Bitcoin is a form of decentralized currency system similar to Dollars or Pounds, except that it is completely digital (based on computer hardware and software). These “digital coins” can be used like traditional money for transactions between two parties. They are “mined” (like gold or silver) from a special “peer-to-peer” computer program that sits on a distributed worldwide network of computers. The mining process involves using computers to solve complex mathematical problems and getting rewarded with the Bitcoins which the “miners” can then trade for other things just like silver can be exchanged for Dollars or used to pay people’s wages. Bitcoins can be traded on an exchange just like Gold can be traded on the London Metal Exchange. The Bitcoin system makes extensive use of encryption technology (hence sometimes called a “crypto-currency”) and because it is a peer-to-peer network, there are millions of copies of the records of how many Bitcoins there are and all the transactions between different parties using Bitcoin.

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