Bitcoin is a digital currency or cryptocurrency that can be used to exchange goods and services like any other currency in places where it is accepted. Bitcoin (BTC) is a free and decentralized electronic currency that allows direct transaction without any intermediary. Bitcoin was created by Satoshi Nakamoto in 2009, along with the software that supports it. Bitcoins are created through a process known as Bitcoin mining.
Before you Buy Bitcoin in Perth, it would be ideal if you know the basic functions of Bitcoin. Although Bitcoin does not exist in a physical way, it has the same functions as other money. But unlike a bill or a non-virtual currency, Bitcoins do not have a serial number or other type of mechanism to be able to trace to buyers and sellers using this virtual currency. This makes it attractive to those who want or need privacy in their transactions. Unlike any other currency, Bitcoin is not fiat money. It is not backed by the confidence of a central bank, by a government or by a material. Instead, they do use a proof-of-work system to avoid double spending and reach a consensus among all nodes operating on the network.
The block chain and innovation
The block chain is a fundamental piece for the functioning of Bitcoin. Being a public registry, there can be millions of copies and the registries of all the computers that keep a copy would have to be changed, which is practically unfeasible since it is an open and public database. Besides, Bitcoin transaction is an open source for its operation and doesn’t need any intermediary to perform the transactions. Therefore, it promises to have lower transaction costs.
Characteristics of Bitcoin
To avoid the problems derived from a currency that is not backed by an entity or a third party, but by a working system, the BTC has several fundamental principles –
- The number of units can never exceed 21 million Bitcoins. Therefore the money supply is limited.
- No one can ban or censor transactions that have been validated.
- The source code used must always be accessible to everyone.
- Everyone can make transactions in Bitcoins without the need for a permit.
- The real identity of its owner is not reflected and it is not necessary to identify yourself to participate in the Bitcoin network.
- It is expendable. It allows the possibility of generating a reputation and trust among the different users.
- All units are interchangeable.
- Transactions that have been confirmed cannot be modified or deleted.
How are Bitcoins created?
Bitcoin t is created and distributed by peer networks, commonly known as P2P (peer to peer). These networks allow the direct exchange of information without the need for fixed servers. The process of generating BTC is through cryptocurrency mining. It consists of solving highly difficult mathematical problems thanks to computer processors.