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- Bitcoin is a digital form of currency and differentiates from your average currency and some altcoins in these 5 major ways:
- No single entity controls the bitcoin network. It is maintained by a group of volunteer coders, and run by an open network of dedicated computers spread around the world called nodes.
- Limited Supply
- Fiat currencies (dollars, euros, yen, etc.) have an unlimited supply – central banks can issue as many as they want, and can attempt to manipulate a currency’s value relative to others. With bitcoin, on the other hand, the supply is tightly controlled by the underlying algorithm. A small number of new bitcoins are distributed into the blockchain network every hour, and will continue to do so at a diminishing rate until a maximum of 21 million Bitcoins has been reached.
- Partial Anonymity
- Since there is no central “validator,” users do not need to identify themselves when sending bitcoin to another user. When a transaction request is submitted, the protocol checks all previous transactions to confirm that the sender has the necessary bitcoin as well as the authority to send them. The system does not need to know his or her identity. With that being said when buying Bitcoin from an exchange most require that you reveal your identity and keeps record of whatever bitcoin you buy or sell.
- Bitcoin transactions cannot be reversed, unlike electronic fiat transactions. This is because there is no central person in charge of the transaction that can return the money.
- The smallest unit of a bitcoin is called a satoshi. It is one hundred millionth of a bitcoin (0.00000001).
For more info, check out our article: What is Bitcoin? An Easy Guide for Anyone to Understand