What is Bitcoin?

Bitcoin is a cryptocurrency built on a decentralized network that allows users to make peer-to-peer (P2P) transactions. This helps users avoid a traditional system where a centralized entity manages the exchange of funds. On a P2P network, there are many decentralized nodes. Bitcoin transactions are recorded, verified, and distributed on these nodes in a safe way using cryptography. Because all transactions are distributed across the nodes, this creates a distributed ledger where all existing transactions can be found on the blockchain.

One Bitcoin is not the smallest unit available of this cryptocurrency. A Bitcoin is divisible into the smallest unit of 100 millionth of a coin (0.00000001 BTC). This unit is called a satoshi. There is, however, a limited supply of Bitcoin. Bitcoin’s own source code establishes that there will only be 21 million bitcoins ever created. So far we have not yet reached this number, so Bitcoin is still being generated and mined. This limited supply makes it an attractive asset for investors.

Just like all other currencies, Bitcoin can be used to pay for goods and services. One of the advantages of Bitcoin is that it is pseudo-anonymous in nature. Despite the fact that every transaction has a unique ID and is recorded and published on the blockchain, the name of the user is never made public. This means that while each user is not completely anonymous (but pseudo-anonymous), it is very hard to reveal the true identity of a buyer or seller.

Bitcoin is also not tied to any central entity, like central banks or governments. Therefore, international transactions in Bitcoin are cheaper and easier than traditional fiat currency. As a result, a growing number of businesses are accepting payments in Bitcoin or other cryptocurrencies. Bitcoin has also become a very popular investment option.

As mentioned earlier, P2P allows for Bitcoin to be transferred directly between users. In recent years, we have also seen the rise of many Bitcoin exchanges. These exchanges allow customers and investors to trade their Bitcoin for fiat currency or other cryptocurrencies.

These cryptocurrency exchanges store large quantities of Bitcoin, making them an attractive target for hackers. As a result, the security and protection of these cryptocurrency storage places have become the most important issue for exchanges.

With these challenges in mind, CYBAVO has created a secure storage and management solution for exchanges and cryptocurrency traders. CYBAVO VAULT provides a combination of top-of-the-line security with an easy-to-use interface for cryptocurrency exchanges.

Learn more about blockchain and cryptocurrencies in our Knowledge Center.