is a peering electronic cash system using digital currency of the same name, which is often called virtual or crypto-currency. The network is completely decentralized, without a central administrator or any of its counterpart.
Bitcoin can be used to pay for goods or services from sellers who are ready to accept them. There is an possibility to exchange real money through specialized platforms for trading or exchangers.
One of the specific bitcoin features is the generation of new coins. It is decentralized, limited in scope and time, relatively randomly distributed among the volunteers who use the computing power of their equipment to protect the payment system by the proof-of-work of re-spending. Maintenance activities of the system with the ability to receive compensation in the form of generated bitcoins and fees called Mining.
The basic element of this payment system is the client software with an open source code. The clients are interconnected in ad hoc network via a network application layer protocol running on multiple computers.
To maintain and protect the system, cryptographic techniques are used.
Bitcoin uses cryptographic principles to create unique, irreproducible, and divisible cookie exchange. Users store cryptographic keys to their own money locally on their own computers, and conduct transactions directly with each other via peer to peer network by checking via the reliability of remittances. Physically, each coin in the system has its own unique key.
To make a transaction, the client adds recipient’s public key to the coins and sign it with his own private key. To avoid double write-off of the same coin, all transactions are broadcast to other participants, and the complete list of transactions in an anonymous form stored in a distributed network. With each new transaction, keys are checked on the list of previous transactions. In other words, Bitcoin is based on the record of movement of funds using asymmetric encryption.
At BTC, there are two ways to get Bitcoins: generating coins using your own computing equipment, or buying them for some traditional currency (the usual way of converting currencies). Mathematically, the algorithm is designed so that with the development of the system and increase the money supply in the system, the generation of new coins become more difficult, requiring more computing power.
When the total monetary base system reaches the amount of 21 million coins, any type of the bitcoins generation will be fully technically stopped (to avoid inflation), then the system will enter the third and final phase – the stabilization.
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