Bitcoin

To create a clearer environment around Bitcoin, let’s separate it into two components. First, we have Bitcoin- the-token, a piece of code that represent ownership of a digital concept. Second, we have Bitcoin-the-protocol, a distributed network that contains a ledger of balances of Bitcoin-the-token. Both are named and called as “Bitcoin”.

Bitcoin

To create a clearer environment around Bitcoin, let’s separate it into two components. First, we have Bitcoin- the-token, a piece of code that represent ownership of a digital concept. Second, we have Bitcoin-the-protocol, a distributed network that contains a ledger of balances of Bitcoin-the-token. Both are named and called as “Bitcoin”.

In what ways is it different from traditional currencies? 

Bitcoin is the most popular form of digital currency. If traditional currencies were made by gold and silver, Bitcoin is based on distributed computing. The offer of traditional currencies are offered and printed by central banks; Bitcoins are created or ‘mined’ by distributed computer networks.

 If two parties agree among each other, they can use Bitcoin to pay for things electronically. It is logically as fiat currencies used to make online transactions, but it differs in many aspects: 

1 – Decentralization 

If you do not like the idea of the banks and government controlling your money, then you are born to be a Bitcoin owner. The main characteristic of the Bitcoin is being decentralized. No institution can control its network. With Bitcoin, the integrity of the transactions is maintained by a distributed and open network, owned by no-one. 

2 – Limited supply 
Meanwhile the supply for Bitcoin is controlled by the underlying algorithm. A small number of Bitcoins can be released every hour. That makes Bitcoin attractive, because for a certain asset, if the demand increase and the supply stays the same, its value will increase.
 

3 – Pseudonymity 
There is no central to validate users, they do not need to identify themselves when transferring Bitcoins to another user. When a transaction request arrives, the protocol checks previous transactions to validate the ability of the user to make the transfer, so there is enough Bitcoin to transfer or not. The system does not ask for the identity.
 

4 – Immutability 
Bitcoin transactions cannot be undone, unlike electronic fiat transactions. If more than one hour has passed since the transaction, it is impossible to modify the transaction. There is no terminal that can order to return your Bitcoins back.
 

5 – Divisibility 
One satoshi is the smallest unit of a Bitcoin, it is one hundred millionth of a Bitcoin- nowadays prices around one hundredth of a cent. This could make possible the micro transactions that current currencies don’t allow electronically.