Bitcoin is a type of digital currency. It’s completely decentralized, meaning that no one controls it. Bitcoins (BTC) aren’t printed and don’t exist in physical form like dollars or euros – people produce them by running computers all around the world, using software that solves mathematical problems.
Bitcoin was the first example of money category known as a cryptocurrency. It was created by an anonymous software developer called Satoshi Nakamoto, who aimed to create a currency independent of any central authority, that could be transferred electronically in an instant, with very low transaction fees.
What makes Bitcoin different from traditional currencies?
Bitcoin can be utilized for purchasing things online. In that sense, it’s like common currencies which can also be traded digitally.
However, Bitcoin’s most important characteristic is that it is decentralized, unlike typical currencies. No one controls the Bitcoin network. Knowing this fact puts some people at ease because it means that large banks can’t get control of their money.
The common currency is based on gold or silver. Bitcoin is not based on gold; it relies solely on mathematics.
All over the world, people are using software that follows a mathematical formula to mine Bitcoins.
The software is open source, meaning that anyone can look at it to make sure that it does what it is supposed to.
Bitcoin has quite a few important features that set it apart from government-backed currencies.
1. It’s decentralized
The Bitcoin network isn’t controlled by anyone. Every machine that mines Bitcoin and processes transactions makes up a part of the BTC network, meaning that all machines work together. If a part of the network goes offline for any reason, the money keeps on flowing.
2. It’s easy to use
Conventional banks make you jump through hoops just to open a bank account. On the other hand, you can set up a Bitcoin address in seconds, no questions asked, and with zero fees.
3. It’s anonymous
Users can own multiple Bitcoin addresses, and they aren’t linked to any names, addresses, or other personally identifying information. However, total anonymity isn’t guaranteed by the network.
4. It’s completely transparent
Bitcoin stores details of every transaction that ever happened in the network in a ledger which is called the blockchain.
If you have a public Bitcoin address, anyone can see how many Bitcoins are stored at that address. However, no one will know that it’s yours.
5. Transaction fees are small
Your bank typically charges you a $10+ fee for international transfers. Bitcoin doesn’t, you would only pay a small fee if you want to speed up your transfer.
6. It’s fast
You can send money anywhere on the planet (and soon in space too), and it will arrive within minutes, as soon as the Bitcoin network confirms the payment.
7. It’s non-repudiable
When your Bitcoins are sent, there’s no getting them back, unless the recipient sends them back to you. They are gone forever.
So, Bitcoin has a lot going for it. Hope this answer will help you get a better idea about Bitcoin significance.