What is Bitcoin?


Bitcoin is a new kind of global payment network. Like Visa or Paypal, it allows money to be transferred electronically however Bitcoin is different from these conventional payment networks in two important ways.

First, the Bitcoin network is fully decentralized. The PayPal network is owned and operated by PayPal Inc. People send money to each other via PayPal and PayPal keeps a ledger. But there is no Bitcoin Inc. Instead, thousands of computers around the world process Bitcoin transactions in a peer-to-peer fashion.

Second, Visa and PayPal payments are based on conventional currencies such as the US dollar. In contrast, the Bitcoin network has its own unit of value, which is called the bitcoin. The value of one bitcoin fluctuates against other currencies in the same way the euro’s value fluctuates against the dollar. In April 2014, one bitcoin is worth around $400, and all bitcoins in existence are worth around $5 billion.