Bitcoin is a decentralized digital currency (cryptocurrency) that operates without the need for a central authority, such as a bank or government. Here are some key points about Bitcoin:
- Origins and History:
Bitcoin was introduced in 2009 by an individual or group of individuals under the pseudonym Satoshi Nakamoto. Its creation marked the beginning of a new approach to digital finance. - Decentralization:
Instead of being controlled by a central institution, Bitcoin uses a network of computers (nodes) that collectively verify and record transactions. This decentralization means that no single entity has control over the entire network. - Blockchain:
All Bitcoin transactions are recorded in a public and distributed ledger known as the blockchain. Each block in the blockchain contains a set of transactions, and once added, it is nearly impossible to alter, enhancing both security and transparency. - Mining:
New bitcoins are introduced into circulation through a process called mining. Miners use computing power to solve complex mathematical problems, thereby verifying transactions and adding them to the blockchain. In return, they are rewarded with newly created bitcoins. - Limited Supply:
The total number of bitcoins is capped at 21 million. This limit is designed to prevent overproduction and could potentially contribute to the currency’s deflationary nature. - Pseudonymity:
Bitcoin allows for peer-to-peer transactions without the need for intermediaries. Although all transactions are publicly recorded on the blockchain, the identities of the users remain pseudonymous, as they are represented only by wallet addresses.
Bitcoin represents an alternative financial system, offering fast, cost-effective, and globally accessible transactions without relying on traditional financial institutions.
« Back to Glossary Index