Bitcoin is a decentralized digital currency, often referred to as cryptocurrency, that operates on a peer-to-peer network without the need for a central authority or intermediary. It was invented in 2008 by an unknown person or group of people using the pseudonym Satoshi Nakamoto and released as open-source software in 2009.
The key innovation of Bitcoin is its underlying technology, blockchain, which is a distributed ledger that records all transactions across a network of computers. This ledger is maintained collectively by the network participants, known as miners, who use computational power to validate and add new transactions to the blockchain in exchange for rewards in the form of newly created bitcoins.
Bitcoins are created through a process called mining, where miners compete to solve complex mathematical puzzles to validate transactions and secure the network. The total supply of bitcoins is capped at 21 million, making it a deflationary currency.
Transactions on the Bitcoin network are pseudo-anonymous, meaning that while transaction details are public and recorded on the blockchain, the identities of the parties involved are not directly tied to their public addresses. This provides a level of privacy but also raises concerns about potential illicit activities.
Bitcoin can be used for various purposes, including peer-to-peer transactions, online purchases, investment, and as a store of value. Its decentralized nature and limited supply make it immune to government manipulation and inflation, attracting attention as a digital alternative to traditional currencies and investment assets.
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