What is Bitcoin?

Bitcoin is a cryptocurrency and a payment system, first proposed by an anonymous person or group of people under the name Satoshi Nakamoto in 2008. Bitcoin is unique in that there are a finite number of them: 21 million.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.

Bitcoin is decentralized: it is not subject to government or financial institution control.

How does Bitcoin work?

Bitcoin is transferred between users through bitcoin addresses, which are randomly generated strings of 27-34 letters and numbers.

Users can create as many addresses as they want. Bitcoin addresses are not linked to names, addresses, or other personally identifying information.

To send bitcoin, a user enters the recipient's bitcoin address, the payment amount, and a message. The software then creates a new bitcoin address for the payment, adds the transaction to a ledger, and sends the payment.

The recipient can see the payment in their bitcoin wallet. They can then use their bitcoin to buy goods or services, or hold on to them in hopes that their value will increase.

What are the benefits of Bitcoin?

Bitcoin has several benefits over traditional currency.

Bitcoin is decentralized, meaning it is not subject to government or financial institution control. This makes it more secure and less prone to censorship.

Bitcoin is global: it is not restricted to any one country or region.

Bitcoin transactions are irreversible: once a payment is made, it cannot be reversed. This protects sellers from fraud and scam artists.

What are the risks of Bitcoin?

Bitcoin is still a relatively new technology, and its legal status is uncertain in many countries.

Bitcoin is also volatile: its value can fluctuate significantly from day to day.

Bitcoin payments are not reversible, so if a buyer pays too much or does not receive what they ordered, they may not be able to get their money back.

What is Bitcoin mining?

Bitcoin mining is the process of creating new bitcoins. Miners are rewarded with bitcoins for verifying and committing transactions to the blockchain.

Miners use special software to solve mathematical problems and are issued a certain number of bitcoins in exchange. This provides a secure way to issue the currency and also creates an incentive for people to mine.

What is a Bitcoin wallet?

A Bitcoin wallet is a software program where bitcoins are stored. Bitcoin wallets can be desktop, mobile, or web-based.

Desktop wallets are installed on a computer and can only be accessed by the owner. Mobile wallets are installed on a mobile device and can be used to make payments. Web-based wallets are hosted by a third party and can be accessed from any internet-connected device.

What is a Bitcoin exchange?

A Bitcoin exchange is a website where users can buy and sell bitcoins. Exchanges can be used to purchase bitcoins, or they can be used to sell bitcoins for traditional currency.

What is a Bitcoin transaction?

A Bitcoin transaction is the process of transferring bitcoins from one Bitcoin address to another. Transactions are verified by miners and added to the blockchain.

What is a Bitcoin block?

A Bitcoin block is a group of Bitcoin transactions that have been verified by miners and added to the blockchain.Blocks are created every 10 minutes and contain a fixed number of bitcoins.

What is the blockchain?

The blockchain is a digital ledger of all Bitcoin transactions. It is used to verify and commit transactions to the blockchain.

The blockchain is public: anyone can view it. This makes it difficult to tamper with or hack.

What is Bitcoin worth?

As of February 2015, the value of one bitcoin is about $225.