Bitcoin is a cryptocurrency that is sent and received across a decentralized P2P network that also carries out the its issuance. Its main features, which the traditional financial system fails to successfully implement, include:
1. Transparency and immutability of transactions through a public ledger called blockchain.
2. Anonymity through public and private keys.
3. Decentralized control to keep monopolization at bay.
4. Limited supply of coins ever minted to prevent inflation decreasing purchasing power across time.
Created in 2009, the concept of Bitcoin was inspired by the ideas found in the whitepaper of Satoshi Nakamoto, whose identity isn’t yet revealed up to this day.
The Bitcoin network uses a consensus protocol called proof-of-work that lets the network maintainers compute the validity of a network transaction. This process is called mining because it allows you to “mine” BTC by being the first one to successfully validate a transaction using computer hardware, now commonly called mining rigs.
This incentive system paves the way to the BTC network’s decentralized structure. Since everyone wants a piece of the reward, multiple entities from different places can participate in “mining”, creating multiple maintainers from everywhere in the world.
Nobody has total control or owns the Bitcoin network. It is controlled by multiple Bitcoin users around the globe. Developers are attempting to improve the software, but the Bitcoin protocol cannot be forced to change since users have the freedom to choose what version of software they are going to use.
Bitcoin, as well as other legitimate cryptocurrencies, is as real as bank notes (paper bills) and coins. What makes Bitcoin different from “just digital money” is that the system where it runs cannot be hacked without destroying the whole system, which is very unlikely as of now.
Yes. The number of people and businesses using it is increasing in number. Most businesses which are utilizing it are restaurants, law firms and apartments. Currently, the increase in price is driven by speculators wanting to profit from its volatile price movements.