Bitcoin is a decentralized electronic cash system using peer to peer networking to empower payments ...

1. Bitcoin Clarified
Bitcoin is a decentralized electronic cash system using peer to peer networking to empower
payments between parties without relying on shared trust. This essentially means that two
celebrations and make payments to each other electronically without having to experience a third
party including a bank or another financial institution.
Bitcoin was first described in a paper by Satoshi Nakamoto (widely presumed to be a pseudonym) in
2008. The data of all of these transactions, after being validated with a proof-of-work system, is
rolled up into what is called the block chain. Another way to think of the block chain is like an
electronic checkbook.
Participants begin using bitcoin by first acquiring a application called a Bitcoin wallet and one or
more Bitcoin addresses. Bitcoin addresses are used for receiving bitcoins, in exactly the same way
that e-mail addresses are used for receiving e-mails. Bitcoin addresses may also be considered as
account numbers or destination accounts for recovering bitcoins.

2. While Bitcoin is thought of as an
experimental payment system, it is
already deployed on a large scale. What
I mean by large scale is that the current
value of all the coins issued so far
surpasses 7,000,000,000 USD and
attracts lots of media interest. Its
proponents claim that it is the first really
international money which does not
discriminate its users based on
citizenship or place, it truly is constantly
running with no holidays, it's easy to
secure with really low utilization fees,
it's no chargebacks, etc. On the other
hand, its detractors assert that it is
widely misused to buy illegal items and
to launder large amounts of money, and
that it is too easy to steal bitcoins from
wallets via cyber attacks.
Unlike fiat currency, which has been held to be legal tender by a government in spite of how it has
no intrinsic worth and isn't backed by reserves, Bitcoin has no centralized issuing authority. The
network is programmed to increase the money supply in a slowly rising geometric series until the
absolute number of bitcoins reaches an upper limit of about 21 million BTC's. Bitcoins are given to
Bitcoin "miners" for solving increasingly difficult evidence-of-work issues which support trades and
prevent double spending. The network now needs over one million times more work for affirming a
block and receiving an award (now 25 BTC's) than when the first blocks were verified.
The exchange rate of bitcoins has fluctuated widely through the years, from merely $0.01 to well
over $1000 per BTC. Prices have dropped to around $600 per BTC and the money still experiences
significant price fluctuations daily.