What is Bitcoin and How does Bitcoin Work?


This post was most recently updated on December 5th, 2018

Bitcoin is a digital currency that does not exist physically. This basically means that Bitcoin only exists in digital or virtual format. However, you can use Bitcoin to buy and sell merchandise, both online and offline. You can use it to buy plane tickets, high-tech gadgets, pizza, cable service, chicken wings and so much more. In fact, with bitcoins increasing popularity hundreds of thousands of merchants now accept Bitcoin payment and this number continues to rise every day. Bitcoin is a decentralized cryptocurrency it is not controlled or backed by any bank or government. Unlike national currencies such as the US dollar Canadian dollar British Pound Sterling and more unlike paper money, which is printed by banks on giant printers. Bitcoins are created 100% electronically. Secure encryption techniques are used to regulate the creation of new bitcoins to make sure no one cheats the system and creates an unlimited number of bitcoins for themselves. The same technology also ensures that no double payments will ever occur which is a very common problem in digital products. Piracy Really is a crime.

When you make  Bitcoin payments to another person the transaction occurs almost instantly and
with very minimal fees. Almost instantly because you do have to wait for the so-called Bitcoin miners to audit and verify the transaction and then add it to the blockchain. This process usually takes from a few minutes to 45 minutes. While this may sound lengthy to you, consider the fact that if you transfer via bank wire transfer you’d probably have to wait the whole day and pay significant fees, one to three percent of the transaction amount. With Bitcoin payments fees will only be an equivalent to cents this
is true even if you’re sending thousands of bitcoins at once.

The Bitcoin network is open source which means that anyone can access it each and every Bitcoin transaction can be viewed by the entire network. But it doesn’t mean that everyone knows who you are and how many bitcoins or fractions you have in your digital wallet. All anyone can see are alphanumeric codes which don’t make sense to us humans but are of course easily understood by computers.

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About Author

Ethan Hunt

Bitcoin Maximalist and Toxic to our banking and monetary system. Separation of money and state is necessary just like the separation of religion and state in the past. Also, pro-local, pro-global and anti-national.

Disclaimer: All content found on 7bitcoins.com is only for informational purposes and should not be considered as financial advice. Do your own research before making any investment. Use information at your own risk.

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