What is a Bitcoin?
Bitcoin is a form of digital money. This means that it has no physical form and only exists in the digital world. It is not printed or minted like traditional money because it is a decentralized form of currency that doesn’t need a physical entity to keep track of its transactions.
What makes Bitcoin work?
Bitcoin is based on the idea that it doesn’t need governments or banks to control the creation and transfer of money. Instead, it uses cryptography to do this. Bitcoin works like this: you need a wallet, which acts as your public address (like an email address), and from there you can “send” money to other people’s wallets based on their address, which is like a postcode. They can then spend that money by giving people permission to spend it by sending them back another piece of code (a private key).
The main things that make Bitcoin better than regular money are:
1. Bitcoin is decentralized, which means you don’t have to put your money in the hands of a bank or other third party. Instead, it is kept in a public ledger called the blockchain, which anyone can access from their computer.
2. Bitcoin transactions are anonymous and can’t be undone. Unlike credit cards or PayPal, there is no way for a central authority like a bank to reverse or freeze a bitcoin transaction because bitcoins aren’t stored in an account with a specific institution like PayPal or Venmo. They are kept in a public record book that anyone with an internet connection can look at.
3. Transactions with Bitcoin are quick and cheap (or free). If a merchant accepts bitcoin payments through BitPay or oinbase">Coinbase, they’ve already paid the cost of processing fees and aren’t charging anything extra on top of what they sell their goods for. This is similar to how using cash at a store instead of credit card payment services like Visa or Mastercard doesn’t add any extra charges to the price of items sold by merchants who accept cash.