What is Bitcoin?

What is bitcoin

Bitcoin is a payment system in the form of digital money. When you opt to play at Bitcoin casinos you want to know exactly what is bitcoin, how it came into existence, how it works, is it safe or not and many such related questions.  Here you can find answers to almost all of your doubts and your queries you have in mind about Bitcoin.

It is childish to ask you have seen a dollar or euro or any paper or coin currency. But to make things simpler for you to understand about Bitcoin just remember Bitcoin is not printed like your dollars or Euros or any of the world’s currencies. It is but a form of digital currency created and held electronically. No one controls it and they’re produced by people, increasingly businesses, running computers all around the world, using software that solves mathematical problems.

Bitcoin- The technology of cryptocurrency

According to Wikipedia Bitcoin is a crypto currency and a payment system invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto.  Bitcoin was introduced on 31 October 2008 to a cryptography mailing list, and released as open-source software in 2009.  There have been various claims and speculation concerning the identity of Nakamoto, none of which are confirmed. The system is peer-to-peer and transactions take place between users directly, without an intermediary.

These transactions are verified by network nodes and recorded in a public distributed ledger called the block chain, which uses bitcoin as its unit of account. Since the system works without a central repository or single administrator, the U.S. Treasury categorizes bitcoin as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency, although prior systems existed and it is more correctly described as the first decentralized digital currency. Bitcoin is the largest of its kind in terms of total market value.

Bitcoin Miners

Bitcoins are created as a reward in a competition in which users offer their computing power to verify and record bitcoin transactions into the blockchain. This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created bitcoins.  Besides being obtained by mining, bitcoins can be exchanged for other currencies,  products, and services. When sending bitcoins, users can pay an optional transaction fee to the miners. This may expedite the transaction being confirmed.

Bitcoin Infographic

Bitcoin Blockchain

Behind the scenes, the Bitcoin network is sharing a massive public ledger called the “block chain”. This ledger contains every transaction ever processed which enables a user’s computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses therefore allowing all users to have full control over sending bitcoins.

Nobody owns the Bitcoin network much like no one owns the technology behind email or the Internet. Bitcoin transactions are verified by Bit coin miners which has an entire industry and Bit coin options. While developers are improving the software they cannot force a change in the Bitcoin protocol because all users are free to choose what software and version they use.

In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus.

So Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and enables a user to send and receive bitcoins.

Bitcoin is based on Mathematics

As theoretically conventional currency has been based on gold or silver, bitcoin isn’t based on gold; it’s based on mathematics. Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available, so that anyone can check it. The software is also open source, meaning that anyone can look at it to make sure that it does what it is supposed to.

The characteristics of Bitcoin

Bitcoin has several important features that set it apart from government-backed currencies.

  • Decentralized– As said above the bitcoin network isn’t controlled by one central authority. Every machine that mines bitcoin and processes transactions makes up a part of the network, and the machines work together. Also if some part of the network goes offline for some reason, the money keeps on flowing.
  • Easy to set up– You can set up a bitcoin address in seconds, no questions asked, and with no fees payable.
  • Offers to be Anonymous– Users can hold multiple bitcoin addresses, and they aren’t linked to names, addresses, or other personally identifying information.
  • Completely transparent– Bitcoin stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain.  If you have a publicly used bitcoin address, anyone can tell how many bitcoins are stored at that address. They just don’t know that it’s yours. There are measures that people can take to make their activities more opaque on the bitcoin network, though, such as not using the same bitcoin addresses consistently, and not transferring lots of bitcoin to a single address.
  • Transaction fees are almost none– Your bank may charge you a $10 fee for international transfers but with Bitcoin no fees.
  • Bitcoin is fast- You can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment. That is the reason that it is becoming more popular in online casinos.
  • Also is  non-repudiable– When your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever.

The bitcoin protocol or the rules that make bitcoin work  say that only 21 million bitcoins can ever be created by miners. However, these coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the founder of bitcoin).

Buying, selling and storing  Bitcoins

You can buy and sell bitcoins at bitcoin exchange companies like Coinbase, (Coinbase will block your account and cease your funds if suspects gambling., so not recommended for online gaming), Bitquick in USA. Also people can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.

Technically, you can’t store Bitcoins anywhere. But just like with actual cash that you keep in your wallet, Bitcoins can also be stored in various bitcoin wallets. To be precise, you are not really storing the actual bitcoin ‚coins or bills, but only the digital keys used to access the public Bitcoin addresses.

Bitcoin wallet keys

There are several web-based wallets, USB wallets and hardware wallets that let you store your private bitcoin keys. You can also make use of paper wallets (they offer actual coin-like Bitcoin) which are the cheapest ways of keeping and storing your bitcoins. The best thing about paper wallet is that no digital keys are stored anywhere, therefore there would be no way to get your Bitcoin keys compromised via cyber-attacks or hardware failure. To make bitcoin wallets you need to register yourself at the bitcoin exchange and create your wallet.

As Bitcoin is on the rise and people are more interested in Bitcoin transactions be it at online casinos to enjoy games or at online stores Bitcoin future is bright and makes now things to understand better about this cryptocurrency.