Bitcoin: quickest explanation

Bitcoin is a publicly maintained ledger (a wiki ledger), the unit of account of which is 1 Bitcoin (BTC). 1 BTC = 100 million satoshi. Every Bitcoin owner has one or more accounts in the public ledger (called wallets). All transactions between Bitcoin owners are recorded in this ledger.

As a publicly maintained ledger, everyone who wishes, can keep a copy of the ledger and add new transactions to it. There are protocols each member should follow to maintain the integrity of this ledger. If a member fails to follow these protocols, other members will not accept his version of the ledger as accurate.

Each maintainer of the public ledger (called a miner), is allowed to pay himself newly created bitcoins for each set of transactions he records and is accepted by every other maintainer of the ledger. This is the source of money supply in the Bitcoin economy. There are protocols in place to ensure the inflation rate of money supply in the Bitcoin economy is halved every 4 years, and that there will never exist no more than 21 million Bitcoins. To maintain these constraints the maintainers of public ledgers get paid lesser every 4 years.


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