Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part.
Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
Bitcoin’s existence began with an academic paper written in 2008 by a developer under the name of Satoshi Nakamoto.
The paper described the foundation for what was intended to be a peer-to-peer electronic cash system that was secure, affordable, and efficient far beyond conventional banking standards. The system Satoshi described was developed into open-source software and the First bitcoin transaction (also known as the Genesis Block) was confirmed on January 3, 2009.
Bitcoin can often refer to two things.
First, the Bitcoin network that keeps track of our transactions and balances, and second, the currency that we use as the unit of value when we transact.
Bitcoin's payment network (also called the bitcoin blockchain) is what makes it possible for us to transact with one another.
The network uses distributed consensus to verify and confirm transactions, and consensus is reached via a large global network of high-performance computers (called miners) running the bitcoin software.
Whenever someone sends a transaction it is broadcast instantly to the network and verified by the miners.
Miners are constantly working to confirm individual transactions and include them in the next block of transactions in the chain.
Once a new block is verified, all the transactions within it are permanently recorded on the blockchain.
Rewards are paid out in bitcoin to miners who confirm transactions and verify the next block as a way to incentivize productivity on the network.
Each party who participates in the mining process has an identical up-to-date copy of the blockchain or public ledger, which is a record of all the transactions in bitcoin history. Each party's copy of the ledger is updated every time a new block is found.
The unit of value that we send and receive on the Bitcoin network is also referred to as bitcoin, or bitcoins.
Bitcoin is completely digital, meaning we can't physically hold it in our hand.
It's also portable, divisible, fungible, and irreversible.