Welcome to professorsavings.com, we teach finance basics. Today we will teach you what bitcoin is.
Hi I’m Rayfil Wong. We hope these investment concepts will help you be a better investor.
Bitcoin is the first decentralized digital currency. It is also sometimes referred to as a virtual currency or a crypto-currency.
Bitcoins are held in a digital wallet and can be sent over the internet. Bitcoin transactions are authorized using a digital signature.
The transactions are verified usually within minutes by a network of miners. Once verified, the transaction is permanently stored on a public ledger known as the Block Chain.
Fees for bitcoin transactions are relatively low compared to traditional ways of commercially transferring money over the internet.
There are no physical bitcoins, only balances associated with public addresses. The balance of each address can be viewed on the public Block Chain which keeps track of all transactions.
Each address has an associated private key which is used to authorize transactions. The key should be known only to the owner.
Bitcoin can be bought on exchanges. It is legal in the United States and most countries. However, bitcoin regulation is not yet well formed. It is accepted as payment by some local merchants and online retailers.
New bitcoins are released through a process called mining. Anyone can participate in mining with a computer using three open source software.
The interval at which coins are released is kept constant by the network and because of this, the more miners that participate the harder it is to mine.
The amount of coins being released at each interval is decreased by half around every four years. The total amount of coins released will approach $21 million.