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What is Bitcoin? And How Does It Work?

Bitcoin was the first of what have become known as "cryptocurencies". These are forms of digital money that use encryption to secure transactions and control the creation of new units.

Where did Bitcoin come from?
Created by a mysterious developer who uses the pseudonym Satoshi Nakamoto, Bitcoins exploded on to the financial scene in 2013, following enormous increases in their value.
In the original Bitcoin white paper, Nakamoto describes his creation as a "peer-to-peer version of electronic cash", allowing "online payments to be sent directly from one party to another without going through a financial institution".
How does Bitcoin work?
Nakamoto wrote that such a currency uses "cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party".
This sort of stateless, bank-free currency uses a distributed, cryptographically secure "blockchain" to record payment transactions.

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