Bitcoin is a form of digital currency that, despite popular belief, doesn’t just exist on the internet. Bitcoin is first and foremost used as a currency via mobile apps and can be converted into official currencies as well, including Forints or Euros. It can also take a tangible, physical shape, for example via paper wallets or other offline storage tools, like Trezor. Unlike traditional currencies, it does not have a central authority, and does not belong to any single country, bank or centralized bank.
You can send money to anyone in the world with the help of bitcoin, as long as the recipient has a bitcoin address. Just like the cash in your wallet, bitcoins are in a similar place, stored in a so-called digital wallet to which only you have access. Your bitcoin wallet is usually on your cellphone, but not exclusively. You can read more about that here.
Bitcoin is built on the blueprint of a decentralized, peer-to-peer network. Various bitcoin transactions are stored in databases with the help of this network.
The records for each completed transaction and each ‘mined’ bitcoin are kept via a decentralized process validated by all of the computers that run the software, without the possibility of any sort of centralized accountability. The computers that run the software are all equal, working in a so-called peer-to-peer network, where the machines speak directly with each other, that is to say there is no specified central crossroads. Because of this, bitcoin is an incredibly resilient and trustworthy system, as it’s able to work even if a few hundred computers drop out of the system. In the past 9 years the entire network has only stalled out once for a total of 6 hours, due to a software bug. This means that the bitcoin network has been available for 99.99% of the time throughout its existence, day and night, and even on the weekends.
Both the digital currency and the network, and it’s open-source software is called ‘bitcoin.’ We refer to the digital currency with a small “b” (bitcoin) and to the payment network (Bitcoin) with a capital “B” .