Definition of Bitcoin, What is Bitcoin?

Bitcoin (sign: BTC) is a decentralized digital currency based on an open-source, peer-to-peer Internet protocol. It was introduced in 2009 by a pseudonymous developer, Satoshi Nakamoto.

Bikinis can be exchanged through a computer or Smartphone locally or internationally without an intermediate financial institution. In trade, one bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places.

Bitcoin is not managed like typical currencies: it has no central bank or central organization. Instead, it relies on an Internet-based peer-to-peer network. The money supply is automated and given to servers or "bitcoin miners" that confirm bitcoin transactions as they add them to a decentralized and archived transaction log approximately every 10 minutes.

The transaction log is authenticated by end-users through hashed ECDSA digital signatures (similar to a username and password) and added to through calculations of varying difficulty, performed by dedicated servers called bitcoin miners. Each 10-minute portion or "block" of the transaction log has an assigned amount of bitcoins that is awarded to miners (who can then sell them at their discretion) once it is added to the log and confirmed by other miners. The amount of bitcoins per addition depends on how long the network has been running and how much in transaction fees has been paid. Currently, 25 new bitcoins are generated with every 10-minute block. This will be halved to 12.5 BTC during the year 2017 and halved continuously every 4 years after until a hard limit of 21 million bitcoins is reached during the year 2140.

Bitcoin is the most widely used alternative currency and accepted by various merchants and services internationally. As of April 2013, the monetary base of bitcoin was valued at over $1 billion USD.[16][17] The large fluctuations in the dollar value of bitcoin has evoked criticism of bitcoin's economic suitability and legitimacy as a currency.

Transactions
Bitcoins can be sent and received through various websites and apps after being bought with an exchange such as Mt. Gox.

List of bitcoin wallets
Armory
Bitcoin-Qt
Coinbase
Electrum
Flexcoin
Multibit
My Wallet

I personally use a My Wallet as my bitcoin wallet.

Address (Your receiving bitcoin addresses)

Based on digital signatures, payments are made to bitcoin "addresses" or "public keys": human-readable strings of numbers and letters around 33 characters in length, always beginning with the digit 1 or 3, as in the example of 175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W.

Users obtain new bitcoin addresses as necessary; these are stored in a wallet file with links to cryptographic passwords or "private keys" that enable access to and transfer of bitcoins. A file or "wallet" containing bitcoin addresses is usually encrypted with an additional password.

Distribution
Unlike fiat currency, bitcoin has no centralized issuing authority. The network is programmed to increase the money supply as a geometric series until the total number of bitcoins reaches 21 million BTC, by issuing them to nodes that verify transaction records through intense bruteforce hashing with computing power. These nodes can then sell their earned bitcoins on exchanges or trade them at their discretion.

Currently, 25 bitcoins are generated every 10 minutes. This will be halved to 12.5 BTC within the year 2017 and halved continuously every 4 years after until a hard-limit of 21 million bitcoins is reached within the year 2140. As of March 2013 over 10.5 million of the total 21 million BTC had been created; the current total number created is available online. In November 2012, half of the total supply was generated, and by end of 2016, three-quarters will have been generated. By 2140, all bitcoins will have been generated with the last one consisting of fractional parts. To ensure this granularity of the money supply, clients can divide each BTC unit down to eight decimal places (a total of 2.1 × 1015 or 2.1 quadrillion units).

Exchange
Through various exchanges, bitcoins are bought and sold at a variable price against the value of other currency. Bitcoin has appreciated rapidly in relation to existing "fiat" currencies including the US dollar, euro and British pound.

In April 2013, 1 BTC traded from $100–$260. Taking into account the total number of bitcoins mined, the monetary base of the bitcoin network stands at over $1 billion USD.

Median price of Bitcoin in GBP to April 2013, from the Mt.Gox GBP index. From April 2012 to April 2013, Bitcoin became 20 times more valuable.

According to Reuters, undisclosed documents indicate that banks such as Morgan Stanley and Goldman Sachs have visited bitcoin exchanges as often as 30 times a day. Employees of international banks and major financial organizations have shown interest in the bitcoin markets as well.

Hedge funds
Financial laws can limit the type of assets institutional investors can buy, including alternative assets like bitcoin. However, assets stored in a licensed product can usually be bought by regulated entities. Exante Ltd., a Malta-based investment firm, launched a bitcoin hedge fund marketed towards institutional investors and high net-worth individuals. Bitcoin shares are currently traded through the Exante Hedge Fund Marketplace platform and authorized and regulated by the Malta Financial Services Authority. As of March 2013, Exante holds $3.2 million (2.5€ million) in bitcoin assets.
Derivatives

Derivatives on bitcoins are thinly available:
iCBIT[1] offers futures contracts on bitcoins against multiple currencies.
In April 2013, IG Group began to offer binary options on the price of bitcoins at a given date.


Source : Wikipedia