Bitcoin is extremely complicated and there is no absolute definition that can encapsulate the actual meaning of the term. If we go with analogy, it is like sending gold through email. Bitcoin is a consensus network which enables digital money and a complete new payment system.
This is the first centralized peer to peer network of payment which is powered by its users. Bitcoin do not employ the middlemen or central authority. This form of payment is created and held electronically. No one is at the helm of controlling it and they are not printed, like the dollars or the Euros. Bitcoin are produced by people and run by computers around the world. This form of payment uses software which solves the intricate mathematical problems.
Bitcoin happens to be a perfect example of growing category of money which is known as cryptocurrency.
Why is Bitcoin different from the traditional currencies?
Bitcoin can purchase things electronically. This is what makes it take a form of conventional currencies like the dollar, Euros and yen since they are also traded electronically. However, the significant factor that puts it aside from other currencies is that they are decentralized. There is no single institution that is charged with the control of Bitcoin network. This is a relief to many people since it is an idea that is opposed the control that is imposed by large banks.
Who is the creator of Bitcoin?
The inventor of the Bitcoin software is called Satoshi Nakamoto.He is the one who made the first proposal of the electronic payment system and this is based on the mathematical proof. The brainchild idea is to produce a currency which is independent. The currency also should not have a central authority and it is transferable electronically and the transaction is instant with minimal transaction fees.
Is the currency printed?
Nobody prints Bitcoin. The currency is not printed after any directives of the central bank. It is accountable to the population and it is capable of making its own rules. This is a different scenario with the bank since they can produce more currencies thus devaluing the national currency.
Bitcoin is created and formulated digitally and this is propagated by the community of people and it is open for everyone to join. Therefore, Bitcoin are mined by using computing power in the distributed network.
This network has the ability to process the transaction which is made by virtual currency. This makes Bitcoin to effectively make its own network of payment.
So what is it based on?
Conventionally, Bitcoin currency is based on the either silver or gold. Hypothetically, if you gave a dollar to a bank, you could get gold in exchange (but this does not work in the actual context). However Bitcoin is not based on silver or gold, it is instead based on the proof of mathematics.
All over the world, people are actively using the software programs. This follows the mathematical formula to produce Bitcoin. This mathematical formula is freely available to anyone who is willing to check on it. This software is also an open source and this gives people a sure way to ensure that no rooms for mistakes.