To understand Bitcoin, there are a few other definitions to clarify first, including that of digital currency .
This type of currency does not have a physical form, so it can’t be seen or touched, but theoretically, it can be used in the same ways as traditional money, including buying and selling goods and services. Digital currency can be used around the globe, as long as parties accept this type of payment, being exchanged among digital wallets.
Cryptocurrency is a type of digital currency, one that’s based on cryptography, using complex mathematical principles to create and analyze algorithms. Bitcoin is the most widely recognized form of cryptocurrency, but it isn’t the only option.
Bitcoin uses blockchain technology and a decentralized ledger to operate. In hypothetical terms, blockchain technology is like a spreadsheet duplicated across networks of computers with the technology creating the ability for people to regularly update the spreadsheet with transactions.
Records are public and easily verified, creating a sense of openness. Bitcoin has no primary regulating authority—and no centralized version of its record exists. Regulators are increasingly getting involved, but the regulatory structure is currently nowhere near the same degree as those imposed on securities or banking products.Read more