How does Bitcoin work ?
It exists through an open-source software program and its supply is controlled by a computer algorithm. Once you download and run the Bitcoin client software, it connects over the Internet to the decentralized network of all Bitcoin users and also generates a pair of unique, mathematically linked keys, which you’ll need to exchange Bitcoins with any other client. One key is private and kept hidden on your computer. The other is public and a version of it dubbed a Bitcoin address is given to other people so they can send you Bitcoins. The process of generating Bitcoins is quite complicated and involves solving complex algorithms and sharing the solution with the entire network. The “mining “ is very computationally intensive and requires powerful computers.
How to transfer Bitcoins?
When you perform a transaction, your Bitcoin software performs a mathematical operation to combine the other party’s public key and your own private key with the amount of Bitcoins that you want to transfer. The result of that operation is then sent out across the distributed Bitcoin network so the transaction can be verified by Bitcoin software clients not involved in the transfer.
How to trade Bitcoins ?
Exchanges like Mt. Gox provide a place for people to trade Bitcoins for other types of currency. Paymentsto a merchant who accepts Bitcoins are made from the wallet application, either on your computer or smart phone, by entering the recipient’s address, the payment amount.
Who controls the Bitcoin network?
It is controlled by all Bitcoin users around the world. While developers improve the software, they can’t force a change in the Bitcoin protocol because the virtual currency can only work correctly only if there is a consensus among all users. The world’s first-ever Bitcoin ATM named Robocoin opened at “ Waves Coffee House “ in Vancouver (Canada ) on 29th October, enabling Bitcoin owners to exchange the digital currency for cash, and vice versa.