What is bitcoin?

Many of us are still confused about what really bitcoin is; therefore some of us are curious to discover it. To make you understand this technology, let’s turn back to 2008 and check who invented bitcoin.

First, the initial application and the main innovation of the Bitcoin network is a decentralized digital currency system whose unit of account is bitcoin. It an experimental property transfer and verification system based on a peer-to-peer network with no central authority, but why does it exist?

A quick back story

Actually, there was a huge financial crisis in the world in 2008. Since 2006, economy had been in trouble; there were sky high home prices in the United States, too many own homeowners with a questionable credit, it spread quickly and had touched financial markets overseas.

WHO INVENTED BITCOIN?

Due to this world financial crisis, an unknown software developer invented BITCOIN. Simply put, he created it as a form of electronic cash; a decentralized currency without a central bank. Satoshi created the original rules of the bitcoin network and released the software to the world in 2009.

Bitcoin works with software and a protocol that allows participants to issue bitcoins and manage transactions collectively and automatically. As a free protocol, it also allows interoperability of software and services that use it. As a currency bitcoin is both a payment intermediary and a store of value.

Designed to self-regulate, its limited inflation of system is distributed evenly by computing power across the network, and will be limited to 21 million units divisible up to the eighth decimal place. The smooth functioning of the exchanges is guaranteed by a general organization that everyone can examine, because everything is public: the basic protocols, the cryptographic algorithms used, the programs making them operational, the data of the accounts and the debates of the developers.

 

The possession of bitcoins is materialized by a series of numbers and letters which constitute a virtual key allowing the expense of the bitcoins associated with it on the register. A person can hold several keys in a “Bitcoin Wallet”, a “key ring” web, software or hardware that allows access to the network to perform transactions. The keychain is used to view the balance in bitcoins and public keys intended to receive payments. It also contains the private keys associated with these public keys. These private keys must remain secret because their holder can spend bitcoins associated with them on the registry. Any media is suitable to keep the following symbols constituting your keychain: paper, USB key, memory, etc. With the right software, you can manage your assets on your computer or phone.

IS IT LEGAL TO USE BITCOIN?

Most of transactions on the Bitcoin Network are legal; you can buy and sell bitcoin whenever you want. Simply put, in order to have bitcoins on an account, you need either a bitcoin holder gave you, for example in exchange for a good, or go through a foreign exchange platform that converts conventional currency into bitcoins, or have earned by participating in collective currency control operations.

 

WHO DETERMINES THE VALUE OF BITCOIN?

Actually, the price of bitcoin is determined by open market bidding; or by what people will pay for it.

The thing is Satoshi Nakamoto has established a protocol which rules that only 21million bitcoin can be mined. The more people accept it for goods, the more its price increases.