What is Cryptocurrency?
Crypto-Currencies are digital forms of electronic money. They are different to the traditional fiat money system in three key ways: transactions are anonymous, you can create your own wallet bank account in minutes and the network is decentralized run through consensus of its participants. Bitcoin and other crypto-currencies are also anonymous – you can set up a wallet in minutes and start receiving or giving Bitcoin via your personal address number. Any transaction you do make shows up on the blockchain– the central ledger of all transactions ever made! … Read more!
What is Bitcoin?
Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
It’s the first example of a growing category of money known as cryptocurrency.
What are its characteristics?
1. It’s decentralized
The bitcoin network isn’t controlled by one central authority. Every machine that mines bitcoin and processes transactions makes up a part of the network, and the machines work together. That means that, in theory, one central authority can’t tinker with monetary policy and cause a meltdown – or simply decide to take people’s bitcoins away from them, as the Central European Bank decided to do in Cyprus in early 2013. And if some part of the network goes offline for some reason, the money keeps on flowing.
2. It’s easy to set up
Conventional banks make you jump through hoops simply to open a bank account. Setting up merchant accounts for payment is another Kafkaesque task, beset by bureaucracy. However, you can set up a bitcoin address in seconds, no questions asked, and with no fees payable.
3. It’s anonymous
Well, kind of. Users can hold multiple bitcoin addresses, and they aren’t linked to names, addresses, or other personally identifying information. However..
4. It’s completely transparent
..bitcoin stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain. The blockchain tells all.
If you have a publicly used bitcoin address, anyone can tell how many bitcoins are stored at that address. They just don’t know that it’s yours.
There are measures that people can take to make their activities more opaque on the bitcoin network, though, such as not using the same bitcoin addresses consistently, and not transferring lots of bitcoin to a single address.
5. Transaction fees are miniscule
Your bank may charge you a $10 fee for international transfers. Bitcoin doesn’t.
6. It’s fast
You can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment.
7. It’s non-repudiable
When your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever.
What is a Bitcoin Faucet?
A bitcoin faucet is a website that is giving away free bitcoins to its visitors. The rewards are most commonly dispensed in the form of a satoshi, which is a hundreth of a millionth BTC, in exchange for completing a captcha. The purpose of a bitcoin faucet is to introduce users to bitcoin by offering some free coins so that they can experiment with a test transaction before putting real money on the line.
What is a satoshi?
A Satoshi is the smallest fraction of a Bitcoin that can currently be sent: 0.00000001 BTC, that is, a hundredth of a millionth BTC. In the future, however, the protocol may be updated to allow further subdivisions, should they be needed.
1 Satoshi = 0.00000001 BTC
10 Satoshi = 0.00000010 BTC
100 Satoshi = 0.00000100 BTC = 1 Bit
1,000 Satoshi = 0.00001000 BTC
10,000 Satoshi = 0.00010000 BTC
100,000 Satoshi = 0.00100000 BTC = 1 mBTC (em-bit)
1,000,000 Satoshi = 0.01000000 BTC = 1 cBTC (bitcent)
10,000,000 Satoshi = 0.10000000 BTC
100,000,000 Satoshi = 1.00000000 BTC