Bitcoin Keypoints
What is bitcoin?
Bitcoin key points
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A decentralised cryptocurrency
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Released as a working beta in 2009
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The digital currency can be traded for other currencies or real world goods
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It can be created (mined) by computers set to the task of solving mathematical 'blocks'
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There is a cap of just under 21 million bitcoins
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Coin transactions and ownership recorded in a public ledger called the blockchain
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Bitcoins are secured in your digital wallet
Bitcoin is a digital cryptocurrency that is decentralised and operates using a peer-to-peer network.
Unlike other currencies, it has no central authority or government-based backing.
It is a digital currency and is essentially a code that is traded between two people.
It was created by someone under the pseudonym of Satoshi Nakamoto and released as a working beta in 2009.
Satoshi's true identity remains a mystery as he disappeared from the scene in 2010 after seemingly handing over the reins to Gavin Andresen, the chief scientist at the Bitcoin Foundation.
During the early years some people collected thousands of bitcoins each, mostly at a worth of less than a dollar per coin.
Bitcoin was a niche curiosity, but after mainstream coverage and several market surges and crashes it was worth nearly $US1,000 per bitcoin (in November 2013).
It can be traded for other currencies or real world goods and new bitcoins can be created by 'mining'.
There is a limit of just under 21 million bitcoins that can be created. Once the limit is reached, no more bitcoins can be made.
However, a single bitcoin can be subdivided as far down as the eighth decimal place (0.00000001BTC) to buy smaller goods using just a fraction of the bitcoin.
The entire currency is underpinned by a public ledger called the blockchain, which records who owns what bitcoins and all transactions ever made in the currency.
Whenever a transaction is made it is added to the blockchain which is confirmed by other users using the peer-to-peer network.
Due to the nature of the blockchain, transactions cannot be reversed, only new transactions can be recorded to the chain.
Bitcoins are essentially codes added to the blockchain, which are secured using encrypted digital wallets.
A wallet operates by having a public address and a private key. The public address is used by other people to send bitcoins to your wallet, whereas the private key is held by the owner and used to access and make payments from the wallet.