Bitcoin explained for dummies…
In today’s economic system everything we buy has to go through a bank or credit company. When you buy in Starbucks, you aren´t paying them directly, is the bank who pays them & records all the transactions (for security).
For instance…Peter can demonstrate he paid $1M to James because the bank has recorded & verified the transaction.
In 2009 an anonymous person Satoshi Nakamoto created a system in which we don’t need that middle man (bank or credit card company) to verify the transactions: Bitcoin.
What is Bitcoin?
Bitcoin is digital money. Anyone can create a Bitcoin account & exchange Bitcoins. Something like a virtual wallet. There are only 21 million Bitcoins out there & no one can produce more.
But how can the bank be replaced? This is, how can transactions be recorded & verified?
For this, Bitcoin uses blockchain technology. This technology is very complex & I won’t get into all the math formulas 2#$%^&*()… but made it simple… a lot of computers verify the transactions, allowing for all transactions to be visible by everyone in a public ledger (document). This ledger would read: user #24 paid 1$ to user #564.
What does this mean?
- No banks are needed, so no fees are applied when you send/receive money.
- Users are anonymous so no one knows who I pay or for what.
- Governments can’t interfere/put restrictions on transactions.
- Money transfers inmediatly.
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