Monday, May 30, 2016

Explaining Bitcoin

Today, my ambition is to attempt explaining in simple terms how the Bitcoin system of payment works. This is a quite ambitious endeavor, but I will try. First, it's based on an open-source peer-to-peer software.

Transactions take place between users directly, without any intermediary, all are verified by network nodes and are recorded in a ledger called the block chain. Since the system works without a central administration, nations generally consider Bitcoin as a decentralized, virtual currency.

The main purpose of Bitcoins is to be exchanged for other currencies,products, and services. This is obviously what meets the eye, but behind all this, there's a rather complex computerized record-keeping system, called mining that guarantees that all transactions are on the up and up.

In spite of this technical reassurance, I'm not ready yet to make the jump to Bitcoin (BTC) and entrust my life-savings to this seemingly elusive entity. Yet, at the same time, the few dollars I own, that I keep in a bank, are probably almost as fuzzy and virtual as this new ethereal currency!

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