Is Bitcoin just a bubble or the global currency of the future, asks Ian Vella
We’ve been hearing a lot about Bitcoin, from high-tech heists to people who became overnight virtual currency millionaires. But what is it exactly?
Bitcoin is a peer-to-peer crypto-currency. This means that no particular central authority such as a banking institution prints money or tracks any of the electronic transactions that take place. This has a huge implication since governments and financial authorities have no control over how this currency is operated.
Bitcoin payments don’t need any third parties such as banks to process transactions. Traditionally any online purchase has to be facilitated by a banking institution, credit card company or a licensed intermediary like Paypal, which normally charge. However, this is not the case with Bitcoin as any payment is directly sent over the internet from buyer to seller.
The original idea was conceived around 2009 by Satoshi Nakamoto, who wrote a paper describing how Bitcoin should work and created the first open source software. Nevertheless it is not yet clear if Nakamoto is a real person, a fictitious character, or a group of individuals working under an assumed identity.
The Bitcoin network needs a number of electronic data-miners to process and encrypt transactions. For this reason the system rewards such data-miners with a payment of newly generated Bitcoins which is set to reach the maximum milestone of 21m bitcoins in 2140.
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