What is Bitcoin?

 

Bitcoin was the first, and it currently has the largest number of users. There are hundreds of cryptocurrencies, the majority of which are derivatives based on Bitcoin.

Shawn Smith, CPA:So, Bitcoin is a pretty new form of currency that's becoming very popular. It's not backed by the government, it's not printed—it's actually just software that runs through computers that you mine on a computer. We can have a whole discussion on the underlying computer science of what makes Bitcoin work so let's set that aside and say there are three parts to this. There are transactions; how do you pay someone else? There is actually verifying who you are and having proof of who you say you are, which is called authentication; and then there is controlling for double spending, which is making sure that everybody can only spend their money once.

Cryptocurrency is a term used to describe digital currency secured by cryptography and traded electronically. Cryptocurrency uses cryptography to secure the transactions and to control the creation of new units. The most-known cryptocurrency so far is bitcoin. Cryptocurrency is decentralized and made possible by the use of cryptography. It is based on a blockchain, which is a public transaction database, operating independently of a central bank.