Bitcoin explained in a simple way…
Sit down, pour your glass of wine or coffee and sharpen your pencil…
What is Bitcoin?
Bitcoin is actually two things. It’s a currency and a technology.
Let’s make it real simple:
Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, which means it doesn’t depend on a central bank or single administrator to conduct transactions or implement policy. It works on a peer-to-peer network which means transactions take place between users directly.
The worldwide payment system sits on a technology called the Blockchain. This is where it gets a little more complex, so for a really simple explanation, we recommend you check out this article by Life Hacker about what is blockchain technology.
One of our favorite analogies for how Bitcoin transactions work is that once a payment is made, a complex mathematical puzzle goes out into the network. Bitcoin miners try to solve this puzzle as quick as they can, using extraordinary amounts of computing power. Miners are rewarded for solving the puzzle with a miners fee (in Bitcoin) which the system automatically awards the miners who solve it the fastest.
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