Bitcoin: Common Questions & Short Answers
What is Bitcoin?
Bitcoin is the first digital currency that exists only on the Internet. Bitcoin is used to pay for goods and services electronically throughout the world.
How Was It Created?
Bitcoin started in 2009 by an unknown person or people using the alias Satoshi Nakamoto. Satoshi Nakamoto’s goal was to create an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, with very low transaction fees.
What Makes Bitcoin Different From Traditional Currencies?
No one controls Bitcoin, no one prints it and no one can fake it today. Transactions are made with no banks or other intermediaries. As a consequence, Bitcoin is deflationary.
Who Produced Bitcoin?
Bitcoin is produced digitally, by running computers all around the world, using software that solves mathematical problems. Unlike normal currencies printed by a central bank, bitcoin is created by a community of people that anyone can join. The process of creating bitcoin is called mining, and people who do it are called miners.
Is It Possible to Generate an Unlimited Amount of Bitcoins?
No, it is not. The amount of bitcoins on the market is limited. The bitcoin protocol – the rules that make bitcoin work – say that only 21 million bitcoins can ever be created by miners. Such amount of coins is quite enough for daily calculations as 1 bitcoin is divided into 100 millions parts, called satoshi in honor of Bitcoin’s mysterious founder, Satoshi Nakamoto.
What is Necessary to Know About Using Bitcoin?
It is easy to set up a bitcoin address
There is no bureaucracy. Users do not need to ask questions and pay fees to set up a bitcoin address.
Bitcoin transaction is anonymous
Users do not need to provide personal data as names or postal address to make a transaction. However, history of all bitcoins is public.
The transferring of bitcoins is immediate
It may take a few seconds depending on the volume of transactions occurring at the time.
Bitcoin transactions are irreversible
From the moment you send bitcoins from your wallet to another, there is no option to cancel the transaction.
Bitcoin is international currency
Bitcoin is internationally accepted. Users can send bitcoins around the world, without the need for any foreign exchange transaction. However, bitcoin is not yet widely accepted and in some countries it’s even illegal.