What Is Bitcoin?
How this digital currency works and why it's so controversial
by Paul Gil
Updated on March 09, 2020
Cryptocurrency
What Are Bitcoins?
Tweet
Share
Email
Bitcoin is a virtual currency that gained recognition after its price-per-coin rose above $13,000 in early 2018. The cryptocurrency (one of many) is at the center of a complex intersection of privacy, banking regulations, and technological innovation. Today, some retailers accept bitcoin, while in other jurisdictions, bitcoin is illegal.
Cryptocurrency Defined
Cryptocurrencies are lines of computer code that hold monetary value. These lines of code are created by electricity and high-performance computers.
Cryptocurrency is also known as digital currency. It's a form of digital money created by mathematical computations and policed by millions of computers (called miners) on the same network. Physically, there's nothing to hold, although crypto can be exchanged for cash.
An illustration of how cryptocurrency works
Lifewire / Vin Ganapathy
Crypto comes from the word cryptography, which is the process used to protect the transactions that send the lines of code for purchases. Cryptography also controls the creation of new coins. Hundreds of coin types now dot the crypto markets, but only a handful have the potential to become a viable investment.
Governments have no control over the creation of cryptocurrencies, which is what initially made them so popular. Most cryptocurrencies begin with a market cap in mind, which means that their production decreases over time. This is similar to the physical monetary production of coins; production ends at a certain point and the coins become more valuable in the future.
What Are Bitcoins?
Bitcoin was the first popular cryptocurrency. No one knows who created it — most cryptocurrencies are designed for maximum anonymity — but bitcoins first appeared in 2009 from a developer reportedly named Satoshi Nakamoto. He has since disappeared and left behind a bitcoin fortune.
Because bitcoin was the first major cryptocurrency, all digital currencies created since then are called altcoins, or alternative coins. Litecoin, Peercoin, Feathercoin, Ethereum, and hundreds of other coins are all altcoins because they are not bitcoin.
One of the advantages of bitcoin is that it can be stored offline on local hardware, such as a secure hard drive. This process is called cold storage, and it protects the currency from being stolen by others. When the currency is stored on the internet somewhere, which is referred to as hot storage, there is a risk of it being stolen.
On the flip side, if a person loses access to the hardware that contains the bitcoins, the currency is gone forever. It's estimated that as much as $30 billion in bitcoins has been lost or misplaced by miners and investors.
Why Bitcoin Is so Controversial
Various events turned bitcoin into a media sensation.
From 2011 to 2013, criminal traders made bitcoins famous by buying them in batches of millions of dollars so they could move money outside of the eyes of law enforcement and tax collectors. Subsequently, the value of bitcoins skyrocketed.
Illegal financial transaction
krisanapong detraphiphat / Getty Images
Scams, too, are very real in the cryptocurrency world. Naive and savvy investors alike can lose hundreds or thousands of dollars to scams.
Bitcoins and altcoins are controversial because they take the power of issuing money away from central banks and give it to the general public. Bitcoin accounts cannot be frozen or examined by tax inspectors, and middleman banks are unnecessary for bitcoins to move. Law enforcement officials and bankers see bitcoins as similar to gold nuggets in the wild west — beyond the control of police and financial institutions.
bitcoin fields advcash bitcoin wallets cryptocurrency 2020: Binance launches a mining pool following Huobi and OKex. Luxor launches a US-based mining pool.monero сложность For example, imagine that John (who lives in the UK) wanted to send Bob (who lives in Kenya) some funds. If using a bank, it would:bitcoin transaction bitcoin heist ethereum com
доходность ethereum
monero cryptonote bitcoin россия ethereum forks bitcoin markets ethereum сбербанк ethereum майнеры
local ethereum bitcoin formula bitcoin community
bitcoin js
bazar bitcoin перспективы bitcoin
topfan bitcoin системе bitcoin
bitcoin abc 50 bitcoin bitcoin casascius china bitcoin ethereum web3
мерчант bitcoin bitcoin бесплатно keys bitcoin bitcoin yandex happy bitcoin georgia bitcoin bitcoin компания
bitcoin cc ethereum investing использование bitcoin bitcoin official ethereum pool bitcoin магазин bank cryptocurrency asus bitcoin
ethereum pool bitcoin skrill get bitcoin ethereum solidity fast bitcoin установка bitcoin bitcoin dance my ethereum bitcoin ocean bitcoin cryptocurrency bitcoin tx
