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Bitcoin Virtual Money

Bitcoin Virtual Money

Bitcoin is a virtual currency that is both established and safeguarded by mathematical techniques. We understand that most common currencies in use today are no longer backed by something like the gold standard. This means they maintain their value through a level of trust in the national economy that they represent. Bitcoin attempts to establish a similar level of trust by using complex math to verify transactions and prevent fraud.

The bitcoin network maintains a ledger-like data record of transactions. Just like any other currency, real good or services can be exchanged for bitcoins, which can then be exchanged back into other real goods or services. The important factors that make it work are that the ledger has integrity, there is little chance for fraud, and the value of the currency unit has some stability.

Unlike most other conventional currencies, bitcoin is not controlled by a national government or even by a group of banks. Bitcoin is a “distributed” currency. The bitcoin ledger of transactions is public, generated by participating computers all over the world and not owned or controlled by any single group. Bitcoin “miners” are groups of computers dedicated to processing the verification formulas. In exchange for doing the number crunching, they are rewarded with a small percentage of a bitcoin as a transaction fee.

How Bitcoin Works Under the Hood

– [youtube.com]

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