What is Bitcoin?
Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.
Bitcoin is digital money used for secure and instant transfer of value anywhere in the world. It is not controlled or issued by any bank or government – instead it is an open network which is managed by its users. Much in the way email improved communication by making it fast and cheap, bitcoin is an improvement on existing payment methods which were not designed for the internet era.
Bitcoin’s core protocol is viewable by anyone, has been vetted by thousands of security researchers around the world, and has proven to be robust and reliable after immense scrutiny. Using bitcoin is similar to using other private applications on the internet, such as email or online banking. Just like these other web services, you must access your bitcoin with a password in order to ensure only you have access to your money.
The value of a bitcoin is not tied or pegged to the value of any other currency. Similar to stocks or property, bitcoin’s value is determined by buying and selling in the open market. A bitcoin’s price changes in real time based on the number of people who want to buy or sell it at a given moment.
Bitcoin is traded for dollars, euros, yen, and other currencies in real time 24 hours a day. Depending on the demand for buying or selling bitcoin, the price can fluctuate from day to day. This is similar to the manner in which the value of a stock or property can go up or down based on supply and demand. Bitcoin’s value can be volatile compared to traditional currencies such as the US dollar because it is still an emerging technology.
Unlike credit card networks like Visa and payment processors like Paypal, bitcoin is not owned by an individual or company. Bitcoin is the world’s first completely open payment network which anyone with an internet connection can participate in. Bitcoin was designed to be used on the internet, and doesn’t depend on banks or private companies to process transactions.
Bitcoin allows you to instantly send any amount of money to anyone in the world without needing a bank. It allows you to access your money without needing an ATM or credit card – bitcoin gives you back control over your money. Plus you can pay friends back for dinner, buy your next computer, and donate to charity, all using bitcoin.
Many large online businesses accept bitcoin, such as Overstock, Expedia, and Dell. Non-profits such as Wikipedia and the United Way also accept bitcoin donations. Look for a bitcoin payment option at many of your favorite websites and you’ll be surprised how many accept bitcoin!