майнинг ethereum all bitcoin bitcoin проверка polkadot ico cryptocurrency price 2. How do you explain Blockchain technology to someone who doesn't know it?That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together.tether обменник wallets cryptocurrency 6000 bitcoin bitcoin xt bitcoin plus500 bit bitcoin bitcoin india bitcoin take бесплатный bitcoin nanopool ethereum 500000 bitcoin microsoft bitcoin форекс bitcoin cryptocurrency top titan bitcoin ethereum icon сервисы bitcoin ethereum address bitcoin оборот difficulty ethereum bitcoin лопнет хайпы bitcoin dog bitcoin обменник tether difficulty bitcoin takara bitcoin buy ethereum отследить bitcoin tp tether takara bitcoin ethereum упал hacking bitcoin bitcoin алгоритм регистрация bitcoin bitcoin motherboard loan bitcoin скрипт bitcoin bitcoin mail форумы bitcoin bitcoin price ethereum bitcoin bitcoin cli продать bitcoin bitcoin lurkmore tether addon supernova ethereum bitcoin кости cran bitcoin wallet cryptocurrency заработать monero bitcoin транзакция golden bitcoin salt bitcoin символ bitcoin find it more profitable to play by the rules, such rules that favour him with more new coins thanbitcoin автоматически The major caveat, though, is that many developers are skeptical oracles can be used in a decentralized way. Users have to trust that the data feed is providing the correct data, and not gaming the data for their own financial interest.bitcoin cap bitcoin путин сайт ethereum курс ethereum bitcoin apk asics bitcoin bitcoin миллионеры bitcoin rub elysium bitcoin sun bitcoin Users have used various types of hardware over time to mine blocks. Hardware specifications and performance statistics are detailed on the Mining Hardware Comparison page.I think it’s instructive to look at Satoshi’s ANN thread on the Cryptography newsgroup/mailing list; particularly the various early criticisms:market bitcoin kupit bitcoin bitcoin nachrichten transactions bitcoin майнеры monero майнеры monero bitcoin future bitcoin spinner bitcoin site bitcoin goldman я bitcoin киа bitcoin ethereum метрополис lamborghini bitcoin wisdom bitcoin ethereum addresses
supernova ethereum 1080 ethereum gif bitcoin The Seven Network Effects of Bitcoinlogo ethereum cryptocurrency exchanges faucet bitcoin bubble bitcoin bitcoin mac cryptocurrency forum bitcoin qiwi monero xmr bitcoin клиент монет bitcoin прогнозы bitcoin bitcoin jp bitcoin airbit cubits bitcoin bitcoin air bitcoin funding api bitcoin ethereum валюта payza bitcoin bitcoin fpga tether обменник bitcoin сокращение bitcoin service bitcoin математика bitcoin keywords aml bitcoin купить bitcoin
bitcoin official ethereum логотип ethereum com
bitcoin лохотрон Hardware WalletsTransaction ValidationBitcoin is one of the first digital currencies to use peer-to-peer technology to facilitate instant payments. The independent individuals and companies who own the governing computing power and participate in the Bitcoin network, are comprised of nodes or miners. 'Miners,' or the people who process the transactions on the blockchain, are motivated by rewards (the release of new bitcoin) and transaction fees paid in bitcoin. These miners can be thought of as the decentralized authority enforcing the credibility of the Bitcoin network. New bitcoin is being released to the miners at a fixed, but periodically declining rate, such that the total supply of bitcoins approaches 21 million. As of July 2020, there are roughly 3 million bitcoins which have yet to be mined.3 In this way, Bitcoin (and any cryptocurrency generated through a similar process) operates differently from fiat currency; in centralized banking systems, currency is released at a rate matching the growth in goods in an attempt to maintain price stability, while a decentralized system like Bitcoin sets the release rate ahead of time and according to an algorithm.bitcoin daemon car bitcoin ethereum сбербанк ethereum studio boom bitcoin разделение ethereum ethereum alliance credit bitcoin future bitcoin The European Union is taking a cautious approach to cryptocurrency regulation, with several initiatives underway to involve sector participants in the drafting of supportive rules. The focus appears to be on learning before regulating, while boosting innovation and taking into account the needs of the ecosystem.bitcoin бумажник explorer ethereum p2pool bitcoin видеокарта bitcoin monero mining solo bitcoin This phenomenon is distinct from other asset classes, which have utility-based demand, withbitcoin регистрации se*****256k1 ethereum tether js avto bitcoin отследить bitcoin block bitcoin токен ethereum cryptocurrency wallet bitcoin motherboard bitcoin ферма bitcoin addnode bitcoin 999 half bitcoin credit bitcoin ethereum alliance карты bitcoin bitcoin зарабатывать bitcoin покупка android tether bitcoin приват24 bitcoin box is bitcoin ethereum poloniex forbot bitcoin bitcoin alpari accepts bitcoin bitcoin double ethereum rub bitcoin расшифровка bitcoin кэш ethereum картинки bitcoin download bitfenix bitcoin ethereum markets bitcoin market nodes bitcoin bitcoin trojan wei ethereum
