Bitcoin is a digital peer-to-peer currency system that provides a decentralized method for performing transactions.
Bitcoins (BTC) are also the name of the unit of currency. The Bitcoin protocol is based off a paper by Satoshi Nakamoto called “Bitcoin: A Peer-to-Peer Electronic Cash System” that is designed to allow monetary transactions between users without a central authority like a bank or services like PayPal.
Avoiding a central authority allows you to be anonymous, can lower the cost of transactions, prevents your account from being frozen, and lowers the entry barrier for new users. Of course, without a central authority, that leaves nobody to make sure users are not counterfeiting or double-spending their money, right? The Bitcoin protocol protects against this using its peer-to-peer technology to verify each transaction and make sure only the authorized users are transferring their own bitcoins.
“…When you make a transaction, it is announced to everyone on the network, so everyone knows your wallet made a transaction to another wallet to prevent double-spending.”
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