Bitcoin (BTC) is a new type of digital currency with the encryption keys that is decentralized to a network of computers used by users and minors around the world and are not controlled by a single organization or government. It is the first digital that has encrypting public attention and is accepted by a growing number of merchants. Like other currencies, users can use the digital currency to buy online goods and services, as well as in some physical stores that accept it as a form of payment. Cambists can also exchange bitcoins in Bitcoin exchanges.
There are several important differences between Bitcoin and traditional currencies (eg US Dollar):
Bitcoin does not have a central authority or compensation (for example, the government, the Central Bank, MasterCard or Network Visa). The peer-to-peer payment network is managed by users and minors around the world. The currency is anonymous transferred directly between users via the Internet without going through a clearing house. This means that the transaction fees are much lower.
Bitcoin is created by a process called “Bitcoin mining“. Minors around global use exploration software and computers to resolve complex Bitcoin algorithms and approve Bitcoin transactions. They are awarded with transaction fees and new bitcoins generated by the resolution of Bitcoin algorithms.
There is a limited amount of circulation bits. According to Blockchain, there were about 12.1 million outstanding dated December 20, 2013. The difficulty in mine Bitcoins (solving algorithms) becomes more difficult than more bitcoins are generated, and the maximum quantity in circulation is capped at 21 millions. The limit will not be reached up to around the year 2140. This makes it more valuable than more people use them.
A large public book called “Blockchain” records all Bitcoin transactions and shows respective participations of each Bitcoin owner. Everyone can access the public’s big book to check the transactions. This makes the digital currency more transparent and predictable. More importantly, transparency prevents fraud and doubling the expenses of the same bitcoins.
The digital currency can be acquired by exchange or mining Bitcoin Bitcoin.
The digital currency is accepted by a limited number of merchants on the web and in some brick and mortar retailers.
Bitcoin Portfolios (similar to PayPal Accounts) are used for Bitcoins storage, private keys and public addresses, as well as for the Bitcoins anonymous transfer between users.
Bitcoins are not insured and are not protected by government agencies. Therefore, they can not be recovered if the secret keys are stolen by a hacker or lost to a defective hard drive, or because of the closure of a bitcoin exchange. If the secret keys are lost, can not be recovered associated bitcoins and would be out of traffic. Visit this link for a Bitcoins FAQ.
I think Bitcoin will earn greater public acceptance because users can remain anonymous while buying online expense goods and services, transactions are much lower than credit card payment networks; The public book of the public is accessible by all, which can be used to prevent fraud; The currency procurement is capped at $ 21 million, and the payment network is operated by users and minors instead of a central authority.