Bitcoin is a virtual currency, more commonly referred to as a cryptocurrency that was created with the principal of removing intermediary control as enjoyed by banks, central banks, and governments. Bitcoin was created in order to compete or replace fiat currencies as an alternative instant payment mechanism.
Unlike fiat money, there are no physical Bitcoins, just balances of Bitcoins that are recorded on Bitcoin’s blockchain which is a decentralized, public ledger.
Bitcoin was invented in 2009, by Satoshi Nakamoto, whose true identity had yet to be released. Bitcoin.org was registered on 18th August 2008, shortly prior to the first Bitcoin block being mined on 3rd January 2009.
There is a finite number of Bitcoins, the total number being 21 million, a concept that does not exist in the world of fiat currencies, where governments and central banks are able to print more fiat money to sustain false economies that motivated the creation of Bitcoin.
Founder Satoshi Nakamoto is reported to own in excess of 4% of total Bitcoins that can ever hit circulation.
The creation of each individual Bitcoin comes from mining, which stems from a reward mechanism for miners verifying transactions on Bitcoin’s blockchain.
Bitcoin blockchain is a key driver behind Bitcoin. A decentralized ledger that is updated instantaneously across all users, with transaction times and fees depending upon the speed which miners are able to verify transactions. The Blockchain technology is unique as it has no centralized control or the ability to manipulate its content.
Some distinct differences and characteristics of Bitcoin include:
- There are no physical Bitcoins, only virtual.
- Unlike fiat currencies, where governments and central banks are able to print more money, there is a finite number of Bitcoins.
- The very nature of Bitcoin’s decentralized blockchain means that the payment system runs 24-hours a day, with no downtime and has no restrictions on where and to whom Bitcoin can be sent.
- Users of Bitcoin are anonymous