What are bitcoins?
Bitcoins are an anonymous, decentralized form of electronic currency existing entirely on the Internet. They are generated and controlled automatically through computer peer-to-peer networks. Bitcoins are like "cash" in cyberspace - anonymous.
The Bitcoin scheme is a large scale global payment system in which all the transactions are publicly accessible, but quite anonymous.
Bitcoins are not issued by any Government, bank or company. They are not issued or backed by any central body. This is unlike currencies (e.g. Rupees, Dollars, Euro) which are backed by Governments.
How bitcoins work
Bitcoins work on public key cryptography and digital signatures.
A bitcoin address mathematically corresponds to a "public key" and looks like this:
To "pay" you in bitcoins, a person needs your bitcoin address.
The world’s first bitcoin ATM was setup in Waves coffee shop in Vancouver, Canada in October 2013 (Image courtesy: Getty)
Each person can have multiple bitcoin addresses, each with its own balance. Users can generate a new bitcoin address for each transaction.
To create a new bitcoin address, you do not need to disclose any personal information. No e-mail addresses, user-names or passwords are required to hold or spend bitcoins.
Each bitcoin balance is simply associated with a bitcoin address and its public-private key pair.
The money "belongs" to anyone who has the private key and can “sign” transactions with it.
Bitcoin keys do not have to be registered anywhere in advance, as they are only used when required for a transaction.
Transacting parties do not need to know each other's identity. This is analogous to walking into a shop and paying cash to buy something. The shop owner does not need to know your identity.
A user scans a QR code on his smart phone to transfer bitcoins (Image courtesy: Getty)
Bitcoin official site
Financial and technical data related to the Bitcoin network.
Bitcoin blockchain (a database which holds information about all bitcoin transactions)
List of cryptocurrencies
Bitcoin: A Peer-to-Peer Electronic Cash System (PDF)
Hashcash - A Denial of Service Counter-Measure (PDF)
Quantitative Analysis of the Full Bitcoin Transaction Graph (PDF)
Presentation on how criminals use the Internet to sell drugs, guns and banking info.
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