What is Bitcoin?
Bitcoin is a cryptocurrency, created and held electronically. Bitcoins aren’t printed, like Dollars or Riyals and isn’t controlled by a central bank. Anyone can produce them by running software that processes mathematical problems verifying transactions on the network. It can be used to purchase merchandise, for international payments or as an investment.
What makes it different from normal currencies?
Bitcoin can be used to purchase things digitally. Dollars, Yen and other currencies can be used to do that too. However, bitcoin’s most important differentiation is that it is decentralized. No single institution controls the bitcoin network.
What are its core features?
Bitcoin is different in several ways from traditional fiat currencies.
1. It’s decentralized
One central authority doesn’t control the network. Any machine that mines bitcoin and processes transactions make up a part of the network. All these machines are connected together. Which means one central authority can’t tinker with monetary policy and cause a meltdown – or decide to take people’s money away from them as Cyprus did directly from accounts and savings deposits during it’s financial crisis.
2. It’s easy to set up
Traditional banks make you jump through hoops to open a bank account. Setting up merchant accounts for payment is another confusing task, riddled with red tape. A bitcoin address can be created and set up in seconds. Yes, we hate bank’s hidden fees and penalties as much as you do.
3. It’s anonymous
Users can hold multiple bitcoin addresses, and they aren’t linked to your personal identifying information such as names, date of birth, and location. However, to open an account, there are strict know your customer and anti-money laundering practices in play.
4. It’s completely transparent
Every single Bitcoin transaction that takes place is recorded in a huge version of a general ledger, called the blockchain. The blockchain reveals all transactions but never personal details. If you have publicly used a bitcoin address, anyone can tell how many bitcoins are stored at that address. They just don’t know that it’s yours.
5. Transaction fees are small
Average international bank transfer fees could be upwards of $15. Bitcoin’s fees are far less.
6. It’s fast
You can send money anywhere in the world and it will arrive minutes later, as soon as the bitcoin network processes the payment.