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What is Bitcoin?

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asked Jan 1, 2016 in Investing by JLettermanMB (43,340 points)
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2 Answers

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Bitcoin is a type of currency that operates independently of a central bank.

 

 

It's format is digital. There are no coins or bills available for it. It is encrypted with a technique that allows a regulation on generation of units and its transfer.

 

In simpler terms, it is encoded in a way that it can not be copied. Each unit of Bitcoin currency in unique and there is a fixed amount in circulation.

 

Imagine a digital picture or photo in your computer. Yo can not copy it, so to pass it on to someone else you need to send it. But that also means that once you sent it, it no longer is in your possession. This makes the image perfectly unique and therefore can be used as currency.

 

In the same principle a Bitcoin unit can be in your digital possession on your phone or computer, in an app called a 'Wallet'. You can transfer said unit or units from your digital wallet to someone else's digital wallet, the same way you would transfer a real-life bill from your real-life wallet to someone else's real-life wallet in a business transaction -- except everything is digital.

 

This is similar to transferring digital funds in dollars or euros, except the monetary unit does not have a real-life equivalent -- there are no Bitcoin coins or bills.

 

In even simpler terms, it is yet another type of money, alike dollars, euros, yens, pounds, etc

 

Store accepting Bitcoins

answered Jan 2, 2016 by AlecCorday (5,810 points)
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Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems. [1]

 

It’s the first example of a growing category of money known as cryptocurrency.

 

 

Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally.

 

However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.[2]

 

 

Sources:

[1] https://www.bitcoin.com/you-need-to-know

[2] http://www.coindesk.com/information/what-is-bitcoin/

answered Jan 11, 2016 by benbailey (5,400 points)

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