Bitcoin was created as a peer-to-peer system for online payments and transactions. It does not require a central banking authority governed by international banking rules. Since Bitcoin started in 2008, Bitcoin has evolved into a technology, a currency, an investment vehicle, and a community of users.
What is Bitcoin?
We all know that anything digital can be copied over and over again. The challenge Bitcoin faced, was making sure that nobody can spend the same money more than once.
Historically, this was done by having a trusted central authority (like PayPal) to verify all of the transactions. The core innovation that makes Bitcoin unique is that it uses a massive peer-to-peer network to verify transactions.
In other words, the transactions are verified by the community of users on the network. This results in a system where payments are non-reversible, accounts cannot be frozen, fraud is nearly impossible and transaction fees are much lower.
How are Bitcoins Created?
People have invested in very powerful specialized computers called “Miners” These machines complete millions of computations rapidly. The reward for solving these calculations is to earn Bitcoins, where they can be sold, traded or used for purchases.
Some users put their computers to work verifying other transactions for the health of the peer-to-peer network. But it is the “Miners” that create the Bitcoins. They are rewarded with new bitcoins proportional to the amount of computing power they donate to the network and this is how Bitcoins get into
Is Anyone in Charge of Bitcoin?
Although, there is no central person or central authority in charge of Bitcoin. Programmers donate their time developing the open source Bitcoin software and can make changes subject to the approval of lead developer Gavin Andresen
The individual “Miners” can choose whether to install the new version of the software on their machines or stick to the old one. So the Bitcoin community is essentially “voting” with their processing power.
It is in the “Miners” best interest to only accept changes that are good for the Bitcoin currency in the long run. These checks and balances make it difficult for anyone to manipulate Bitcoin.
How to get started with Bitcoin
The best way to learn about Bitcoin is to buy some coins and experiment with them. You will need to learn about the exchanges and how they differ, if you plan to buy coins from them. And last you need to set up a Bitcoin wallet account to store the Bitcoins you do acquire.