BITCOIN is a digital currency and is based upon an open-source, peer to peer internet protocol. Bitcoin was introduced back in 2009 by Satoshi Nakomoto (pseudonym) and can be subdivided into 100 million smaller units called satoshis which is defined by 8 decimal points. The smallest denomination possible is 0.000 000 01 BTC which is called a “satoshi” (pronounced sa-toh-shee).
- 1.0 = 1 BTC
- 0.1 = 1/10 BTC
- 0.01 = 1/100 BTC (referred to as a bitcent)
- 0.001 = 1/1000 BTC
- all the way to 0.00000001 = 1 satoshi
Bitcoins can be easily exchanged via a computer or smartphone without the interaction of a financial institution. Originally there was no physical coins, only digital coins that were designed to be used as a currency via the internet. In recent years, physical BITCOINs have been introduced to the public. These physical coins or Casascius as they are called come with a private key that can be loaded into the owners electronic Bitcoin wallet for use. Bitcoins have become wildly popular and even though there are several online merchants who accept Bitcoin, most of the popularity derives from the online exchanges that allow you to buy and sell Bitcoins with USD and other international currencies. The trading symbol for Bitcoin is BTC on these online exchanges. List of the most popular Bitcoin online exchanges where you can trade (BTC):
Bitcoins are not controlled like traditional currencies. There is no central bank or organization to oversee the currency. There is not physical metal to backup the value of the currency like Gold or Silver. Bitcoin relies on a peer to peer internet based network of computers or servers called miners. These Bitcoin miners are connected to the internet and they confirm BTC transactions and add them to a decentralized and archived transaction log approximately every 10 minutes. The transaction log is authenticated by end users via a hashed ECDSA digital signature through dedicated servers called Bitcoin Miners. Anyone with a little bit of technical know how can setup a alternative (BTC) miner. A Bitcoin miner is simply a PC that is running the mining software. The miners are rewarded with transaction fees and with new Bitcoins that are generated (25) each day. However, Bitcoin mining is very competitive and the odds of actually solving a block of transaction data is getting higher and higher as the price and popularity of BTC soars. Every 10 minutes or so a block of the transaction log assigns a portion of the Bitcoins to the miners as payment for their services. 25 new Bitcoins are generated this way (payment to miners) every 10 minute block. This number (25) will be cut in half (12.5) during the year 2017 and halved again every 4 years until a hard limit of 21 million Bitcoins are in circulation which should be reached by the year 2140.
Bitcoin is the most popular used alternative currency in the world and is accepted by many merchants internationally. Bitcoins are sent and received through applications called wallets of all things. Wallets are simply software applications that can be local, installed on a PC or smartphone or they can be web based. Wallets are based on digital signatures and address’ or public keys. These public keys are human readable and contain 33 (letters and numbers) characters in length. An example of a Bitcoin Wallet key would be; 18pFdxWnLaXK66AgW5Rgz6wGP44NqM2juK. To send Bitcoins from one wallet to another the receiver would provide the sender with the 33 character public key provided by their wallet. The sender would simply SEND via their wallet software x amount of Bitcoins to the public key provided by the receiver. This transaction would be added to the Bitcoin transaction log and once 6 different miners solve the hash, the bitcoin would be confirmed and transferred to the receivers wallet.