Bitcoin Basics

Bitcoin is said to be the future. Many people are sceptical. Most of the suspicion comes from a limited understanding of how Bitcoin works.

However, I have good news for you. You do not need to be a software developer or cryptography expert to understand Bitcoin. You also don’t need to be a particle physicist to understand how electricity works and how it improves your life.

Let’s have an overview of Bitcoin in this article.

Bitcoin was created in November 2008 in the hight of the financial crisis. It’s creator says that it was also a response to the collapsing banks. It is not known who created Bitcoin. We only know his synonym: Satoshi Nakamoto.

The Bitcoin system is decentralized and based on the currency of the same name, whose unit represents the Bitcoins. Bitcoins are limited. There are a total of 21 million bitcoins available. This means that inflation (creating a lot more Bitcoins) is not possible.

The main innovation of Bitcoin is not that it is a virtual currency. Also Euros and Dollars are mostly virtual by now. The vast majority of transactions are done electronically, not in form of cash. The main innovation is the Blockchain. this means that we do not need a central authority anymore.

This blockchain is a plain text file and acts as digital and virtual financial accounting. There, each transactions that are made with Bitcoins is saved as a block (entries), of the blockchain. Entries are made automatically by the users and the transactions.

Bitcoins are accepted as a payment options by a growing number of online stores. Companies like Microsoft (Xbox payments), the game provider Steam and Dell are accepting bitcoins as payment.

To get bitcoins, you need a so-called digital wallet. This is the palce where you keep your Bitcoins. In the near future our SkyWallet will also support Bitcoins.

If you want to learn more about Bitcoin, I recommend watching the following video on YouTube:

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