Understanding Bitcoin
A Beginner's Guide to the Revolutionary Digital Currency
Introduction
"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."
Think of Bitcoin like digital cash that you can send directly to someone else over the internet, without needing a bank or PayPal to help. It's like handing cash to a friend, but digitally.
How Transactions Work
"We define an electronic coin as a chain of digital signatures."
Each Bitcoin transaction is like signing a digital check. Your signature proves you own the Bitcoin and are allowed to send it. These signatures form a chain that shows the history of who owned each Bitcoin.