According to Satoshi Nakamoto, Bitcoin is a “purely peer-to-peer version of electronic cash” that allows “online payments to be sent directly from one party to another without going through a financial institution.”
Also see: What is peer-to-peer?
Bypassing financial institutions is a key part of the Bitcoin promise. In the decentralization advocates mind, financial institutions are perfect examples of centralized points of failure. However, to average users of financial systems, which all of us are, bypassing financial institutions can mean significant savings in fees. When Alice wants to send Bob some bitcoin, all she needs is an internet connection and she’ll be able to broadcast her transaction to the Bitcoin blockchain – the ledger of all Bitcoin transactions.
Also see: What is a blockchain?(coming soon)
Bitcoins can be broken down to 8 decimal places. Fun fact: 0.00000001 ฿ is also known as a “satoshi.”
If there’s no central authority… How are Bitcoin transactions on the blockchain secured?
Bitcoin is a payment system that is based on cryptographic proof instead of trust.With Bitcoin, instead of having one central authority (failure point) that verifies transactions, controls the money supply, users of Bitcoin called miners secure the network.
Want to learn more about Bitcoin mining? What is Bitcoin mining? (coming soon)