Q: What is Bitcoin?
A: Bitcoin is a peer-to-peer, network-based digital currency. There is no central authority to issue new money or keep track of transactions. These tasks are managed collectively by the nodes of the network. To learn more, visit bitcoin.org (official site) or watch a short video on weusecoins.com.
Q: What is the Bitcoin Monitor?
A: The Bitcoin Monitor visualizes the events on the Bitcoin network as they are happening: Transactions move Bitcoins around between different addresses and blocks create a small amount of new Bitcoins and in the process confirm previous transactions. Additionally, trade data from markets - kindly provided by Bitcoin Charts - is included to show the interaction with other currencies.
Q: Is this an accurate history of the Bitcoin network?
A: Not necessarily. The Bitcoin Monitor plots new transactions as soon as they spread through the network. If they should later become invalid - maybe through an attempted double-spend - and rejected from the nodes of the network, this 'rewriting' of history will currently not be accounted for on the chart. In practice, almost all transactions are valid though.
Q: Why do transactions often consist of multiple components?
A: Transactions move Bitcoins from a number of source addresses to a number of destination addresses. Usually one of the destination addresses belongs to the person performing the transaction, so the Bitcoins transferred there are often referred to as 'change'. This mechanism helps to increase the anonymity of transactions and as such there is no straightforward way to detect which component is the 'change'. The Bitcoin Monitor therefore simply plots the total amount and lists all components.