What Is Bitcoin?

What Is Bitcoin?

What Is Bitcoin?
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What Is Bitcoin?

Bitcoin is a type of money that exists in digital form and is transferred through the internet. Bitcoin is often referred to as cryptocurrency, digital currency, or alternative currency. In fact, it is the most popular type of cryptocurrency or internet-money.

What is cryptocurrency?

The term “cryptocurrency” is a hybrid from 2 words: cryptography & currency. Cryptography aims to provide security of information and communication and currency is a means to transfer and exchange value. Therefore, cryptocurrency is a medium of exchange of digital information that possesses value that utilizes cryptography. To protect data, cryptography uses encryption, the conversion of data into an unreadable format, giving security of transactions and control over the creation of the new units of exchange within the Bitcoin system.

Unlike traditional fiat currencies, cryptocurrencies are not bound geographically or legally to a specific country (although several governments of the world announced plans to create state cryptocurrencies, and Canada already did). Most cryptocurrencies are known for being decentralized, which means that they have no central authority regulating their ownership, issuance, value and circulation. Instead, they spread worldwide by means of a decentralized network of users. Cryptocurrencies are used as alternative payment methods as opposed to bank transfers and credit card stripes.

Bitcoin is the first cryptocurrency to have spread all over the world except for the places that don’t have the internet coverage. It was created in 2009 by Satoshi Nakamoto who published a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008 describing the functioning principles of Bitcoin.

The first decentralized cryptocurrency

The Bitcoin whitepaper was published on October 31, 2008. In the beginning. the paper didn’t receive much attention from the public except for a group of cryptography enthusiasts. In 2009, when the Bitcoin software and the open source code were released, the cryptocurrency started gaining global traction.

Bitcoin was designed with the idea of direct online payments from one person to another without a third-party, e.g. a bank or other financial institution, in mind. This topic was already addressed by earlier researchers like Wei Dai who described B-money, an anonymous distributed electronic cash system, back in 1998. This work, among others, was referenced in the Bitcoin whitepaper.

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