Bitcoin is a virtual currency that allows you to send money across the world quickly and without any extra charges. It is also irreversible, which makes it difficult for scammers to reverse payments after they have been confirmed.
It was created in 2008 after the financial crisis by an unknown person or group using the pseudonym Satoshi Nakamoto. Its creator intended it to be a form of money that could be sent directly between people over the internet, bypassing banks and other middlemen.
Bitcoin Basics: How Does the Cryptocurrency Work?
To make that possible, Bitcoin uses cryptography and a computer algorithm to verify and record transactions on a ledger called the blockchain. The system is decentralized, so no single entity controls it; instead, the blockchain is maintained by a global network of computers that process transactions and confirm their accuracy. Every transaction is recorded on the blockchain, and that record is visible to all of its users.
You can buy Bitcoins in exchange for traditional money or other cryptocurrencies, receive them as payment for goods and services, or earn them by dedicating your computer to solving complex math problems, known as mining. When you acquire Bitcoins, they are stored in a digital wallet, which you keep on your computer or mobile device. You share your wallet’s public address with others so they can send you Bitcoins. Your private key, a string of randomized letters and numbers, identifies your Bitcoin wallet. Unlike bank accounts, Bitcoin addresses are not linked to your real-world identity, so you can use them for anonymous purchases and donations.
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