What are bitcoins?


Bitcoin Explained Simply This is Matthew. He works with online payment and his grandmother,
Margaret has just begun banking online. She’s heard of Bitcoin, but doesn’t know
what it is. Matthew can explain. Everyone knows about money. We use cash or cards to buy things, either
in shops or online. Bitcoin works in a similar way, but is a completely
digital currency. It is created and stored electronically. The banks control Margaret’s money, whereas
it’s the users themselves that control Bitcoin payments. Her money can be affected by inflation, but
bitcoin can’t. By controlling production they keep their
value on quite a solid level. This makes it popular in countries with economic
problems as users can circumnavigate inflation and other issues. However, even small events such as a bad press
report can have a drastic effect on Bitcoin price. So where could Margaret use bitcoins? Certain companies and online retailers now
accept it as payment. However, Bitcoin is still relatively unknown
by businesses as it’s a developing network. The simple and largely anonymous nature of
bitcoins has also made it attractive to criminals in the black market. From Matthew’s perspective, Bitcoin is an
app on a computer or smartphone that works as an online wallet. It’s easier to make payments than with conventional
debit or credit cards. Just enter the recipient’s address, the
amount to pay and press send. Margaret can send and receive money instantly
anywhere in the world and at any time. Unlike credit cards, there are either no or
only small fees because there was no bank to go through, and no personal or sensitive
data is stored. Users each have their own address from which
they can send and receive bitcoins. A collection or block of these transactions
is then added to the block chain. Bitcoin is equivalent of a bank’s ledger. Users that maintain this form of accounting
are rewarded with new bitcoins. This is known as mining. There is a fixed amount of bitcoins, but over
time existing bitcoins become divided to maintain a consistent value. Now that Matthew has explained bitcoins, Margaret
doesn’t find online payment to be all that complicated anymore. Bitcoin appears to be a real alternative form
for worldwide currency for the future.

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