What is a Bitcoin?

What is a Bitcoin?

A Bitcoin is a worldwide cryptocurrency that acts as a decentralized digital currency and payment system.  The system works without a central repository or single administrator and was originally invented by an unknown person or group of people under the name of Satoshi Nakamoto.  It was originally released as an open-source software in 2009 and operates as a peer-to-peer system tracking transactions between users directly without an intermediary.  The transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain.

The use of the word bitcoin is a compound of the words bit and coin.  As of 2014, the unit of accounts of the bitcoin system is represented by BTC and XBT, the smallest amount of bitcoin represents only 0.00000001 bitcoin, or one hundred millionth of a bitcoin, called a satoshi.  A millibitcoin equals 0.001 bitcoin, or one thousandth of a bitcoin.

A Bitcoin is considered to be pseudonymous, meaning that funds are not directly tied to real-world entities and rather bitcoin addresses.  Owners of bitcoin addresses are not explicitly identified but all blockchain transactions are public.  Transaction histories can be linked to individuals through idioms, when combining an corroborating public transaction data with known information of an owners certain address, it is possible to identify users.