Bitcoin is a whole new definition money that can be sent to each other without the need for a trusted third party which can be a bank or other financial institution. It trully is the first global, decentralized currency, cryptocurrency.
Bitcoin - the technology
Bitcoin was originally created in 2009 by Satoshi Nakamoto as a piece of software and released with a paper describing how it works. Bitcoin is a fundamental software, which means that anybody can run it on their PC, and therefore participate in a new global economy.
One of the most important elements of Bitcoin is the blockchain, which tracks who owns what and every transaction within itself, similar to how a bank tracks assets. What sets the Bitcoin blockchain apart from a bank's ledger is that it is distributed, meaning anyone can view it. Since Bitcoin is open, no company, country, or third party is in control of it, and anyone can participate.
Bitcoin - the currency
One can use bitcoins to purchase goods on the internet and in stores, which is become more and more whidespread with every day. The following are some unique properties of Bitcoin:
- Globalization: Bitcoins can be sent to someone across the world as easily as one can pass cash across the counter. Bitcoin isn't closed on weekends and doesn't impose any arbitrary limits.
- Irreversibility: Bitcoin is like cash in that transactions cannot be reversed by the sender. In comparison, credit card, popular online payment systems, and banking transactions can be reversed after the payment has been made - sometimes months after the initial transaction.
- Privacy: When paying with bitcoins, there are no bank statements, and one need not provide unnecessary personal information to the merchant. Bitcoin transactions do not contain any identifying information other than the bitcoin addresses and amounts involved.
- Security: Due to the cryptographic nature of the Bitcoin network, Bitcoin payments are fundamentally more secure than standard debit/credit card transactions. When making a Bitcoin payment, no sensitive information is required to be sent over the internet. There is very low risk of your financial information being compromised, or having your identity stolen.
- Transperency: Every transaction on the Bitcoin network is published publicly, without exception. This means there's no room for manipulation of transactions, changing the money supply, or adjusting the rules mid-game. The software that constitutes the core of Bitcoin is free and open-source so anyone can review the code.