What is Bitcoin?
The technology behind bitcoin came about in 2009, when software underpinning the currency was released. Its inventor, Satoshi Nakamoto, is believed to have created the bitcoin currency and posted the software for the world to use. The cryptocurrency is based on a decentralized computer network and distributed ledger known as the blockchain. These networks act as a central database for all bitcoin transactions, and networked computers verify each transaction and are rewarded with bitcoins.
Bitcoins are stored in digital wallets, which can either reside on the cloud or on the user’s computer. It functions much like a digital bank account, allowing users to send and receive bitcoins, pay for goods and services, and save them for future use. Bitcoin wallets are not insured by the FDIC, and hackers have been known to break into servers hosting digital wallets and steal client bitcoins. Additionally, digital wallets are vulnerable to hacking and viruses.
As with any digital currency, Bitcoin has the potential to grow over time. Several investors are buying Bitcoins for speculative purposes and betting on the currency maturing. As it becomes more widely used, it will gain greater trust and value, as the currency continues to grow in use. A major advantage of Bitcoin is its decentralization. Decentralized currencies are independent of governing authorities, regular banks, and third parties.
