The Bitcoin craze has finally found its way to the general public, but what is Bitcoin? Bitcoin is a decentralized cryptocurrency that isn’t issued by any government or financial institution. This means it is removed from the control of anyone entity and therefore can be used without having to deal with banks or other third parties.
But bitcoin motion app lack centralized authority and also means no refunds, no exchanges, and higher volatility.
Who created Bitcoin? Bitcoin’s creator was Satoshi Nakamoto whose identity remains unknown. He published the invention on an open-source forum in 2008 and mined the first set of Bitcoin (known as the genesis block). Then in 2009 he gradually began distributing Bitcoin to others while remaining anonymous himself. The original Bitcoin software client has since been modified by a large community to support more transactions, longer Bitcoin addresses, etc. Today Bitcoin is mostly supported by a volunteer workforce and Bitcoin users themselves.
How does Bitcoin work?
Bitcoin is built on blockchain technology, which is also known as distributed ledger technology (DLT). It’s called “blockchain” because transactions are grouped into blocks recorded one after another in a publicly viewable ledger online. This can be thought of as being similar to the way bank transactions are organized. Every user has their own personal Bitcoin address that they use to send and receive bitcoins with an email address. Their associated private keys grant access to spend or transfer those bitcoins further according to the rules set out in the Bitcoin software client.
The difference between Bitcoin and fiat currency Bitcoin is different from the traditional currency in several ways. Bitcoin has no physical existence beyond computer records, Bitcoin addresses are not tied to the identity of users, Bitcoin transactions are non-reversible and Bitcoin can be sent while remaining anonymous. Bitcoin’s independence from institutional oversight makes it unique among currencies. It also means Bitcoin is highly volatile with the potential for significant price swings based on demand.
Can Bitcoin be hacked?
Bitcoin cannot be hacked because each Bitcoin address has two important pieces of cryptographic information called a public key and a private key. The public key allows bitcoins to be spent by another user by using that address’s associated private key or seed. There is no way to know which private keys are tied to individual Bitcoin addresses unless you have direct access to someone else’s Bitcoin wallet. So, selecting between hot wallet or cold wallet can be considered a vital action.
How secure is Bitcoin? Bitcoin’s reputation as a secure currency came into question in August 2010 when someone was able to hack Bitcoinica, an online bitcoin trading platform. It has been suggested that this event was only possible due to poor coding practices and Bitcoin has since become more secure as a result. As of today, it still appears far safer to store bitcoins with Bitcoin exchanges or other third-party organizations than it does to store them yourself.
What prevents Bitcoin from being counterfeited?
Transactions can be viewed publicly which makes counterfeiting very difficult, but not impossible. This includes the current balance of every Bitcoin address involved in a transaction, along with the public keys connected to those addresses. The transactional history behind those Bitcoin addresses is publicly viewable too. Bitcoin balances are confirmed by Bitcoin miners which makes counterfeiting essentially impossible. Bitcoin mining requires electrical energy, specialized Bitcoin-mining machines, and a lot of patience. Bitcoin mining also serves to decentralize the Bitcoin network by processing transactions, securing Bitcoin’s public ledger known as the blockchain, and guaranteeing that no individual can control what happens on the Bitcoin network.
Who accepts Bitcoin?
Many companies already accept Bitcoin including Microsoft Dish Network, Expedia, Subway, Reddit, OkCupid, CheapOair, 1-800 Flowers, Dell, Intuit PayPal, Wikipedia, Home Depot Target, and Whole Foods among others (see here for more). There is even one company out there called Bond No 9 that allows you to buy their perfume and candles using Bitcoin. Bitcoin can be used to pay for other alternative currencies like Ripple because Bitcoin is convertible into many different types of currency at exchanges online.
What are Bitcoin’s limitations?
Bitcoin still has a long way to go before it becomes an everyday currency that can be used everywhere. It currently cannot handle transactions as quickly as credit cards do for example, which means Bitcoin users may have to wait hours or days before receiving their purchases if there is a large amount of activity on the Bitcoin network. This may also prevent merchants from accepting Bitcoin in the first place due to transaction fees, speed, and confirmation times.
