What is Bitcoin? | Coinbase Support

Understanding Bitcoin

Bitcoin is a decentralized digital currency that enables instant payments to anyone, anywhere in the world. It uses peer-to-peer technology to operate with no central authority: transaction management and money issuance are carried out collectively by the network.

Created in 2009 by an anonymous person or group using the name Satoshi Nakamoto, Bitcoin was the first practical implementation of a concept called cryptocurrency, which had been described as early as 1998.

Unlike traditional currencies, Bitcoin is not controlled by any government or financial institution. Instead, it relies on cryptographic principles and a distributed network of computers to maintain its integrity.

Key Features of Bitcoin

Decentralization

No single entity controls the Bitcoin network. It is maintained by a distributed network of computers around the world.

Security

Bitcoin uses cryptographic techniques to secure transactions and control the creation of new units.

Global Accessibility

Anyone with an internet connection can use Bitcoin, regardless of location or banking status.

Limited Supply

Only 21 million bitcoins will ever exist, making it a deflationary asset unlike traditional fiat currencies.

How Bitcoin Works

Transactions

Users send and receive bitcoin through digital addresses. Transactions are broadcast to the network and recorded on a public ledger.

Mining

Miners use powerful computers to solve complex math problems that validate transactions and secure the network.

Blockchain

Verified transactions are grouped into blocks and added to the blockchain - an immutable, transparent public ledger.

Consensus

The network reaches consensus on the validity of transactions through a process called Proof-of-Work.

Frequently Asked Questions

How do I buy Bitcoin?

You can buy Bitcoin on cryptocurrency exchanges like Coinbase using traditional currency. You'll need to create an account, verify your identity, and link a payment method.

Is Bitcoin anonymous?

Bitcoin is pseudonymous, not completely anonymous. Transactions are recorded on a public ledger, so while identities aren't directly revealed, transaction histories are transparent.

What determines Bitcoin's value?

Bitcoin's value is determined by supply and demand dynamics in the market. Factors include adoption rates, investor sentiment, regulatory developments, and macroeconomic trends.

Can Bitcoin be hacked?

The Bitcoin network itself has never been hacked due to its strong cryptographic foundations. However, exchanges and individual wallets can be vulnerable if proper security measures aren't followed.

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