Bitcoins are exchanged online in a fashion similar to cash, but the anonymous currency works differently than most real forms of currency. Bitcoin is becoming a great method to exchange cash for services, and more merchants and service providers are beginning to show acceptance of it.
When you sign up for a service, such as Payza or Bitcoin Core, you will receive a digital wallet tied to an account. You can login to this account from any desktop or mobile device, and it comes with an address. That address is used to transfer Bitcoins to and from your wallet.
You can buy Bitcoins using your currency’s exchange rate, or you can set up a system to mine for them. Mined Bitcoins take time to find, and require some technical knowhow to setup, but they can provide a steady stream of Bitcoins for your wallet.
Each transaction is recorded to a central ledger system. This system not only tracks how many Bitcoins were spent, but it uses a sophisticated algorithm to verify ownership of a coin and record the transaction taking place. Every transaction abides by these rules.
Desktop clients must download the entire blockchain, which is always growing. Mobile users utilize a streamlined form of Bitcoin’s blockchain, instead relying on nodes to pass information on behalf of the user. This results in an accurate ledger without consuming too much data to use the service.
Another amazing innovation is that Bitcoin wallets have multiple methods for backup. You can take your records offline, back them up to another digital device and use multiple signatures to help verify your transactions.