What is Bitcoin?

Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by lots of people running computers all around the world, using software that solves mathematical problems. It’s the first example of a growing category of money known as cryptocurrency. Value of the Bitcoin

What is it based on?

Every currency has two things in common:

- Something of real value (like gold or silver) to stand behind the coins and notes,

- Have a centralized government to control it. 

Conventional currency has been based on gold or silver. Theoretically, you knew that if you handed over a dollar at the bank, you could get some gold back (although this didn’t actually work in practice). But bitcoin isn’t based on gold; it’s based on mathematics. 

For decades, throngs of internet insiders have worked to establish a digital currency of its own, but the big problematic question has always been twofold:

- What will back the currency?

- Who will control the system?

Bitcoin is the first currency of its kind to show true potential to become much more than just an Internet sensation (which it definitely is). 

Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available, so that anyone can check it. The software is also open source, meaning that anyone can look at it to make sure that it does what it is supposed to.

Bitcoin is developing into a major player in the world economy at large. Here are some of the facts and figures that show how bitcoins (BTC) will give dollars and yen a run for their money.

The essence of bitcoin

- A bitcoin is a basic unit of currency, mined not from gold or silver but instead from code.

- Free of all governmental oversight, the bitcoin economy is monitored by a peer-to-peer internet protocol.

- All bitcoin generation (or mining) and every single bitcoin transaction is tracked by the P2P network.

- In short, a bitcoin is an encrypted string of data, or a hash, encoded to signify one unit of currency.

- With a code of 33 or more characters, it is virtually impossible to randomly reproduce.

- A bitcoin is also extremely expensive to track and verify

- The vast P2P server network checks every string of code for uniqueness by bruteforce comparison to ensure no coin is reproduced or double spent.

- It is this digital capital, the huge computer investment rather than gold or silver, that gives the bitcoin its value.