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Bitcoin: What is it?

The History

When trying to understand Bitcoin in detail, an endless journey is made through the history of money, financial policy, mathematics, game theory, computer science, and cryptography.

We have put together the most important aspects of Bitcoin for you in this article.

The cryptocurrency is a product of financial crises of 2007/2008 and was designed by Satoshi Nakamoto in response to the failure of financial industry and the monetary system.

Bitcoin is a nueutral, decentralized monetary system.

Simultaneosly, Bitcoin is also a computer network secured by cryptography.

Satoshi Nakamoto is known as the inventor of Bitcoin, the programmer of the first blockchain, and the decentralized digital currency.

The person behind the pseudonym Satoshi Nakamoto is still unknown today.

On 03 January 2009, the system went online. In the first transaction of the first block of the blockchain, the Genesis block, Satoshi Nakamoto wrote:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

“A hidden message as a reference to the bank bailout. These expenses were shouldered by the taxpayers. A monetary credit system transfers economic crises to the general public in order to avoid a total breakdown of the financial system. Supernational organizations such as the IMF often fulfill the function of lenders of last resort. In contrast. a decentralized monetary system prevents the risk of a domino effect in the financial sector.”

The Network

One Word – Two Meanings

In general, a distinction is drawn between the Bitcoin network and the Bitcoin currency₿

The network consists mainly of users, miners and node operators. The currency itself is the underlying asset of the network.

Virtual Central Bank

The network is responsible for processing of transactions and for ensuring that money is created in a fraud-proof and transparent manner. In the Bitcoin system, trust in the central banks is replaced by verification of programmed rules.(Consensus).

The Bitcoin network ensures that transactions can not be censored and that no single actor has control over the technology. This type of governance is completely new paradigm and was not previously possible.

Decentralized Governance

The network is a loose structure of different participants located all over the world. Each actor has a different function within the network. An incentive system, which is based on game theory, guarantees that the actors have no conflicts of interest.