In this article we look into what is bitcoin & how it works. Bitcoin is a cryptocurrency and a payment system invented by Satoshi Nakamoto, who published the invention in 2008 and released it as open-source software in 2009. The system is peer-to-peer; users can transact directly without needing an intermediary.
Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain, which uses bitcoin as its unit of account. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency.
Bitcoin is the largest of its kind in terms of total market value. Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into a public ledger.
This activity is called mining and the miners are rewarded with transaction fees and newly created bitcoins. Besides mining, bitcoins can be obtained in exchange for different currencies, products, and services. Users can send and receive bitcoins for an optional transaction fee.
Bitcoin has been criticized for its use in illegal transactions, its high electricity consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is an economic bubble. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.
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