How The World Trades Cryptocurrency
Bitcoin is a digital currency that uses an open-source, peer-to-peer protocol to conduct, verify and record transactions. It is a decentralized form of currency not backed by any government or financial institution, or pegged to the value of any hard commodity such as gold.
Bitcoins are digitally generated according to an algorithm that creates a new block of bitcoins around every 10 minutes. These new bitcoins are mined by participants in the bitcoin network who contribute their computing power to validate every transaction by solving a series of cryptographic puzzles. Every transaction is archived in a log known as a blockchain. By providing a publicly available, network-distributed ledger of all transactions for every bitcoin, the blockchain prevents users from being able to double-spend the currency.
The blockchain-verified, peer-to-peer basis of the currency enables users to exchange bitcoin funds across a global network without the need for third-party processing or verification services (banks or credit-card companies, for example), which typically take a percentage for enabling transactions using other currencies such as dollars, euros, pounds, yen or yuan.