Bitcoin Structure

What can I do with Bitcoin?

You can do everything with Bitcoin that you can do with traditional currencies! Bitcoin can be used for everything from small retail payments to huge funds remittances between major institutions.

In other words, Bitcoin is just another currency, albeit a digital one, that exists in the world.

Unlike yen or dollars, Bitcoin must be settled electronically. There are no paper bills or coins.

As settlements are electronic, sending funds over the internet is simple. Whether the recipient is next door or on the other side of the world, funds can be settled in a very short amount of time.

How is Bitcoin different from yen or dollars?

If Bitcoins were the same as yen and dollars, there would be no need for it to exist. So, what makes Bitcoin unique?

The biggest difference is that there is no Bitcoin central bank. There is no institution, government, or other third party that oversees the issuance and circulation of Bitcoin.

Even though it has the basic characteristics of a government currency, Bitcoin is not managed by any country or company. This is the groundbreaking concept that makes Bitcoin unique.

Who administers Bitcoin?

As we mentioned before, there is no government institution or company managing Bitcoin. So, who is managing it?

Common sense tells us that a currency not managed by a trusted central institution is risky. If someone were to issue large amounts of such a currency and then profit or benefit from that issuance, all faith in that currency would be lost. No one would find value in such an unstable currency, and it would simply fall out of circulation.

Rather than being centrally managed however, Bitcoin is managed by a decentralized network of computers.

All transactions and activities, such as new currency issuances, are recorded on a massive network of computers. All Bitcoin transactions ever performed are recorded in one giant ledger, which is stored in its entirety on computers around the world.

This visual, public record serves to protect against issues such as currency fraud and duplicate payments. All transactions are stored on the public ledger (although personal information is never saved). These records are kept in order to keep Bitcoin in circulation, and ensure its integrity.

If a single government institution or company managed this ledger, then Bitcoin would be no different from existing government currencies. By managing the Bitcoin ledger via a decentralized group of computers however, Bitcoin does not require central management.

The major concern with distributing a single, massive Bitcoin ledger across so many computers on the Bitcoin network is that a mismatch could occur on some of the machines.

However, the Bitcoin protocol effectively solves this problem, which is one of the reasons Bitcoin is trusted and expanding so rapidly!