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FAQ 3 – What is the Bitcoin?
Bitcoin or bitcoin? There is a difference between “bitcoin” without a capital letter, which is used to refer to bitcoins as a unit of account, and “Bitcoin” with a capital letter, which refers to the blockchain.
The Bitcoin as a crypto-currency
What is the bitcoin?
bit, Bit, means unit of binary information and, coin it’s a piece of monney. According to the Larousse dictionary, bitcoin is “a monetary unit of a virtual payment system that allows a community of users to exchange goods and services with each other over the Internet”.
A bitcoin is a sequence of numbers and letters that allows its holder to make transactions on the Bitcoin network.
Each cryptocurrency can define its number of available units, for example Satoshi Nakamoto has defined in his white paper that there will be no more than 21 million BTC in circulation.
Bitcoin was created to allow its users to make direct payments without going through a financial institution like a bank.
Bitcoin first appeared in 2008
The publication of the white paper “Bitcoin – A Peer to Peer Electronic Cash System” on 18th August 2008 by Satoshi Nakamoto (a person or group of people), describing the functionality of the Bitcoin blockchain network, marked the beginning of Bitcoin and cryptocurrencies.
Satoshi Nakamoto mined the first block of the Bitcoin network on 3rd January 2009 and the first real-world transactions began in 2010 with the “Bitcoin Pizza Day”. On 22nd May 2010, Lazlo did the first Bitcoin transaction by buying 2 pizzas in cryptocurrency.
Bitcoin as Blockchain
Bitcoin works through blockchain technology
The blockchain is the body that lists all transactions made. This register is a transparent, secure database without a central control body, in which transactions are secured by encryption. In this system, all participants have access to the transactions, without knowing who is making them.
Thus, data is shared in real time over a peer-to-peer network and stored cryptographically, which means that no one can alter the data in the database. This anonymised public database allows the immutable recording of data managed by a group of computers. A block corresponds to a transaction.
The blockchain is the technology behind Bitcoin and was developed specifically for this device. Without blockchain, there would be no Bitcoin, and vice versa.
What is special about this blockchain?
Bitcoin uses Proof of Work, defined by Amaury Sechet the founder of the cryptocurrency eCash as “a software algorithm used by bitcoin and other blockchains to ensure that blocks are only considered valid if they require a certain amount of computing power to be produced”.