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What is Bitcoin?

Bitcoin is a payment system invented by Satoshi Nakamoto, who published the invention in 2008 and released it as open-source software in 2009.

The system is peer-to-peer; users can transact directly without needing an intermediary. Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain. The ledger uses its own unit of account, also called bitcoin.
The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency.
Bitcoin is often called the first cryptocurrency, although prior systems existed.

Bitcoin is more correctly described as the first decentralized digital currency.
It is the largest of its kind in terms of total market value. Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into a public ledger. This activity is called mining and the miners are rewarded with transaction fees and newly created bitcoins. Besides mining, bitcoins can be obtained in exchange for different currencies, products, and services.

Users can send and receive bitcoins for an optional transaction fee. Bitcoin as a form of payment for products and services has grown, and merchants have an incentive to accept it because fees are lower than the 2-3% typically imposed by credit card processors. Unlike credit cards, any fees are paid by the purchaser, not the vendor. The European Banking Authority and other sources have warned that bitcoin users are not protected by refund rights or chargebacks. Despite a big increase in the number of merchants accepting bitcoin, the cryptocurrency doesn’t have much momentum in retail transactions. The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and media. Criminal activities are primarily centered around black markets and theft, though officials in countries such as the United States also recognize that bitcoin can provide legitimate financial services.

Is Bitcoin legal?

As far as we know, Bitcoin has not been made illegal by law in most territories. However , some territories (such as Argentina or Russia ) restrict or prohibit foreign currencies severely . Other territories ( such as Thailand ) can limit the licensing of certain entities such as the exchange of Bitcoins .

Regulators in several territories are taking steps to provide individuals and businesses with rules about how to integrate this new technology into regulated and conventional financial system . For example , Network Protection Financial Crimes (FinCEN ) , a bureau of the Ministry of Finance of the United States , issued guidance on how to characterize certain activities involving virtual currencies .

Why people trust Bitcoin?

Much of confidence in Bitcoin comes from the fact that requires trust. Bitcoin is completely open and decentralized code. This means that everyone has access to the full code at any time . Any developer in the world can verify how it works . All transactions and bitcoins created during its existence can be clearly viewed in real time by anyone. All payments can be made without relying on third parties and the whole system is protected by cryptographic algorithms reviewed by users, similar to what is used in electronic banking. No organization or individual can control Bitcoin and the network remains secure even if you can not trust all users

Bitcoin is anonymous

Bitcoin is designed to allow users to send and receive payments with an acceptable level of privacy as any other currency . It is also true that Bitcoin is not anonymous and can not offer the same level of privacy that money . Using public records Bitcoin leaves . There are several mechanisms to protect the privacy of users , and those that are in development . Still, much work remains before these features are properly used by most users Bitcoin .

They have some concerns about private transactions with Bitcoin that could be used for illegal purposes emerged. However , Bitcoin will certainly be subject to similar regulations to those that exist within the financial systems. Bitcoin can not be more anonymous than cash and surely will not prevent criminal investigations are conducted . In addition , Bitcoin is created to prevent a large number of financial crimes.

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Why bitcoins have value?

Bitcoins are created by “mining”, a highly competitive and decentralized process, which means that the network rewards participants for their services. The “miners” use specialized hardware to process transactions and secure the network.

Their main aim is to collect new bitcoins in exchange for their services like bitcoin trading, for example. Bitcoin protocol is wisely made and new bitcoins are made at a fixed rate. That is why Bitcoin mining is a highly competitive business. The more miners come to the network, the more difficult is to make profit, so miners have to reduce their operation costs. Nobody can control or manipulate the Bitcoin system.