The Bitcoin is a digital or currency cryptocurrency  that can be used to exchange goods and services and any other currency in the places where it is accepted. Bitcoin, with the symbol ? and abbreviation BTC or XBT, is a free and decentralized electronic currency that allows direct transaction without any intermediary.

 

Bitcoin was created by Satoshi Nakamoto in 2009, along with the software that supports it. Today it is still a mystery who is behind that name, if a person or institution. Bitcoins are created through a process known as Bitcoin mining, which we will explain below.

 

Bitcoin Functions

 

Although Bitcoin does not exist physically, it has the same functions as the rest of the money , but unlike a ticket or a   non-virtual currency , Bitcoins do not have a serial number or other type of mechanism to track to buyers and sellers who use this virtual currency. This makes it attractive to those who want or need privacy in their transactions.

 

Unlike any other currency , Bitcoin is not fiat money.  That is, it is not backed by the trust of a central bank, by a government or by a material (for example, gold standard ). Instead, they do use a proof of work system to avoid double spending and reach a consensus among all the nodes that operate in the network. This consensus is known as blockchain .

 

The blockchain or blockchain

 

The blockchain is a fundamental piece for the operation of Bitcoin, since to be able to falsify a transaction, it would not be enough to change one or several computers. Being a public registry there can be millions of copies and the records of all the computers that keep a copy, which is practically unfeasible, would have to be changed, being an open and public base.

 

In addition, Bitcoins transactions handle an open source for their operation and do not need any intermediary to perform the transactions. Therefore, it promises to have lower transaction costs.

 

It should be remembered that the rest of the currencies (such as the dollar, the euro, the pesos or the yen among others) do exist physically, but still (in 2016) only 8% of the money that exists in the world called in those currencies is physical money , the rest is electronic money in the banks' balance sheets.

 

Bitcoin features

 

To avoid problems arising from a currency that is not backed by an entity or a third party, but by a work system, the BTC has several fundamental principles:

 

21 million limit: The number of units can never exceed 21 million Bitcoins.

 

Cannot be censored: No one can ban or censor transactions that have been validated.

 

It has open source: The source code used by Bitcoin should always be accessible to everyone.

 

Access to all:  Everyone can make transactions in Bitcoins without the need for a permit. No one can prevent participation in the network.

Use pseudonyms: The real identity of its owner is not reflected and it is not necessary to identify yourself to participate in the Bitcoin network, although unlike an anonymous network, it allows the possibility of generating a reputation and trust between different users.

It is fungible:  All units are interchangeable.

 

Payments are irreversible: Transactions that have been confirmed cannot be modified or deleted.

 

How are Bitcoins created?

 

Bitcoin is a cryptocurrency that is created and distributed by peer networks, commonly known as P2P (peer to peer). These networks allow the direct exchange of information without the need for fixed servers. The process of generating BTC is through mining. It consists of solving mathematical problems of high difficulty thanks to computer processors.

 

The person who solves a problem receives a BTC reward in return. Incentive that makes more people join this process. Each participant is connected to each other through the P2P system and validates each movement in the system. Therefore, the more participants there are, the safer the process will be. On the other hand, as the problems are resolved the difficulty of these increases. In this way the speed of BTC generation is controlled.

 

Bitcoin, as we have already explained, is not regulated by any agency, however, it is programmed so that the generation rate is reduced by 50% every 4 years until it reaches 21 million BTC in circulation.

 

To get an idea as of January 31, 2014, the total BTC in circulation was 12,296,500 (source blockchain.info) and 12,333,875 (according to source bitcoin.com). Although the data differs slightly you can see that there are just over 12 million Bitcoins in the network.

 

How are Bitcoins used?

The time has come to see how one can handle these coins that are but are not. Bitcoin is money, it has certain characteristics that differentiate it from other currencies.  However, as the currency it is, it meets the properties of money:

 

It serves as an accounting unit

Exchange medium

Value conservation medium

The latter is the one that is most controversial around Bitcoin because of its fluctuating nature. See volatility

 

About its utility of accounting unit little more or nothing should be added. The same does not happen with its properties to facilitate the exchange. The appearance of Bitcoin meant the rupture of electronic commerce as it was known until then. Transactions no longer have to be channeled through banks or other trusted financial entities. This means breaking the corresponding service fees to which the transactions were subject.

 

How to buy with Bitcoin?

To pay with Bitcoin we must follow the following steps:

 

Convert your money into bitcoins.

 

Save them in our virtual wallet created in one of the many free servers that exist. For example, blockchain. The purse is a random combination of 33 alphanumeric characters similar to this: 1VtU9rMsQ47rCqsGAvMtw89TA5XT2dB7f9

You can now pay and collect in BTC! To pay, you will only have to access your electronic wallet with your username and password. Enter the recipient's purse code and the corresponding amount. To collect, all you will need is to provide your code to the person who should make the payment.(Bitcoin investment sites)