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Is Bitcoin one of those terms you keep hearing about, but you have no idea what it is or how it works? You’re not alone!
Bitcoin is the most popular brand of cryptocurrency. It was invented in 2009 by a group or programmers, or an anonymous one – no one knows for sure – who wanted a ‘peer-to-peer electronic cash system.’ It is completely decentralized – there are no servers involved, and no central controlling authority. Think of it as a peer network for file sharing.
Bitcoin uses the Blockchain to verify that each participant in the Bitcoin network does what they’re supposed to. There’s another term that keeps coming up. Blockchain is a public ledger of all transactions – everyone in the network can see every account’s balance. This information is available to everyone.
So how does Bitcoin work? Every transaction – like a purchase or investment – is a file that includes both the sender’s and recipient’s public keys – like an address to your wallet – and the amount of coins transferred. The transaction must be signed off by the sender with their key, and then the transaction is broadcast throughout the network, using Blockchain to track the participants.
How do you buy Bitcoins? There are lots of options. For example, there are around 1,800 Bitcoin ATMs in 58 countries. You can also buy Bitcoin using gift cards, cryptocurrency exchanges, investment trusts, and even trade face-to-face.
Tomorrow we’ll look at Bitcoin as a means of financial investment.