Bitcoin is one of the recent buzzwords used in the world of electronic transactions. It is a form of investment which has taken the world by storm since it was introduced. Bitcoins are seen as a type of asset but in digital form. This means that it can be used like any currency involved in trading and commerce.
The origins of the bitcoin remains a mystery to present day. The person accredited for the creation of bitcoin is Satoshi Makamoto. However, that remains as a pseudonym because there is no actual person with this name. In fact, it has been reported that Satoshi Nakamoto could be one or a group of unidentified programmers.
The year was 2008 when the Bitcoin was introduced. It was then released to a cryptography mailing list before becoming an open-source software a year later. There is no central repository as to where the Bitcoin is stored. As such, it uses a concept of Blockchain as its mean of recording through ledger distributed publicly.
The Bitcoin has gained a lot of traction since it was released. It is considered as the largest currency based on its market value and in some cases referred to as the first digital currency which is decentralized.
To understand how Bitcoin works, there is a difference between Bitcoin and bitcoin. The former refers to the software that it runs on and the latter is the actual money value of this cryptocurrency. Because it is a form of money (digital), it can be used as a medium for trade exchanged.
The main difference between Bitcoin and other currencies is that it is not backed by any agency or government.
The Bitcoin can be regarded as a type of currency like US Dollars or Japanese Yen. It is derived from an exercise called Bitcoin mining. This occurs when the Bitcoin software is activated and run. This will then create new entries into the public records of Bitcoins otherwise known as Blockchains. Blockhains are used to ensure that the Bitcoin is accurate and minimizes fraud
To date, it has been recorded that there slightly more than 12 million bitcoins existing in the world. Blockchains will create new bitcoins but there is a limit to how many it can be.
The bitcoin exchange rate is very flexible and volatile, much like other currencies in the world. At one point, 1 bitcoin is about 700US dollars and this changes overtime. This means that investing into bitcoins can be very risky as its value is known to change very quickly and drastically.
Bitcoins can be used to buy anything from sellers who accept them. Overstock.com is one of the retailers that accept Bitcoins. It must be noted however that this can be quite risky as many are using it for money laundering. One thing for sure, it is not a physical form of money that can be used for purchases. Basically, it moves from one virtual account to another.