Bitcoin is the world's first successful decentralized cryptocurrency and payment system, founded in 2009 by Satoshi Nakamoto, a mystery developer who only goes by the name Satoshi. Bitcoin may be broken into smaller units called satoshis (up to 8 decimal places) and used for payments, but it is also regarded as a store of value, similar to gold. This is due to its scarcity. The price of a single bitcoin has risen dramatically since its beginnings, from less than a penny to tens of thousands of dollars. When discussing bitcoin as a trading asset, the ticker symbol BTC is used. The simplest way to grasp bitcoin is to compare it to the internet money. The internet is totally digital; no single person owns or controls it; it has no borders (anyone with energy and a device may connect to it); it operates 24 hours a day, seven days a week; and users can readily share data with one another. Digital money without a central authority controlling the network, issuance and supply of money and is available to everyone without the need for an intermediary. That is essentially what bitcoin is.

History and use of the bitcoin

Nakamoto created bitcoin as an alternative to traditional money, with the objective of ultimately making it a universally acknowledged legal tender that people could use to buy goods and services.

However, bitcoin's value as a payment method has been hampered by its price volatility. Volatility is a term used to indicate how much the price of an item varies over time. Bitcoin's price can fluctuate substantially from day to day - and even minute to minute - making it a less than ideal payment alternative. For example, you wouldn't pay 4.50USD for a cup of coffee that was worth 3.30 USD 5 minutes before. As with every new asset we can expect the volatility to fade after longer distribution among hodlers (from HODL – “hold on for dear life”) and users. Even with bitcoin’s volatility, there are countries in the world where bitcoin price would seem stable to the citizens when compared with the inflation with their fiat currency.

It also doesn't bode well for businesses if the price of bitcoin decreases drastically after the coffee is delivered. Bitcoin functions in several ways in opposition to traditional money: it is neither regulated or issued by a central bank, it has a finite supply (which means new bitcoins cannot be generated at whim), and its price is unpredictable. Understanding these distinctions is critical to comprehending bitcoin.

How does it work

Bitcoin is structured in such a way that users may directly transfer value with one another over a peer-to-peer network. The Bitcoin network (capital "B" for the network and technology, lower-case "b" for the real money, bitcoin) is entirely open, which means that anybody in the world with an internet connection and a device that can connect to it may join without limitation. It's also an open source, which means anybody may look at it or share its source code.

The network refreshes every user's copy of the ledger to reflect the current modifications whenever the block is issued new transactions are confirmed and added to the ledger. Consider it an open Google document that automatically changes when anyone with access modifies its content.

The Bitcoin blockchain, as the name indicates, is a digital string of chronologically ordered blocks – bits of code containing bitcoin transaction data. It is crucial to note, however, that verifying transactions and bitcoin mining are two distinct operations. Mining can continue whether or not transactions are uploaded to the blockchain. Similarly, a rise in Bitcoin transactions does not always enhance the rate at which miners discover new blocks.