Bitcoin is an electronic money that was made in 2009 by Satoshi Nakamoto. The name is also associated with open source software that he designed, and also uses peer-to-peer networks without centralized storage or a single administrator where the United States Treasury calls bitcoin a decentralized currency . Unlike most currencies, bitcoin does not depend on trusting major publishers. Bitcoin uses a database that is distributed and spreads to nodes from a P2P network to transaction journals, and uses cryptographyto provide basic security functions, such as ensuring that bitcoins can only be consumed by people owning them, and should never be done more than once.
Bitcoin isn't just about sending money. It has many features and opens many possibilities that the community is still exploring. Here are some of the technologies currently being researched, and in some cases, being turned into real products and services. The most interesting uses of Bitcoin are probably still to be discovered.
Control against fraud
An unprecedented level of security is possible with Bitcoin. The network provides users with protection against most prevalent types of fraud like chargebacks or unwanted charges, and bitcoins are impossible to counterfeit. Users can backup or encrypt their wallets. Hardware wallets make it very difficult to steal or lose money. Bitcoin is designed to allow its users to have complete control over their money.
With Bitcoin, all payments in the world can be fully interoperable. Bitcoin allows any bank, business or individual to securely send and receive payments anywhere at any time, with or without a bank account. Bitcoin is available in a large number of countries that still remain out of reach for most payment systems due to their own limitations. Bitcoin increases global access to commerce and it can help international trades to flourish.
With the use of cryptography, secure payments are possible without slow and costly middlemen. A Bitcoin transaction can be much cheaper than its alternatives and be completed in a short time. This means Bitcoin holds some potential to become a common way to transfer any currency in the future. Bitcoin could also play a role in reducing poverty in many countries by cutting high transaction fees on workers' salary.
Imagine listening to Internet radio paid by the second, viewing web pages with a small tip for each ad not shown, or buying bandwidth from a WiFi hotspot by the kilobyte. Bitcoin is efficient enough to make all of these ideas possible. Learn more about the technology behind Bitcoin micropayments or about future upgrades currently being designed and implemented to make micropayments more accessible.
Multiple signatures allow a transaction to be accepted by the network only if a certain number of a defined group of persons agree to sign the transaction. This could be used by a board of directors to prevent any member to spend parts of their treasury without other members' consent. This can also be used by banks to prevent theft by blocking payments above a threshold if the user does not provide additional credentials.
All Bitcoin transactions are public and transparent and the identity of the people behind transactions are private by default. This allows individuals and organizations to work with flexible transparency rules. For instance, a business can choose to reveal certain transactions and balances only to certain employees just like a non-profit organization is free to allow the public to see how much they receive in daily and monthly donations.
Automated services usually have to deal with costs and limitations of cash, or credit card payments. This includes all kinds of vending machines, from train tickets to soda machines. Bitcoin is suited to be used in a new generation of automated services to cut their operating costs. Imagine self-driving taxis or a store where you can pay for your purchases without waiting in line. Many ideas are possible.