What Are Bitcoins?
Bitcoins are virtual coins in the form of a file that is stored on your device. These coins can be sent to and from users three ways:
1. Direct with peer-to-peer software downloaded at bitcoin.org
2. Via an escrow service like ClearCoin
3. Via a bitcoin currency exchange
Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A pay can verify the signatures to verify the chain of ownership.
The benefits of a currency are
a) Your coins can’t be frozen [like a Paypal account can be]
b) Your coins can’t be tracked
c) Your coins can’t be taxed
d) Transaction costs are extremely low [sorry credit card companies]
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