Bitcoin is a digital payment currency that utilizes cryptocurrency (a digital medium of exchange) and peer-to-peer (P2P) technology to create and manage monetary transactions as opposed to a central authority. The open source Bitcoin P2P network creates the bitcoins and manages all the bitcoin transactions.
Often referred to as "cash for the Internet," Bitcoin is one of several popular digital payment currencies along with Litecoin, Peercoin and Namecoin. When the word Bitcoin is capitalized, it usually refers to the software and systems used for bitcoin (in lowercase it means the actual currency).
Bitcoin In the News
The Face Behind Bitcoin; Newsweek
Gartner: Bitcoin is 'Massively Overhyped Noise'; eWeek
Why Marc Andreessen Is Bullish on Bitcoin; eWeek
Another bitcoin bank bites the dust, Flexcoin blames losses on hackers; EuroNews
Bitcoin firm CEO found dead in suspected suicide; FOX News
Bitcoin is considered the biggest cryptocurrency. It was first introduced in 2009 and is the most widely-traded cryptocurrency. Bitcoin as an implementation of the cryptocurrency concept was described by Wei Dai in 1998 on the cypherpunks mailing list. Dai suggested a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. In 2009, the Bitcoin specification and proof of concept was published in a cryptography mailing list by Satoshi Nakamoto. As noted in the Official Bitcoin FAQ, Satoshi Nakamoto left the project in late 2010 without revealing much about himself.
How Bitcoin Works
Payments are made via a Bitcoin wallet application that resides on a user's computer or mobile device, and a person only needs to enter the recipient's Bitcoin address information and payment amount before pressing send to complete payment.
New bitcoins are created by a competitive and decentralized process called "mining". Bitcoin miners are processing transactions and securing the network using specialized hardware and are collecting new bitcoins in exchange. The Bitcoin protocol ensures new bitcoins are created at a fixed rate, making the process of bitcoin mining a very competitive business. According to eWeek, efforts to improve Bitcoin mining are now under way, working under the basic assumption that the cheaper you can mine Bitcoins, the more money you can make.
Recommended Reading: Learn more about how Bitcoin and bitcoin mining works in the Bitcoin Official FAQ.
While attackers are going after Bitcoin-related sites, there is an important distinction between the security of the Bitcoin network and the Bitcoin exchanges. According to this InternetNews.com story, no one has ever found a critical vulnerability within the Bitcoin protocol itself that would allow a user within the Bitcoin network to fraudulently create coins or forge transactions. That said, there have been compromises of various Bitcoin exchanges throughout the virtual currency's lifetime, and as the value of a Bitcoin increases, so does the risk in using exchanges.
- Watch Datamation's editor James Maguire moderate roundtable discussions with tech experts from companies such as Accenture, Dell, Blue Jeans Network, Microsoft and more »
Taking ownership of our own misjudgments or simple forgetfulness takes a healthy amount of humility and some honest self-assessment. Yet sometimes... Read More »Have We Become a World of Addicts?
It's hard to imagine our lives without smartphones. But people who suffer separation anxiety when they don't have their phones nearby may be in... Read More »13 Best Free Android Apps
From secure messaging to document editing, our top free must-have apps have been rated, reviewed and named the best free Android apps of 2015. Read More »
From wacky alarm clocks to lecture hall tools and after class entertainment, these Android apps are a good fit for a student's life and budget. Read More »Network Fundamentals Study Guide
A network is a group of two or more computer systems or devices, linked together to share resources, exchange files and electronic communications.... Read More »Computer Architecture Study Guide
This Webopedia study guide describes the different parts of a computer system and their relations. Read More »