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What is Bitcoin?
Bitcoin is a digital token that can be sent electronically from one user to another, anywhere
in the world.
Bitcoin is also the name of the payment network on which the Bitcoin digital tokens move. Some
people differentiate between Bitcoin capitalized, as the token, and bitcoin lowercase, as the
network. Unlike traditional payment networks like Visa or American Express, no single company
or person runs the Bitcoin network. Instead, it is a decentralized network of computers around
the world that keep track of all Bitcoin transactions, similar to the decentralized network of
servers that makes the internet work.
Because there is no central authority running Bitcoin, no one has the authority to force new
users to reveal their identities. The network was designed this way to create a currency and a
financial network outside the control of any government or single company.
The computers that join the network and track Bitcoin transactions are motivated to do so by
the new coins that are released to the network every 10 minutes and are given to one of the
computers helping to track the transactions and maintain the network.
Why are hackers using Bitcoin?
The digital currency Bitcoin has emerged as a favorite tool for hackers demanding a ransom for
a simple reason: You can start accepting Bitcoin anywhere in the world without having to reveal
your identity.
For criminals, this makes Bitcoin much more attractive than systems like Western Union, which
generally require customers to provide identification before opening an account and receiving
transferred money.
How do people use bitcoins?
It is an electronic or digital currency that works on a peer-to-peer basis. This means that it
is decentralised and has no central authority controlling it. Like currency notes, it can be
sent from one person to another, but without a central bank or the government attempting to
track it. The system depends on cryptography to control the creation of the currency. While no
one authority controls the generation of the coins or tracks them, the system itself is
designed in such a way that the network maintains a foolproof system of the record of every
transaction as well as tracking issuance of the currency.
The beauty of this cryptocurrency is that if you receive a bitcoin from another, you can be as
sure of the payment as you would on receiving physical currency notes, with the same anonymity
ascribed to it. No one need know if your neighbour spent 2 bitcoins this morning to buy gold,
but the transaction is recorded for posterity.