What is Bitcoin?

Bitcoin is a cryptocurrency and a payment system, first proposed by an anonymous person or group of people under the name Satoshi Nakamoto in 2008. Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is unique in that there are a finite number of them: 21 million.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.

Bitcoin is controversial, because it is a new form of currency and has not yet been proven to be stable. Its value has fluctuated wildly, reaching a high of over $1,200 per bitcoin in 2013 before crashing to around $200 in early 2015.

What is Ethereum?

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference. Ethereum is powered by Ether, a cryptocurrency whose value is determined by the market.

Ether can be traded for other currencies, products, and services. Ethereum has the second largest market cap after Bitcoin.

What is a Cryptocurrency?

A cryptocurrency is a digital or virtual currency that uses cryptography to secure its transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.

Bitcoin, Ethereum, and other cryptocurrencies are popular because they are secure and allow for anonymous transactions.

What is a Blockchain?

A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as "completed" blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the block chain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

The block chain is shared by all Bitcoin nodes and is used to confirm Bitcoin transactions.

What is Mining?

Mining is how new Bitcoin and Ethereum are created. Miners are rewarded with cryptocurrency for verifying and committing transactions to the blockchain. Ethereum miners are rewarded based on their share of work done, rather than their share of the total number of blocks mined.

Mining is a competitive process that requires specialized hardware and consumes large amounts of electricity.

What are Bitcoin and Ethereum Exchanges?

Bitcoin and Ethereum exchanges are platforms where you can buy, sell, or trade Bitcoin and Ethereum for other currencies, products, and services. Exchanges are necessary for the operation of Bitcoin and Ethereum and allow for the easy conversion of currency.

What is Bitcoin and Ethereum Worth?

Bitcoin and Ethereum's worth is determined by supply and demand. Their value can fluctuate wildly, as has been seen in the past.