Source: Business Dictionary
Created
in 2009, it is a digital currency that is completely decentralized. Facilitates
payments by using peer-to-peer technology and can be used on the internet or in
brick and mortar stores. It is considered a type of crypto-currency because it
uses cryptography for security, making it extremely difficult to counterfeit.
Why Is It Important?
Why Is It Important?
Bitcoin has been changing the way people purchase items. However, the only
caveat is that the acceptance of Bitcoins is purely voluntary. Bitcoin has been
in the news a lot recently due to its highly fluctuating market value in 2013,
reaching its peak of $1,200 per coin and then dropping 50% shortly after to
$572 per coin after the Chinese Central Bank created regulations regarding the
use of Bitcoins. Bitcoin's popularity and value thrives on its growing
acceptance. Recently, Overstock.com announced that they would consider
accepting Bitcoins in 2014. There's also been some concern that Bitcoin is
being used for illegal activities such as gambling because of its unique decentralized
market. Overall, Bitcoin has the potential to be a big game changer for some
industries and economies. As a result, many governments and companies are
keeping a close eye on its development and acceptance.
Bitcoin is a consensus network that
enables a new payment system and a completely digital money. It is the first
decentralized peer-to-peer payment network that is powered by its users with no
central authority or middlemen. From a user perspective, Bitcoin is pretty much
like cash for the Internet. Bitcoin can also be seen as the most
prominent triple entry bookkeeping system in existence.
Bitcoin is the first implementation
of a concept called "crypto-currency", which was first described in 1998
by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form
of money that uses cryptography to control its creation and transactions,
rather than a central authority. The first Bitcoin specification and proof of
concept was published in 2009 in a cryptography mailing list by Satoshi
Nakamoto. Satoshi left the project in late 2010 without revealing much about
himself. The community has since grown exponentially with many developers working
on Bitcoin.
Satoshi's anonymity often raised
unjustified concerns, many of which are linked to misunderstanding of the
open-source nature of Bitcoin. The Bitcoin protocol and software are published
openly and any developer around the world can review the code or make their own
modified version of the Bitcoin software. Just like current developers,
Satoshi's influence was limited to the changes he made being adopted by others
and therefore he did not control Bitcoin. As such, the identity of Bitcoin's inventor
is probably as relevant today as the identity of the person who invented paper.
Nobody owns the Bitcoin network much
like no one owns the technology behind email. Bitcoin is controlled by all
Bitcoin users around the world. While developers are improving the software,
they can't force a change in the Bitcoin protocol because all users are free to
choose what software and version they use. In order to stay compatible with
each other, all users need to use software complying with the same rules.
Bitcoin can only work correctly with a complete consensus among all users.
Therefore, all users and developers have a strong incentive to protect this
consensus.
From a user perspective, Bitcoin is
nothing more than a mobile app or computer program that provides a personal
Bitcoin wallet and allows a user to send and receive bitcoins with them. This
is how Bitcoin works for most users.
Behind the scenes, the Bitcoin
network is sharing a public ledger called the "block chain". This
ledger contains every transaction ever processed, allowing a user's computer to
verify the validity of each transaction. The authenticity of each transaction
is protected by digital signatures corresponding to the sending addresses,
allowing all users to have full control over sending bitcoins from their own
Bitcoin addresses. In addition, anyone can process transactions using the
computing power of specialized hardware and earn a reward in bitcoins for this
service. This is often called "mining". To learn more about Bitcoin,
you can consult the dedicated page and the original paper.
Yes. There is a growing number of businesses and
individuals using Bitcoin. This includes brick and mortar businesses like
restaurants, apartments, law firms, and popular online services such as
Namecheap, WordPress, Reddit and Flattr. While Bitcoin remains a relatively new
phenomenon, it is growing fast. At the end of August 2013, the value of all bitcoins in
circulation exceeded US$ 1.5 billion with
millions of dollars’ worth of bitcoins exchanged daily.
As payment
for goods or services.
Purchase
bitcoins at a Bitcoin exchange.
While it may be possible to find
individuals who wish to sell bitcoins in exchange for a credit card or PayPal
payment, most exchanges do not allow funding via these payment methods. This is
due to cases where someone buys bitcoins with PayPal, and then reverses their
half of the transaction. This is commonly referred to as a chargeback.
Bitcoin payments are easier to make
than debit or credit card purchases, and can be received without a merchant
account. Payments are made from a wallet application, either on your computer
or smartphone, by entering the recipient's address, the payment amount, and
pressing send. To make it easier to enter a recipient's address, many wallets
can obtain the address by scanning a QR code or touching two phones together
with NFC technology.