What is Bitcoin and how does it work?
Key points
Bitcoin is the first cryptocurrency that was created. It was created in 2008 and launched in 2009 by the pseudonym Satoshi Nakamoto.
Bitcoin works with blockchain technology, which acts as a public ledger. All Bitcoin transactions are verified by a network of nodes distributed around the world.
What is Bitcoin?
Bitcoin is essentially digital money. It is the first cryptocurrency ever created, announced in 2008 (and launched in 2009). Bitcoin allows users to send and receive digital money called bitcoins (with a lowercase b, or BTC for short).
Unlike traditional fiat currencies issued by governments (such as the dollar or the euro), Bitcoin is decentralized, meaning it is not controlled by any institution, government, or entity. Transactions are conducted peer-to-peer, eliminating the need for banks or financial institutions to act as intermediaries.
What makes Bitcoin so attractive is its inherent resistance to censorship, the impossibility of spending funds twice, and the ability to conduct transactions anytime and anywhere.
How does Bitcoin work?
Bitcoin works with blockchain technology, a public ledger that records all transactions. This means that every Bitcoin transaction is transparent, verifiable, and secure.
Imagine the blockchain as a chain of blocks, where each block contains information about transactions. Every time someone uses Bitcoin, their transaction is added to the blockchain, and this record is stored on a global network of computers (called nodes).
This distributed network ensures that no party can manipulate the data. Anyone can participate in the ecosystem by downloading the open-source Bitcoin software.
