Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain. Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
Bitcoin can be used to pay for things electronically, if both parties are willing. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally.
However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.
decentralization is also a double-edged sword. Because there is no central authority, if something goes wrong, there’s no one to help you get your money back.
For example, if you forget your bitcoin wallet’s password, there is no way to recover your money. If a hacker steals your bitcoins, there is no way to get them back.
Likewise, if a bitcoin exchange such as Mt. Gox goes bankrupt, you might lose all your money.
So, you should be very careful with whom you trade bitcoins. Make sure you use a reputable exchange, and never store your bitcoins on an exchange or online wallet.
Other related questions:
Q: How is money transferred using bitcoin?
A: Bitcoin transfers are made using a bitcoin wallet. This is a piece of software that allows you to send and receive bitcoins.
Q: How do you transfer money on blockchain?
A: To transfer money on Blockchain, you will need to first set up a Blockchain wallet. Once you have a wallet, you can then send and receive Bitcoin and other cryptocurrencies.
Q: How do I transfer money from my bitcoin wallet?
A: There are a few different ways to do this. One popular method is to use a service like Coinbase or Xapo that allows you to send money directly from your wallet to another person’s wallet.
Q: Can you send Bitcoins through blockchain?
A: Yes, you can send bitcoins through blockchain.