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How bitcoin works

What is bitcoin?

Bitcoin is a form of electronic peer-to-peer digital currency that is regulated by a computer network instead of a government.

Why do bitcoins have value?

Because, like gold, consumers are willing to exchange goods and services for them.

How are bitcoins created?

Through a process called mining, which involves users solving a difficult math problem to enter into competition to obtain a block of coins.

How is the supply regulated?

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The difficulty of mining and availability of bitcoins are automatically adjusted by the network, which controls the amount of coins similar to the way commodities are regulated.

How is a transaction completed?

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Bitcoins, stored electronically, are transferred directly from buyers to sellers. There is no third party, such as a bank or credit card company.

What can be bought with bitcoins?

A growing number of merchants, from restaurants to retailers, now accept the currency, Some currency exchanges will also trade bitcoins for dollars or other traditional forms of money.

SOURCES: Bitcoin, WeUseCoins.com, PandoDaily