A peer-to-peer electronic cash system
Many newcomers to the cryptocurrency market start here. Bitcoin is the first, and largest, digital currency without a central bank or administrator. It was launched by a person, or persons, who used the pseudonym Satoshi Nakamoto in 2009, in direct response to the worldwide financial crisis. Bitcoin operates on the Bitcoin blockchain, a database distributed among computers and servers around the world (The individual computers are called “nodes.”). As transactions occur, they are timestamped and added to an ever-lengthening computational record that all the nodes can see.
Owning money through a blockchain rather than a bank reduces vulnerability to hacking, eliminates the currency stabilizing and manipulating powers of state governments, and allows users to participate in financial transactions anonymously. Because new Bitcoins are minted through a complex mathematical algorithm, they have a fixed supply, like gold. In theory this makes them a better place to store value over time than currencies that are subject to inflation, such as the US dollar. The appeal of Bitcoin over other cryptocurrencies stems from its longevity, security and size: Many businesses accept Bitcoin directly for payments, it can be traded on many exchanges, and some people, including NFL player Russell Okung, have even asked to be paid in it directly.