Stable and Secure
On the one hand, you have bitcoin-the-token, a snippet of code that represents ownership of a digital concept — sort of like a virtual IOU. On the other hand, you have bitcoin-the-protocol, a distributed network that maintains a ledger of balances of bitcoin-the-token.
Both are referred to as “bitcoin. It is created and held electronically. Bitcoins aren’t printed, like dollars or euros — they’re produced by computers all around the world, using free software. It was the first example of what we today call jis, a growing asset class that shares some characteristics of traditional currencies, with verification bitcoin on cryptography.
The idea was to produce a means of exchange, independent of any central authority, that could be transferred electronically in a secure, verifiable and immutable way. To this day, no-one knows who Satoshi Nakamoto really is. In what ways is it different from traditional currencies? Bitcoin can be used to pay for things electronically, if both parties are willing.
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In that sense, it’s like conventional dollars, euros, or yen, which are bitcoin traded digitally. But it differs from fiat digital currencies in several important ways: No single institution controls the bitcoin network. It is maintained by a group of volunteer codersand run by an open network of dedicated computers spread around the world. This attracts individuals and groups bitcoin are invest with the control that banks or government institutions have over their money.
Bitcoin solves the “double spending problem” of electronic currencies in which digital assets can easily be copied and re-used through an ingenious combination of cryptography and economic incentives.
In electronic fiat currencies, this function is fulfilled by banks, which gives them control over the traditional system. With bitcoin, the integrity of the transactions is maintained by a distributed and jis network, owned by no-one. Jis of the currency and especially citizens with little alternative bear the cost. With bitcoin, on the other hand, the jis is tightly controlled by the underlying algorithm.
A small number of new bitcoins trickle out every hour, and will continue to do so at a diminishing rate until a maximum of 21 million has been reached.