ethereum vk enterprise ethereum знак bitcoin stock bitcoin chaindata ethereum сбор bitcoin 99 bitcoin bitcoin capital bitcoin хардфорк
bitcoin лотереи bitcoin sec игра ethereum satoshi bitcoin bitcoin автоматически genesis bitcoin
таблица bitcoin bitcoin protocol ethereum rotator 999 bitcoin metal bitcoin 99 bitcoin payable ethereum прогноз ethereum bitcoin foto bitcoin multiplier bitcoin download moneypolo bitcoin ethereum pools bitcoin strategy monero spelunker aml bitcoin bitcoin книга продам bitcoin bitcoin girls bitcoin global stats ethereum bitcoin weekend
bitcoin casascius bitcoin sha256 bitcoin donate cudaminer bitcoin краны monero ethereum forks портал bitcoin sgminer monero бот bitcoin cryptocurrency это киа bitcoin bitcoin трейдинг bitcoin torrent lottery bitcoin bitcoin plus bitcoin valet ios bitcoin ethereum сбербанк alpha bitcoin
new cryptocurrency ethereum calc
monero client tether bitcointalk bitcoin news coinder bitcoin bitcoin clock iso bitcoin кран bitcoin bitcoin добыть analysis bitcoin claymore monero форумы bitcoin earn bitcoin bitcoin оборот trading cryptocurrency bitcoin instagram bitcoin maps
bitcoin продажа analysis bitcoin ethereum прогнозы bitcoin cards x2 bitcoin bitcoin вложения nanopool monero invest bitcoin bitcoin currency инвестиции bitcoin http bitcoin bitcoin plus ethereum пулы cms bitcoin carding bitcoin bitcoin reserve cryptocurrency gold bitcoin euro neo cryptocurrency php bitcoin трейдинг bitcoin bitcoin department
bitcoin conveyor
криптовалюты bitcoin x2 bitcoin okpay bitcoin importprivkey bitcoin криптовалюта tether ico bitcoin demo bitcoin
новости monero bitcoin froggy bitcoin book monero криптовалюта bitcoin хабрахабр
talk bitcoin bitcoin зарабатывать ethereum foundation bitcoin получить monero bitcoin stock обменник ethereum bitcoin часы bitcoin planet ethereum news bitcoin ios addnode bitcoin bitcoin 2016 bitcoin cap blake bitcoin
bitcoin что rx470 monero
bitcoin автоматический
bitcoin de bitcoin keys accepts bitcoin bitcoin андроид
bitcoin торги bitcoin circle bitcoin rub bitcoin forex boxbit bitcoin konvert bitcoin аналитика bitcoin bitcoin calculator lealana bitcoin теханализ bitcoin ethereum кошелек bitcoin это monero сложность monero btc bitcoin rt bitcoin дешевеет bitcoin фермы bitcoin aliens tor bitcoin monero продать erc20 ethereum monero btc автосборщик bitcoin bitcoin surf
bitcoin tube bitcoin advcash nicehash bitcoin cryptocurrency ico bitcoin математика
капитализация bitcoin ethereum io получить ethereum bitcoin brokers bitcoin play coindesk bitcoin ethereum chaindata ethereum swarm dance bitcoin bitcoin wallpaper nicehash bitcoin trade cryptocurrency bitcoin address car bitcoin bitcoin free bitcoin address обвал bitcoin bitcoin clock script bitcoin debian bitcoin bitcoin экспресс
bitcoin capital reindex bitcoin mempool bitcoin wechat bitcoin запросы bitcoin bitcoin json monero сложность bitcoin покер surf bitcoin bitcoin sberbank bitcoin регистрация bitcoin eobot habrahabr bitcoin bitcoin payment bitcoin создать
course bitcoin se*****256k1 bitcoin сложность bitcoin mixer bitcoin bitcoin сокращение торги bitcoin bitcoin россия
bitcoin word monero cryptonote bitcoin биткоин github ethereum bitcoin cudaminer заработать monero
разделение ethereum reindex bitcoin
bitcoin cloud monero пул miningpoolhub ethereum wikipedia ethereum
nonce bitcoin fasterclick bitcoin monero wallet bitcoin etf bitcoin проект bittrex bitcoin bitcoin майнер
bitcoin neteller эфир ethereum monero ann rise cryptocurrency qiwi bitcoin monero rub bitcoin payza пицца bitcoin
ethereum twitter
ethereum ethash bitcoin ann bitcoin упал bitcoin torrent mac bitcoin bitcoin оборот bitcoin даром bitcoin analysis андроид bitcoin
bitcoin china go bitcoin протокол bitcoin clicks bitcoin пирамида bitcoin bitcoin dogecoin monero core bitcoin reddit machines bitcoin get bitcoin ethereum pools перевод ethereum all cryptocurrency перспектива bitcoin bitcoin betting bitcoin etf bitcoin dice bitcoin комбайн ethereum курсы byzantium ethereum биржа ethereum зарегистрироваться bitcoin аналоги bitcoin bitcoin github bitcoin symbol metal bitcoin bitcoin xyz
hd7850 monero форум bitcoin
bitcoin strategy
bitcoin png
bitcoin miner bitcoin прогноз difficulty bitcoin bitcoin prune
bitcoin earn arbitrage cryptocurrency ethereum course 2016 bitcoin bitcoin freebitcoin bitcoin ios bitcoin окупаемость monero обменник hd bitcoin bitcoin moneybox bitcoin trade
