The basics for a new user

what is bitcoin in simple english

Today is the tenth anniversary of the virtual currency Bitcoin. But on its birthday it could be worth less by the end of year than it was on its previous birthday - for only the second time since it arrived in the virtual wallet.

And there are still a couple of months of trading to go. But what is Bitcoin and how does it all work? Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency - is a type of money that is completely virtual.

It's like an online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether.

The physical Bitcoins you see in photos are a novelty. They would be worthless without the private codes printed inside them. Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer. People can send Bitcoins or part of one to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain.

This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undo-ing transactions. There are three main ways people get Bitcoins. In order for the Bitcoin system to work, people can make their computer process transactions for everybody. The computers are made to work out incredibly difficult sums.

Occasionally they are rewarded with a Bitcoin for the owner to keep. People set up powerful computers just to try and get Bitcoins. This is called mining. But the sums are becoming more and more difficult to stop too many Bitcoins being generated.

If you started mining now it could be years before you got a single Bitcoin. You could end up spending more money on electricity for your computer than the Bitcoin would be worth.

There are lots of things other than money which we consider valuable like gold and diamonds. The Aztecs used cocoa beans as money! Bitcoins are valuable because people are willing to exchange them for real goods and services, and even cash. Some people like the fact that Bitcoin is not controlled by the government or banks. People can also spend their Bitcoins fairly anonymously.

Although all transactions are recorded, nobody would know which 'account number' was yours unless you told them. Every transaction is recorded publicly so it's very difficult to copy Bitcoins, make fake ones or spend ones you don't own. It is possible to lose your Bitcoin wallet or delete your Bitcoins and lose them forever. There have also been thefts from websites that let you store your Bitcoins remotely.

The value of Bitcoins has gone up and down over the years since it was created in and some people don't think it's safe to turn your 'real' money into Bitcoins. US President Donald Trump has been impeached. What is impeachment? Newsround speaks to the cast of the new Star Wars movie. Home Menu.

Guide: What is Bitcoin and how does Bitcoin work? What is Bitcoin? Physical Bitcoins are a bit of a novelty. How does Bitcoin work? A Bitcoin wallet app on a smartphone. How do people get Bitcoins? Denes Farkas. How are new Bitcoins created? People build special computers to generate Bitcoins. Why are Bitcoins valuable? Bitcoins are valuable simply because people believe they are. Why do people want Bitcoins?

Is it secure? Getty Images. Top Stories. US President Donald Trump has been impeached 2 hours ago 2 hours ago. Newsround speaks to the cast of the new Star Wars movie 2 hours ago 2 hours ago.

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what is bitcoin in simple english

BITCOIN AND GOLD

We will try to explain the following things in simple words within the framework of this article:. Contents: please click the topic to scroll down to it. If we do not dive deep into cryptographic terms, then there is nothing complicated in the algorithm of the operation of the blockchain technology. For the sake of simplicity, the system of blockchain can be compared with the accounting journal, which is found in the possession of tens of thousands of users simultaneously. This journal is constantly updated and does this in all its copies, each page refers to the previous ones. In order to fool the system and fake at least one record, you will need a titanic amount of processing power, since you will have to replace all copies. Theoretically it is possible, but practically, one substitution will cost its organizers trillions of dollars, so we will consider it impossible.

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This article explains what bitcoin is all about and how and what you should know about it. Bitcoin and cryptocurrency are the talk of the year. The growth of Bitcoin has attracted so many new investors from around the globe. But what amazes me is how few people really understand what Bitcoin is all about. Bitcoin is a digital currency also known as cryptocurrency or virtual currency, built on top of the blockchain technology. Yes, bitcoin is nothing that you can print, touch, feel, or store in your safe or wallet.

what is bitcoin in simple english

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