All about BITCOIN

What is BITCOIN and who created it?

In simple words Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. It is a simple peer to peer network with no middlemen, in layman’s term it is cash on internet.

Bitcoin software is available online and is open source so any programmer can make addition and can edit the code. No one owns Bitcoin; users of Bitcoin constantly keep on giving it better shape by coding it, reshaping it.

How does BITCOIN work, do people use it?

From a simple user’s look, it is not more than an app or a program that provides the user a personal wallet with BITCOINS to send and receive to.

At backend it is guarded by cryptographic algorithms and let’s say a public ledger called the “Block Chain”, this ledger contains any transaction ever made, and verifies the validity of each transaction, users have full control over it.

There is a growing number of businesses and individuals using Bitcoin. This includes real estates and service based industries like restaurants, apartments, law firms, and popular online services such as Namecheap, WordPress, Reddit and Flattr. While Bitcoin remains a relatively new phenomenon, it is growing fast.

Is Bitcoin completely virtual?

Bitcoin is as virtual as the credit cards and online banking networks people use every day. Bitcoin can be used to pay online and in physical stores just like any other form of money. Bitcoins can also be exchanged in physical form coins, but paying with a mobile phone usually remains more convenient. Bitcoin balances are stored in a large distributed network, and they cannot be fraudulently altered by anybody.

How is BITCOIN’s price determined?

The price of a bitcoin is determined by supply and demand. When demand for bitcoins increases, the price increases, and when demand falls, the price falls. There is only a limited number of bitcoins in circulation and new bitcoins are created at a predictable and decreasing rate, which means that demand must follow this level of inflation to keep the price stable. Because Bitcoin is still a relatively small market compared to what it could be, it doesn't take significant amounts of money to move the market price up or down, and thus the price of a bitcoin is still very volatile.

Bitcoin is unique in that only 21 million bitcoins will ever be created. However, this will never be a limitation because transactions can be denominated in smaller sub-units of a bitcoin, such as bits - there are 1,000,000 bits in 1 bitcoin. Bitcoins can be divided up to 8 decimal places (0.000 000 01) and potentially even smaller units if that is ever required in the future as the average transaction size decreases.