Bitcoin is a decentralized peer-to-peer currency system, that has no central bank or authority. It is comprised of a computer network of users and organizations that communicate and store information about Bitcoin address balances with each other over the Internet, primarily by running the original open-source Bitcoin software on their computer.
The design of Bitcoin includes novel methods to transmit payments, to create and distribute new Bitcoins at a known and limited rate, and to cryptographically protect a shared record of all past Bitcoin transactions.
What is a bitcoin?
Bitcoin has its own unit of currency, the bitcoin, that has no set value in relation to government-issued currencies – it is valued independently on the merits of its usefulness and scarcity.
New bitcoins are generated at a limited rate, ensuring a constant and known supply of the currency. A total of 21 million is the maximum that will ever exist.
A whole bitcoin is not the smallest amount that can be sent by users though – a bitcoin can be subdivided down to eight decimal places, ensuring enough currency supply for a globally-sized economy.