What is Bitcoin?
The first thing to know is that Bitcoin is both a currency and a digital system. As a currency, it can be used for everything that any currency can use, but instead of having a government entity -like a central bank- that issues and supports it, it is based entirely on the digital system that was devised by its creator, Satoshi Nakamoto , who spread it with his white paper in a specialized Internet forum. As a result, one of the most outstanding characteristics of Bitcoin is that it does not belong to any country or government; and since its creator is anonymous and decided that his invention was a free license, it does not belong to any individual or private company. Those who keep their platform running are the users themselves.
Bitcoin digital currency cryptocurrency
Bitcoin is a currency: just like the dollar, the euro, the yen or any other local currency you can think of. Their uses are exactly the same. What makes a big difference with the so-called fiat currencies (those issued and backed by a central bank) is that it does not exist physically. It is a digital currency that only exists in the chain of blocks or blockchain that supports it and due to a sophisticated process of verification (consensus) of transactions, it can not be spent twice. Each bitcoin - or portion of it - is unique, as each transaction is publicly registered (albeit without personal data) in a large digital "book" of accounting elaborated with complex cryptographic structures, called blockchain or chain blocks. Therefore bitcoin is called 'cryptocurrency' and is only the first of its kind.
Users can manage their funds with digital wallets that have both a public key (equivalent to a bank account number) and a private key (equivalent to the bank account password). With both, it is possible to carry out financial transactions from anywhere in the world and at all times, so that, in addition, a currency that does not have territorial ties, as the fiat money does, results. In the same way as any other currency, it is possible to exchange it for local currency, for which there are exchange houses or platforms like LocalBitcoins, which work all over the world.
It is abbreviated as BTC, and while the platform as a whole is written with a capital B, 'bitcoin' in lowercase refers only to the units of the currency.
Bitcoin is a digital system: in addition to being a currency, Bitcoin has a very important value as a digital system, since it is the first existing blockchain. Distributed accounting technology is an encrypted database where any information can be stored, from every bitcoin spent to computer programs such as smart contracts. Its value lies in the fact that each piece of information registered - and protected with a powerful cryptographic system - is marked with a unique fingerprint that makes it unrepeatable and immutable; so, beyond Bitcoin, this technology is in development in multiple applications by hundreds of very important companies around the globe.
Bitcoin is decentralized: the revolution that brings bitcoin with respect to existing currencies and payment methods is that it eliminates the need for trust in central entities to be able to sustain the economy. Right now, money is controlled by governments and banks around the world: they are responsible for issuing, distributing, regulating and, for example, ensuring that a transaction between two strangers does not result in fraud. They, as intermediaries, are necessary to validate the economic process. Bitcoin, on the other hand, relies on its own code to provide this trust. The blockchain is a cryptographic system that allows you to store and transfer any digitized asset between two or more people directly, because everything is registered online, where anyone can see that funds exist and really moved from one direction to another. In this way, the strict control of the banks is eliminated, which can even freeze the accounts of their clients, and the high commissions they charge, since Bitcoin was designed to charge a very small or nil commission.
How does Bitcoin work?
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For the average user, the operation of Bitcoin is very simple. Only bitcoins are managed in a digital wallet, which is a mobile or desktop application that can be downloaded at no cost, and from there the transactions are carried out, usually free of charge, although the proc
edure is usually streamlined by paying a small commission it may vary according to network congestion, the size of the transaction and the urgency of the user. The most common is to wait about 10 minutes to receive between 3 and 6 confirmations that validate the transaction.
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