Bitcoin is a decentralized currency in a blockchain, while money is a centralized currency under a government.
Don't know what 'decentralized' or 'blockchain' means? Well, I will explain.
A decentralized currency means that it's not under one singular entity, for example, a bank. Blockchain is the technology that allows Bitcoin to work, and best of all, it's impossible to forge.
How does it work?
Well, imagine that 10 people decided to make a separate currency, and one person - Let's call him Bob - decided to make a list of all the actions in his diary.
Ann sent 10 coins to Mary
Mary sent 5 coins to Jack
Jack sent 3 coins to Ann
Ann sent 1 coin to Adam
Another person - Let's call him Jack - decided to steal money by altering the contents of the diary.
Ann sent 10 coins to Mary
Mary sent 5 coins to Jack
Mary sent 3 coins to Ann
Ann sent 1 coin to Adam
Bob later realized that someone had changed the contents of his diary, so he decided to prevent this by happening.
He found a program called a Hash function which allows you to translate text into a certain set of numbers and letters.
Examples:
test
098f6bcd4621d373cade4e832627b4f6
69420
4ab273bed4f79ea5bb5cb7cf056545d1
asdf this is a hex code thing
468dc5490a55c0a8f7d73d913d158391
After each record, he generated a hash.
Ann sent 10 coins to Mary
9d0032abf56f1cfabbc84acc57e86ff1
Mary sent 5 coins to Jack
bb2790ef6121a1965f0739436cdb65a44
This didn't stop Jack. He changed the diary again and made a new hash for the changed content.
Ann sent 10 coins to Mary
9d0032abf56f1cfabbc84acc57e86ff1
Mary sent 9 coins to Jack
ab4b654e763003dff432cf001240f6b2
Bob noticed that someone had changed the content of his diary again, so he made it more difficult to solve the hashes, by putting each hash generated by the record before it.
Ann sent 10 coins to Mary
9d0032abf56f1cfabbc84acc57e86ff1
Mary sent 5 coins to Jack
9d0032abf56f1cfabbc84acc57e86ff1
44acb39da62a7469bee68443193ec452
Jack sent 3 coins to Ann
44acb39da62a7469bee68443193ec452
e3575c43d6bcaecbffc91a9bc09ac6a2
Ann sent 1 coin to Adam
e3575c43d6bcaecbffc91a9bc09ac6a2
b472300318a4e3c78031766e53e212a8
Jack would have to count every hash to fake the new content, which would take a long time for an average human to do so. Despite this, he counted every single hash and managed to re-hash it.
Bob didn't give up. He developed another way to make sure that it would be near impossible to re-hash an entire textbook of records by using a number at the end of every record called a nonce so that each hash would end with two zeros.
This, combined with putting the hash generated from the previous record would make it near impossible for even computers to decrypt the hash.
This type of encryption technology makes it nearly impossible to change the hash and all the contents inside of it, but even then, it's only nearly impossible.
Anybody can claim that their version of the diary is real, which leads us to the next part of blockchain technology.
After Bob made 5000 records of transactions, he put it all in a one-page spreadsheet, then Mary confirmed that the transactions were recorded properly.
Bob later spread the spreadsheet across 5000 different computers all over the world. These computers are called nodes.
The jobs of these nodes are to check the validity of each transaction and do a vote on whether or not the transaction is valid or not.
It's a foolproof system (unless you have more than half of all computers in the world) to validate every transaction that takes place on the blockchain.
The spreadsheet I mentioned earlier is called a block. A family of blocks is called a blockchain, every node has its copy of the blockchain.
Once a block reaches a certain amount of approved transactions, a new block is created.
The blockchain updates itself every 10 minutes, and get this, no singular entity or central computer instructs the computers to do so.
It does so by itself, therefore a decentralized system.
The only possible way to hack the blockchain is by having more than 50% of all computers under your control to override votes, which means you are either really rich and managed to buy that many computers (which wouldn't be practical for any sort of profit) or you take over that same 50% of computers to take over the blockchain, which not even the government has been able to do so.
TL;DR: The blockchain is so encrypted and secure not even the government can take over the blockchain.
