Okay, So What’s the Real Difference Between Bitcoin and Normal Currencies?Glad you asked. Bitcoin can be used for buying things electronically. Essentially it’s like conventional dollars, yen, or euros, which also happen to be traded digitally. With that said, bitcoin’s ability to be decentralized is one of its most important characteristics and the thing that gives it a competitive edge when it comes to conventional money. Because no single institution controls the bitcoin network, many investors remain at ease as it means a large bank is blocked from controlling their money. Who Created Bitcoin? You can thank software developer Satoshi Nakamoto for the digital currency. Nakamoto proposed bitcoin, which was an electronic payment system based on mathematical proof. The aim was to produce a currency independent of any central authority, as well as one that was transferable electronically, and one that had very low transaction fees. Bitcoin has been used increasingly all over the globe since its birth in 2009. Who Prints Bitcoin? That’s a trick question; no one prints Bitcoin. This is a currency that isn’t physically printed in the shadows by a bank, unaccountable to the population, and making its own standards and rules. Central banks can simply produce more money to cover the national debt, which devalues their currency. Instead, bitcoin is created digitally. By who, you ask? Well, it’s created by a community of people that anyone can join. The process is quite simple: bitcoins are ‘mined’, using computer power in a distributed network. Further, this network processes transactions that are made with the virtual currency, which effectively makes bitcoin its own payment network.
Can I Churn Out Unlimited Bitcoins?Nope. The protocol of bitcoin - the rules that make the currency work - state that only 21 million bitcoins can ever be created by miners. But, these coins can be divided into smaller parts. The smallest divisible amount is called a ‘Satoshi’, after the founder of bitcoin, and it is one hundred millionth of a bitcoin.
What’s It Based On?Conventional currency tends to be based on gold or silver. In theory, you know that if you handed over a dollar at your bank, you could get some gold back (keep in mind this didn’t actually work in practice). However, bitcoin isn’t based on gold; it’s based on math. Chris Dixon, co-founder of Hunch now owned by eBay, was once quoted as saying: “There are 3 eras of currency: Commodity based, politically based, and now, math based.” Globally, people are using software programs that follow a certain mathematical formula to create bitcoin. Interested in learning more about the programs that make up bitcoin? The mathematical formula is available for free, so anyone is eligible to check it out. Additionally, the software is open source, which means you can look at it to make sure that it does what it has been promised to do.
Here are Bitcoin’s 7 Most Important Features:Bitcoin has a number of features that allow it to stand out in a group of government-backed currencies.
- Bitcoin is Easy to Set Up
- Bitcoin is Anonymous
- Bitcoin is 100% Transparent
- Bitcoin is Decentralized
- Bitcoin is Fast
- Bitcoin is Non-Repudiable
- Transaction Fees are Very Small