{"id":15399,"date":"2021-12-20T06:29:32","date_gmt":"2021-12-20T06:29:32","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?post_type=finance-dictionary&p=15399"},"modified":"2024-10-21T16:55:19","modified_gmt":"2024-10-21T11:25:19","slug":"what-is-bitcoin","status":"publish","type":"finance-dictionary","link":"https:\/\/www.5paisa.com\/finschool\/finance-dictionary\/what-is-bitcoin\/","title":{"rendered":"Bitcoin"},"content":{"rendered":"\t\t
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Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank. Bitcoin\u2019s creator, Satoshi Nakamoto, originally described the need for \u201can electronic payment system based on cryptographic proof instead of trust.\u201d<\/p>

Each and every Bitcoin transaction that\u2019s ever been made exists on a public ledger accessible to everyone, making transactions hard to reverse and difficult to fake. That\u2019s by design: Core to their decentralized nature, Bitcoins isn\u2019t backed by the government or any issuing institution, and there\u2019s nothing to guarantee their value besides the proof baked in the heart of the system.<\/p>

Bitcoin is built on a distributed digital record called a block chain. As the name implies, block chain is a linked body of data, made up of units called blocks that contain information about each and every transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange. Entries are strung together in chronological order, creating a digital chain of blocks.<\/p>

How does bitcoin work?<\/strong><\/h2>

\u201cOnce a block is added to the block chain, it becomes accessible to anyone who wishes to view it, acting as a public ledger of crypto currency transactions,\u201d says Stacey Harris, consultant for Pelicoin, a network of crypto currency ATMs.<\/p>

Block chain is decentralized, which means it\u2019s not controlled by any one organization. \u201cIt\u2019s like a Google Doc that anyone can work on,\u201d says Buchi Okoro, CEO and co-founder of African crypto currency exchange Quidax. \u201cNobody owns it, but anyone who has a link can contribute to it. And as different people update it, your copy also gets updated.\u201d<\/p>

While the idea that anyone can edit the block chain might sound risky, it\u2019s actually what makes Bitcoin trustworthy and secure. In order for a transaction block to be added to the Bitcoin block chain, it must be verified by the majority of all Bitcoin holders, and the unique codes used to recognize users\u2019 wallets and transactions must conform to the right encryption pattern.<\/p>

These codes are long, random numbers, making them incredibly difficult to fraudulently produce. In fact, a fraudster guessing the key code to your Bitcoin wallet has roughly the same odds as someone winning a Powerball lottery nine times in a row, according to Bryan Lotti of Crypto Aquarium. This level of statistical randomness block chain verification codes, which are needed for every transaction, greatly reduces the risk anyone can make fraudulent Bitcoin transactions.<\/p>

Alternatives to Bitcoin<\/strong><\/h2>

Because of the growing popularity of BTC, several new crypto currencies have been created to attempt to penetrate the market. BTC\u2019s strongest competitor is Ethereum, followed by other crypto currencies known as alternative coins, or Altcoins.<\/p>

Where to Buy Bitcoin?<\/strong><\/h2>