In this chapter, we’ll cover what Bitcoin is, along with some common questions about Bitcoin.
This chapter won’t go into detail about exactly how Bitcoin works as that is covered at length in the chapter “How Bitcoin Works”.
- What is Bitcoin?
Bitcoin is a network with a digital currency called bitcoins that can be exchanged for goods and services electronically like traditional fiat currencies such as U.S Dollars or Euros.
However, unlike other currencies, Bitcoin is not created or controlled by a central government.
Bitcoin is decentralized, meaning there is no central bank, government, company or institution that controls the currency. Bitcoins are transferred directly from one person to another without the need for banks or financial intermediaries.
Bitcoins are created and transferred by a network of thousands of computers around the world all connected to the Bitcoin network.
Bitcoins can be sent over the internet to other people like an email. We don’t think about sending international emails anymore as any different to sending an email to someone in the same office.
As Bitcoin gains in popularity international money transfers may be treated the same as transferring money locally.
- What is a Cryptocurrency?
One of the foundation technologies of Bitcoin is cryptography which involves encrypting messages or information with codes so they are hidden from everyone except people with access.
Bitcoin is known as the first successful global “cryptocurrency”, the word cryptocurrency is the combination of the words “cryptography” and “currency”.
The importance of cryptography in how Bitcoin works will be explained later in Other Blog.
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