Bitcoin: What Is It and What Does It Do?

Bitcoin is a decentralized digital currency that allows instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate without a central authority: transaction management and cash issuance are collectively performed by the network.

What is Bitcoin

The original Bitcoin software from Satoshi Nakamoto has been released under the MIT license. Most client software, derived or “from scratch”, also use open source licenses. Bitcoin is the first successful implementation of a distributed cryptocurrency, described in part by Wei Dai in 1998 on the cypherpunks mailing list. Starting from the idea that money is any object, or any kind of document, accepted as payment for goods and services and repayment of debts in a country or a socio-economic context, Bitcoin is conceived around the idea of use cryptography to control the creation and transfer of money, rather than relying on central authorities. Bitcoins have all the desirable properties of a money-like good. They are portable, durable, divisible, recognizable, fungible, rare and difficult to counterfeit.

Bitcoin is P2P electronic money that is valuable compared to existing systems because of the monetary autonomy it brings to its users. Bitcoin seeks to tackle the fundamental problem of conventional money: all the confidence it needs to work – Not that justified trust is a bad thing, but trust makes systems fragile, opaque and costly to exploit. Confidence failures lead to systemic collapses, the maintenance of trust creates inequality and immobilization of the monopoly, and the naturally occurring strangulation points of trust can be misused to prevent access to due process. Through the use of cryptographic evidence, decentralized networks, and open source software, Bitcoin minimizes and replaces these trust costs.

Bitcoin transactions are:

  • Without permission and without borders.The software can be installed by anyone around the world.
  • You do not need to have a piece of ID to use it. It is therefore appropriate for people who do not have access to banking services, those who care about their privacy, computers or people living in areas where the financial infrastructure is underdeveloped.
  • Are resistant to censorship. No one can block or freeze a transaction of any amount.
  • Irreversible once settled, like cash. (but consumer protection is still possible.)
  • Quick. Transactions are broadcast in seconds and can become irreversible in one hour.
  • Online and available 24 hours a day, 365 days a year.

Bitcoins stored:

  • Cannot be printed or degraded. Only 21 million bitcoins will exist one day.
  • Do not have storage fees. They do not occupy any physical space, whatever the amount.
  • Are easy to protect and hide. Can be stored encrypted on a hard drive or paper backup and are in your direct possession without any counter party risk. If you keep the private key of a bitcoin secret and the transaction has enough confirmations. No one can take it from you, for whatever reason, no matter how good, no matter what the excuse.

Source: https://en.bitcoin.it/wiki/Main_Page

Summary
Review Date
Reviewed Item
reader review
Author Rating
51star1star1star1star1star