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Bitcoin is a payment system invented by Satoshi Nakamoto, who published the invention in 2008 and released it as open-source software in 2009.The system is peer-to-peer; users can transact directly without needing an intermediary.Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain. The ledger uses its own unit of account, also called bitcoin.The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency.Bitcoin is often called the first cryptocurrency, although prior systems existed.Bitcoin is more correctly described as the first decentralized digital currency.It is the largest of its kind in terms of total market value.

Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into the public ledger.This activity is called mining and the miners are rewarded with transaction fees and newly created bitcoins.Besides mining, bitcoins can be obtained in exchange for different currencies, products, and services.Users can send and receive bitcoins for an optional transaction fee.

Bitcoin as a form of payment for products and services has grown, and merchants have an incentive to accept it because fees are lower than the 2–3% typically imposed by credit card processors.Unlike credit cards, any fees are paid by the purchaser, not the vendor. The European Banking Authority and other sources have warned that bitcoin users are not protected by refund rights or chargebacks.Despite a big increase in the number of merchants accepting bitcoin, the cryptocurrency doesn’t have much momentum in retail transactions.

From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and enables a user to send and receive bitcoins.

Behind the scenes, the Bitcoin network is sharing a massive public ledger called the "block chain". This ledger contains every transaction ever processed which enables a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses therefore allowing all users to have full control over sending bitcoins.

Thus, there is no fraud, no chargebacks and no identifying information that could be compromised resulting in identity theft.

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Cloud Mining is the process of bitcoin mining utilizing a remote datacenter with shared processing power. This type of mining allows users to mine bitcoins or alternative cryptocurrencies without having to manage their own hardware. Since Cloud Mining is provided as a service there is generally some cost and this can result in lower returns for the miner. There are many cloud mining scams.

Users of hosted Mining equipment can either lease a physical mining server or a Virtual private server and install mining software on the machine. Instead of leasing a dedicated server, some services offer hashing power hosted in data centers for sale denominated in Gigahash/seconds (GH/s); Users either select a desired amount of hashing power and a period for the contract or in some cases can trade their hashing power.

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