Many Internet users are wondering what Bitcoin is and what role it plays in the financial world. We can explain complex terms in a more understandable way to a regular user. Bitcoins are a new generation of digital money having no connection with any physical currency, precious metal or stock. One of the Bitcoin features is that it is not a unit of money controlled by separate government agencies — all processes go through millions of computers, excluding the risk of fraud of funds theft when they are transferred.
Features of an independent electronic currency
If you know what is actually Bitcoin, you can understand the structure of all electronic money. They do not have a physical carrier. Traditional monetary units are printed on paper but the Bitcoin exists only in the form of blockchain-codes. The source script is publicly available. You probably heard about mining – the main way to get currency tokens. With the help of the source code and the large processing power of some computers, it is “extracted” — the elements of the code are collected in the necessary combination, which simulates the creation of new currency particles.
Not everyone understands the main advantages of Bitcoin. Its original idea assumed that with the transition of all world transfers to this currency, it is possible to completely exclude corruption and funds theft from accounts. This money does not have any binding to individuals or banks, even if you transfer them from your account to another. No one knows where and to whose name the Bitcoins are moving in the process of transfer. Operations are using the blockchain technology, where each transaction consists of multiple blocks. A transfer is carried out to the specified address — it is received by everyone who will open a new wallet (account). The name of the address is accessible to all, as well as the number of funds transferred. The names of the owners are confidential — this is not even seen by employees of banks, departments, and others. Now you know all about Bitcoin: what it is, and what its purpose is.
How the price of one Bitcoin is formed
What is 1 Bitcoin worth? Even his creator does not know the answer to this question. There is no binding to any physical equivalent — this decentralized currency can have different values, depending on the number of units produced from around the world. The maximum number of produced bitcoins is 21 million. In this case, no person, bank or even the state can artificially depreciate it.
Before you learn more about Bitcoin, and how to make money on this currency, you should mention its limitations. With the increase in the level of its extraction, the nominal value of one unit grows relative to other currencies, which is not limited (they can be printed).
What is Bitcoin address
To answer the question, what Bitcoin-address actually is, it is necessary to mention a multivalued number (from 27 to 34 digits in one code). This code is the direct address of a separate account (wallet). We can compare Bitcoin address with the standard bank card number. The main difference is that no one knows the addressee and the owner of the address — the blockchain commands to transfer funds to the address but you cannot intercept the data or the money itself.
So, the main features of the Bitcoin are:
- Lack of linkage to any forms of values;
- Anonymity and security;
- Strict limitation;
- The possibility of transfers and payment without commissions.
Knowing what Bitcoin is, you can effectively navigate the world of electronic cryptocurrency, because globalization is an integral part of the new generation.