Bitcoin or the cryptocurrencies are rapidly becoming a popular buzzword nowadays. Everyone heard about folks that are millionaires in bits. But what is the bitcoin?
An interesting article from NY Times “What Is Bitcoin, and How Does It Work?” gives us some useful explanations:
A Bitcoin is a digital token — with no physical backing — that can be sent electronically from one user to another, anywhere in the world. A Bitcoin can be divided out to eight decimal places, so you can send someone 0.00000001 Bitcoins. This smallest fraction of a Bitcoin — the penny of the Bitcoin world — is referred to as a Satoshi, after the anonymous creator of Bitcoin.
Unlike traditional payment networks like Visa, the Bitcoin network is not run by a single company or person. The system is run by a decentralized network of computers around the world that keep track of all Bitcoin transactions, similar to the way Wikipedia is maintained by a decentralized network of writers and editors.
The record of all Bitcoin transactions that these computers are constantly updating is known as the blockchain.