Bitcoin is the first and currently the largest, decentralized ‘cryptocurrency’. Bitcoin was invented by Satoshi Nakamoto in 2008 and designed together with the so-called ‘blockchain technology’. As a result, it bypasses traditional banks and creates a peer-to-peer network, which in theory means that transaction costs can be lower. Because Bitcoin is an “internet currency”, you can send bitcoins quickly and easily anywhere in the world, without being bound by the slowness and transaction costs that an international banking transaction entails.

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Bitcoin background

Bitcoin is still the face of cryptocurrencies for most and still has the highest market value. At the highest point it was more than USD 330 billion in all. This shows that Bitcoin is no longer just a toy for traders, but is increasingly known and used by the general public. Bitcoin, however, does not exist without problems, but fortunately there is constant improvement work being done by a large team of volunteers. With around 30% of all trade, Bitcoin is by far the most traded cryptocurrency. The value of Bitcoin can fluctuate greatly, sometimes up to 10-20% per day.

Bitcoin specifications

Protocol Proof of work (mining)
Algorithm SHA-256
Circulating number 16,864,537 Bitcoins
Total amount 21,000,000
Avg transaction time 10-15 minutes
Avg blocktime 10-15 minutes

Bitcoin features

The name Bitcoin will meanwhile immediately ring a bell with a large group of people. But what are we talking about? Below an overview of the most important features of Bitcoin

Easy and fast mobile payment

For international transactions, a Bitcoin payment is relatively fast. The average transaction times are between zero and twenty minutes. It is not as fast as, for example, an “ING to ING” payment. With Bitcoin you do have the option to pay in 2 steps with a smartphone. To transfer money from mobile to mobile you only need to scan a QR code.

Manage money securely

Transactions within the Bitcoin network use encryption that can never be broken in practice. As long as you do not share your wallet password , nobody can use your Bitcoins. This provides protection against many forms of fraud.

Works everywhere and always

As long as you have an internet connection you can use Bitcoin. You are therefore not dependent on office hours and banks that are lying flat because of maintenance or a DDoS attack.

Fast international payment

When sending Bitcoin, distance and boundaries are irrelevant. So you can pay the neighbor just as easily and quickly as your second cousin in Australia.

Low transaction costs

Low costs are of course relative. If someone wants to do an international transaction of a few million euros, that costs you relatively much money. With Bitcoin you do not work with transaction costs. But this does not mean that it is free. When you send a Bitcoin you pay a mining fee. You decide how much you spend on this. Currently, a usual fee is easily twenty euros per transaction. Low costs are therefore relative to the total amount.

Protect your identity

At Bitcoin, identity fraud is not possible as long as you keep your password safe. In fact, it is even possible to remain (almost) completely anonymous as long as you take sufficient measures for this. For example by using Tor.

Technology behind Bitcoin

Bitcoin uses the blockchain technology. This is a public list of all confirmed transactions that have ever been made within the Bitcoin network. This list can be used to check how many bitcoins there are in each wallet and whether you actually have enough bitcoins to execute a transaction.

Transactions only take place when a new block is added to this blockchain. A private key is used as a mathematical signature to prove from which wallet the bitcoins are sent. All transactions are visible to everyone and are usually confirmed within 10 minutes via Bitcoin mining.

Bitcoin mining is used to confirm new blocks that are in the queue. To be confirmed, transactions in this block must comply with very specific cryptographic rules. By applying these strict rules, it is possible to prevent someone from changing the information in a block, as a result of which this block, and all subsequent blocks, would be invalid. Applying mining can also prevent one person from determining which blocks are added.