive peer-to-peer network which shares the ledger instead of the ledger being controlled by one central bank, individual or middle man. This public ledger is called the “block chain”. In this ledger is recorded every transaction processed, and in this way a user’s computer is able to verify the validity of each transaction. Each transaction is protected by digital signatures which in turn correspond to the addresses sending them and in this way it allows all users to have full control over the sending of bitcoins.
This creates the perfect environment making it virtually impossible for any fraud to take place. No chargebacks can take place and in this way everyone’s identity is protected, making identity theft a non-issue.
Who are the people involved in Bitcoin?
Bitcoin and blockchain companies have seen an investment of well over $1 Billion. The result of this is that thousands of companies and hundreds of thousands of individuals from right around the globe have become involved in Bitcoin.
What exactly is the blockchain?
As is the concept of Bitcoin, the blockchain is just as hard to explain, so we thought it might be easier with a video:
We also have more info on the blockchain, here.
So who is in control of the Bitcoin network?
The Bitcoin network does not belong to anyone. Being on a peer-to-peer network, transactions are verified across the network by miners. Bitcoin mining is an entire industry with cloud mining options. The mining software are being improved upon by developers all the time, and even though changes are taking place, they cannot force a change in the Bitcoin protocol, because all users can choose feely what software and version they are using.
Users need to use software which complies to certain rules in order to stay compatible with each other. If there was no consensus amongst users, Bitcoin won’t be able to work correctly.
