A Simple Explanation of Bitcoin

Bitcoin is the first real Cryptocurrency and was published by Satoshi Nakamoto (Pseudonym) in 2009. Bitcoin is the first and most well known cryptocurrency, therefore it is used the most and is the reference for all other currencies.

Desgin

Bitcoin's foundation is a Blockchain and the general purpose is to make digital payments. Every user has his own Bitcoin-adress and can send his Bitcoins to other people in the network. Once a transaction is made, it can not be reverted or manipulated again (well, practically).

Every Bitcoin-user is basicly anonymous but this anonymity is partly lost, when someone can associate a person to a public adress. The whole Blockchain is completely public, so everyone can look into it and see how many coins belong to an adress.

This is how a public Bitcoin adress looks like:

12UwLL7Krhg3QfPqBUoKofHmHQ4wMtjpM

To make transactions more flexible, one Bitcoin can be split up into smaller parts, like a cent in Euro. The smallest possible unit is 0.00000001 Bitcoin and is called "Satoshi". Therefore every Bitcoin can be split up in 100000000 Satoshis.

Mining

The verification of new transactions and the calculation of new blocks is called "Mining". Every new calculated Block extends the Blockchain of bitcoin. Everyone who uses their computer to calculate new blocks is rewarded with new bitcoins. Since Juli 2016 the Mining-revenue is 12.5 Bitcoin per block. But the workload of the calculations is so high, that you usually join a network of computers to increase the calculation-power. This is the reason why everyone on the network is only getting a part from the 12.5 Bitcoin.

Features

Bitcoin is the most known Cryptocurrency today, which is the reason why Bitcoin is the most accepted Cryptocurrency. Almost everyone who accepts Cryptocurrencies is accepting Bitcoin. In addition Bitcoin has the biggest community and has the most developed network. This makes Bitcoin the most important Cryptocurreny today. The technology behind Bitcoin is publicly available which serves as a foundation of many other currencies as Litecoin, Peercoin or many others.

Downsides

Bitcoin is only a network for financial transactions. Other currencies like Ethereum, can also be used for many other purposes and future developements other than only the financial sector.

The usual blocktime, the time needed to calculate a new block, is 10min within the Bitcoin-networt. This is, compared to other currencies, too slow and creates some problems. With more and more transactions are coming into the network, this will slow it down even more. One problem of this is, that it would be difficult to pay in a store, when every transaction is taking that much time.

How can I get Bitcoin?

At first you have to create your own Bitcoin-account, a "Bitcoin-Wallet". After that, Bitcoins can be bought from various websites.

Another way would be to use your computer to join a Mining-network. Everyone who shares their computer to mine new Bitcoins will be rewarded. But usually the low performance and the low efficiency of personal computers is not even worth all the energy costs.