What is a bitcoin in simple language?

The frequency of references to Bitcoin in print and electronic sources is growing exponentially. Against this background, more and more people are directly or indirectly acquainted with this term. Bitcoin has long ceased to be the sphere of interests of “geeks”, and it is firmly entrenched in the lives of ordinary people. And sooner or later you’ll have to deal with Bitcoin directly. We offer you to prepare for this meeting, and learn the bitcoin closer look through this guide for beginners.

What is bitcoin and why is it needed

Bitcoin (abbreviated BTC) is an electronic payment system in which circulating virtual “money” (bitcoins). You have a plastic card VISA or Mastercard? And Visa and MasterCard is also an electronic payment system. However, they use a familiar to us currency – dollars, Euro, hryvnia, rubles, and all transactions are Bank processing. Such currencies are called Fiat. Bitcoin is used bitcoin is a purely digital currency, not linked to any world Bank or the economy of any country. It has its own value (exchange rate), emerging on the background of the demand.

The key features of Bitcoin:

The whole system is decentralized. This means that Bitcoin is not regulated by any Bank, the office or public entity. All network members are absolutely equal, regardless of nationality or other characteristics. For example, Visa and Mastercard have cards Gold, Platinum, Vip, systems like Webmoney or QIWI has user levels. There are restrictions on the size of the transaction. But in Bitcoin everyone is equal and there are no limits.

  • Pseudoanonymity. If the transfer to BTC members do not reveal their identity. For transaction uses the address (a hash of 27-34 characters) without disclosing other data recipient and the sender. Remember transfers between cards, and other electronic systems. Transactions often reveals the person’s name or company name.
  • The irreversibility. All transactions in Bitcoin are irreversible. They cannot be undone, to stop or to block. Theoretically possible complete rollback of the system (blockchain). In practice it is extremely difficult to implement.
  • Security. Hack Bitcoin wallet is impossible. All data is stored in a special file, access to which only you have. Impossible to carry out and intercept the data when transactions like this happen in the banking system. Bitcoin uses a cryptographic recording – encrypted data, guaranteeing privacy and security.
  • Direct operations. Bitcoin transfers are conducted directly between the parties – uses the principle of P2P (peer to peer). The transaction occurs without the participation of a third party, such as a Bank, processing centre, server. Therefore, the operation in Bitcoin can’t track no one except its participants.

The story of the creation of Bitcoin

The history of the cryptocurrency does not have a clear chronology. For decades experts in the field of cryptography, worked on the creation of a unique decentralized system, which is based on mathematical calculations. Using the experience of their predecessors and my own work, Satoshi Nakamoto and Hal Finney in 2008 created the world’s first cryptocurrency – Bitcoin. The main fame Nakamoto – he published a file with the bitcoin Protocol, and briefly described the features of the new payment system. It is named after the smallest fractional part of the coin – 0, 000 000 01 BTC. Why bitcoin was created? Partly the reasons for the developments in the field of cryptocurrency reveal their characteristics: anonymity, decentralization, security, accessibility. Ideally, the Bitcoin ecosystem needs to ensure a quick transaction without the participation of a third party (Bank, cash) with a high level of security.

Interesting point of view was expressed by well-known Russian businessman Sergei Mavrodi in 2013 year:

“All the hype around cryptocurrencies is their anonymity. People are tired of the fact that their every action is watching Big brother. It’s all tired. And bitcoin in this respect is a breath of fresh air.”

This quote answers the question sacema need bitcoins. Privacy of transactions is a major feature of cryptocurrencies.