WHAT IS BITCOIN?
Bitcoin is a decentralized digital currency. It is the first cryptocurrency ever created. Unlike fiat currencies, Bitcoin does not have a central authority and is not issued nor backed by any central bank. The Bitcoin network is basically maintained by a combination of cryptography and computer science (i.e. blockchain technology) and Bitcoins are constantly being generated by a decentralized network of computers all around the world, until the total supply of 21 million Bitcoins is reached.
As a digital currency, Bitcoins can be transferred directly from person to person via the Internet, without the need for intermediaries. In other words, Bitcoin is a peer-to-peer (P2P) electronic cash that allows worldwide money transfers without going through a bank or any other third-party institution.
Bitcoin has a wide variety of intrinsic qualities and there are multiple ways of defining it. It is not only a distributed peer-to-peer (P2P) digital currency, but also a protocol (set of rules) that defines how this P2P network should operate. Moreover, the open source software project that implements this protocol may also be referred to as Bitcoin. Therefore, we may consider Bitcoin a complex network of computers and devices running a software that follows a specific set of rules (protocol) to create and manage the unit of currency (BTC) of a big ecosystem.
GLOSSARY AND BASIC FEATURES
Who created Bitcoin?
Bitcoin was proposed in 2008 by a pseudonymous developer known as Satoshi Nakamoto. The main idea was to create an independent and decentralized electronic payment system based on mathematical proof and cryptography.
A digital asset that is secured by mathematical algorithms and cryptography.
Decentralization is one of the most important characteristics of Bitcoin. Being decentralized means that no single authority or entity controls it. The Bitcoin network is collectively maintained by dedicated computers (nodes) spread around the world.
Bitcoin transactions occur directly between users, without the need for intermediaries.
Unlike fiat currencies that can be issued by central banks, Bitcoin issuance is limited and controlled by an underlying algorithm that is set to generate new Bitcoins until the max supply of 21 million coins is reached. When the total supply is reached, no more Bitcoins will be generated.
The P2P transactions are verified by the communicating network nodes (every device running Bitcoin client). Once verified, all transactions are irreversible and permanently recorded in a public distributed ledger, called Blockchain.
Blockchain is one of the core components and underlying technology of the Bitcoin system. It is basically a public and transparent ledger that keeps a permanent record of all Bitcoin transactions ever made. As the name suggests, the blockchain is made by a chain of blocks, where each block contains a list of recent transactions and a reference to the block that came immediately before it. On average, new blocks are generated every 10 minutes.
The Bitcoin software (also known as Bitcoin Core) is open source and anyone can review or copy the code. Many developers around the world contribute to Bitcoin development.
Bitcoin software and wallets can be downloaded and used by anyone and requires no verification of any kind. Although Bitcoin transactions are public, it is relatively difficult to know who is behind each transaction or address.
Public Address (PA)
Public Address is the address you share with others when you want to receive Bitcoins (it is safe to share your Public Address just like sharing you email address).
Example of a Public Address: 16NsGhJdc7s8XJyRGsQV6msSJRpMZJCGFf.
Private Key (PK)
Private Key is a long string of letters and numbers that is required to move (or spend) your Bitcoins. Each Public Address has a unique corresponding Private Key that functions as a password to access the coins. You should never share your Private Keys with anyone.
Example of Private Key: L3Ta7x3US7jfK4Qx9vyui4TNCe9L1qjMAbcpeYjbCYxK89WWEBHP.
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