Bitcoin

  • Bitcoin is a digital currency that is not supported by any country’s government or central bank.
  • It can be traded for services or goods with sellers who accept bitcoins as payment.
  • Bitcoin was first  introduced in October 2008. It was invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto.
  • The system is peer-to-peer (person to person using bitcoins) and transactions take place between users directly, without an intermediary (like Bank).
  • Bitcoin transactions are seen by the entire network within a few seconds which are verified by network nodes  and are usually recorded into Bitcoin’s world wide ledger (record of transactions) called the blockchain, in the next block.
  • Bitcoin isn’t owned by anyone. Anyone can use it, but there isn’t a single company that is in charge of it.
  • So, Bitcoin payments are impossible to block, and bitcoin wallets can’t be frozen (unlike the currency we use that government can regulate).
  • Unlike government issued money, that can be inflated at will (by increasing or decreasing the money supply), the supply of bitcoin is mathematically limited to twenty one million bitcoins, and that can never be changed.
  • Bitcoins are impossible to counterfeit (as they are encrypted, hence also called Crypto-currency). Bitcoin’s price is determined by the laws of supply and demand.
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Types of Money

  • Fiat money is a currency established as money by government regulation or law. It differs from commodity money and representative money.
  • Demonetised currency are not fiat money as they are not legal tender
  • Commodity money is created from a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange,
  • while representative money simply represents a claim on such a good.
  • Fiat Money don’t have intrinsic value and are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transactions.
  • Cheques can be refused by anyone as a mode of payment. Hence they are not legal tenders/fiat money