Understand Bitcoin

The recent popularity of Bitcoin may have you wondering what it’s all about. Here’s what you need to know.

*  Digital currency. Bitcoin is not linked to any physical representation of value. It is used as a medium of exchange or a store of value.

*  Decentralized. No bank or organization controls Bitcoin, and it is not backed by any government or economy.

*  Mined. Bitcoins are generated through a process called “mining.” It takes massive computer systems (and a lot of electricity!) to mine Bitcoins.

*  Blockchain. Mining uses complex math puzzles to create a new “block” that is added to the Bitcoin chain. The blockchain is recorded in a public ledger.

*  Stored in a “wallet.” A digital wallet is required to store the encrypted key that accesses your Bitcoin. It’s like a virtual bank account.

*  Unregulated. No government or organization has regulatory oversight of Bitcoin. Bitcoin is anonymous and there is no recourse if stolen.