Bitcoin created in 2009 by an anonymous person or group of people under the name Satoshi Nakamoto. It’s a decentralized peer-to-peer network that works on a public ledger called blockchain. Blockchain is the network that all the data include balances and transactions store in.
It’s is a digital currency; it means it can’t be printed like traditional fiat currencies (dollars or euros) and distributed only electronically. The total amount is limited to 21 million coins.
One of the features that attracted a lot of people to it is decentralization. It means that no person, government or institution control it. Although it became popular because of anonymous transactions that could happen on its network, Bitcoin network is transparent. Anybody can have access to its network and check the balances and transactions. In this article we will talk more about its features.
How does Bitcoin work?
Bitcoin is a combination of cryptography and blockchain technology. The blockchain network contains all the transactions ever processed. Users get connected to the blockchain using Bitcoin wallet and be able to see the amount of coins they have in their wallet and the record of transactions.
when a transaction spread through the network it generates a string of numbers and letters called “hash”. The network users who called “nodes” process the data and confirm transactions by using powerful computers. When the transaction got verified it compiles to a block with other transactions. Every hash of a block depended to the previous block and the combination of blocks create the blockchain.
If any changes happen to the data, it affects all of the following blocks. It means that the transactions are irreversible and cannot be changed.
It may take a few minutes for a Bitcoin transaction to be completed due to verification process. In fact, It takes around 10 minutes for each block to get mined.
The network do not control by any person, government or institution. In fact, decentralization was the main objective to create Bitcoin. As a result, even if some part of the network goes down, the network will keep working.
Unlike bank accounts you do not need to provide any personal information in order to have a Bitcoin wallet. everyone who is interested can have an account and start to buy, sell or transfer coins. Although this feature attracted a lot of people to the Bitcoin, some believe that it could be use for illicit activities.
The blockchain is transparent. Every transaction that ever happened stored in the blockchain and can be tracked by studying the blockchain ledger. But, still it’s not possible to trace a particular Bitcoin address to a person. However, there are wallets that provide more security, still the simplest way is to not transfer massive amount of money to a single address.
Unlike normal bank transfer that usually takes several days, Bitcoin transactions happen instantly. In fact, it takes a few minutes to receive the money sent by Bitcoin worldwide.
Bitcoin transactions are irreversible. Once a transaction is done, there is no way of cancel it or return the money back. This feature makes it secure against scam attacks, because nobody can claim that they never got the money.