Bitcoin is known as a cryptocurrency and has spawned many copy cats like it such as LTE Coin, Peercoin, and humorously Dogecoin. Trying to explain exactly how it works is probably only suited to a mathematician, but in its simplest form it is a digital currency that is created by solving pieces of a large puzzle known as a “chain block”.
To get pieces of the block you have to use a computer to mine it. Your computer uses its resources to undertake complex and long mathematical processes to get a piece of the block, and the more parts of the block mined by other people, the harder and longer it takes to get these pieces.
It works incredibly similar to mining for gold. There is a limited amount of gold in the world and the more that it is mined the harder it is to get more because more resources are needed to dig deeper. However instead of bitcoin just existing since the creation of the earth in a limited amount, it was carefully created to have a certain cap on how much can be mined. There can be 21 million bitcoins mined with 16 million already mined. Mathematicians have estimated that all bitcoins will be mined by 2140 unless some major change is added to the system which is unlikely.
Bitcoin is hardly an accepted payment method globally with only a handful of well established companies accepting it due to how volatile its value is. However it is very possible to simply just buy gift cards and prepaid credit cards with bitcoin and use them in that manner.
Bitcoins advantage of being able to make anonymous transactions is also one of its major downfalls. When bitcoin is stolen there is nothing you can do, and I mean that sincerely. Countless Bitcoin brokers have been hacked and have had all their coins stolen, and since no kind of insurance exists they never get it back.
Because of its anonymous nature it has been a popular currency for criminal activities. Money launderers, pedophile rings, drug dealers, gangs, terrorists, and supposedly hitmen have been known to use bitcoin as their currency of choice. These associations hold back this currency’s potential to be used on a larger scale and no solutions seem to exist.