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tech lab

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?

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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?

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?

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?

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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

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