It is an open source P2P digital currency, first described in 2009 by a pseudonymous developer (or developers) Satoshi Nakamoto. Bitcoin is a digital currency, a protocol and a software that enables instant peer to peer transactions, allowing worldwide payments at low or zero processing fees.
Bitcoin is one of the first implementations of a concept called “crypto-currency”. Based on this concept, bitcoin is designed around the idea of a new form of money that uses cryptography to control its creation and transactions, rather than relying on central authorities. Managing transactions and issuing Bitcoins are carried out collectively by the network.
More than $1 billion worth of the digital currency circulates on the web, and interest in the currency is skyrocketing. In many ways, bitcoins function like any other currency. You can buy anything from any company, both online and in the real world, that accepts bitcoins as currency.
Rather than trusting in governments or central banks to secure the value of the currency and guarantee transactions, the founder ensured the bitcoin places its trust in mathematics. At the start 2013, a bitcoin was worth $13.51; the price of a single bitcoin then blasted through the $100 barrier in April 2013, according to Mt Gox, a site where users can swap bitcoins for more traditional currencies.
Virtually untraceable bitcoin currency can be swapped anonymously online for almost anything. It is in a sense the digital equivalent of using hard cash and so some have criticised it for facilitating online drug markets. A recent study estimates that $23 million of illicit items are sold for bitcoins every year.
According to the Time magazine, the Internet will offer more access to a growing number of such currencies that are beyond national control, and these “currencies will be no easier to control than Facebook”.