Bitcoin is a digital crypto-currency that emerged in 2008 as the brain-child of ‘Satoshi Nakamoto’ and was released as open-source software in 2009.
Trading occurs on a peer-to-peer basis and is not regulated by a central authority. Instead of having a printed bill or minted coin, Bitcoin values are represented as a cryptographic string of characters. Bitcoin transactions are non-reversible. Each transaction is noted in a digital ledger – a large, distributed database called the ‘block chain’. As the name suggest, transactions are recorded in blocks. Each new block must contain within itself the hash (digital signature) of the block that came before it: so that each new block keeps a note of the entire Bitcoin transaction record. A distributed network of ‘miners’ provides the computing power to record and verify payments in the block chain. When someone develops a legitimate new block that is longer than the latest public one, it then becomes the latest authoritative block. Miners that successfully create new blocks are rewarded with newly-created Bitcoins.