Bitcoin is a virtual currency. It does not exist in physical form, like the currency and coin we use to exist. It does not even exist in physical form as monopoly money. These are electrons – not molecules.
But think about how much money you personally manage. You get a paycheck from the bank – or it is automatically deposited without seeing the paper that is not printed. Then you use a debit card (or a checkbook if you are an old student) to access those funds. At best, you see 10% of it in your pocket or in your pocket in the form of cash. Thus, it turns out that 90% of the funds you manage are virtual – electrons in a spreadsheet or database.
But wait – these are US funds (or whatever country you are from), safe in the bank, and with the full confidence of the FDIC, each account is guaranteed up to about $ 250,000, right? Well, not exactly. Your financial institution may require you to keep only 10% of your deposits. In some cases it is less. It lends the rest of your money to others for up to 30 years. He demands payment from them for the loan and charges you for the privilege of lending to them.
How is money created?
Your bank starts making money by lending.
Let’s say you have a $ 1,000 deposit in your bank. Then they lend $ 900 of it. Suddenly you have $ 1,000 and someone else has $ 900. Magically, $ 1,900 is spent where there used to be only one grand.
Now say that your bank lends $ 900 to another bank instead. The bank, in turn, lends $ 810 to another bank, which in turn lends $ 720 to the customer. Poof! $ 3,430 at a time – almost $ 2,500 comes out of nowhere – as long as your banking government follows central banking rules.
The creation of Bitcoin is as different from the creation of bank funds as cash is from electrons. It is governed not by the central bank of the government, but by the consensus of its users and nodes. It was created not by a limited mint in a building, but by distributed open source software and computing. And the actual form of work is required for creation. More on that soon.
Who invented Bitcoin?
The first Bitcoins were in the 50 block (“Creation Block”) created by Satoshi Nakomoto in January 2009. At first it was of no value. It was just a cryptographer’s toy based on a paper published by Nakomoto two months ago. Nakotmoto is probably a pseudonym – no one seems to know who he is.
Who is watching all this?
After the Creation Block was created, BitCoins was created as a kind of public book, tracking all transactions for all BitCoins. Nodes / computers that perform calculations in the book are rewarded for this. For each set of successful calculations, the node is rewarded with a certain amount of BitCoin (“BTC”), which is then newly created in the BitCoin ecosystem. So the term “BitCoin Miner” – because the process creates a new BTC. As BTC’s supply increases and the number of transactions increases, the work needed to update the public ledger becomes more difficult and complicated. As a result, the number of new BTCs entering the system will be about 50 BTC (one block) every 10 minutes worldwide.
Although the computing power of BitCoin (and for updating a social journal) for mining is currently increasing exponentially, it is needed to master the complexity of the math problem (by the way, which also requires a certain amount of guesswork) or “proof”. Solve BitCoin and transaction books at any time. Thus, the system still generates one 50 BTC block every 10 minutes or 2106 blocks every 2 weeks.
So, in a sense, everyone is watching it – that is, all the nodes in the network are tracking the history of each BitCoin.
How much and where?
There is a maximum number of BitCoins that can be generated, and this figure is 21 million. According to the Khan Academy, this figure is expected to increase in 2140.
There were 12.1 million BTC in circulation this morning
Your BitCoin is stored in your memory – in a file (BitCoin wallet) on your computer. The file itself is proof of the number of BTC you have, and it can move with you on your mobile device.
If that file, which contains the cryptographic key in your wallet, is lost, your BitCoin funds will also be lost. And you can’t take it back.
How much does it cost?
Value varies according to how much people think they are worth – just like in real money exchanges. However, since there is no central body trying to keep the value at a certain level, it can change more dynamically. The first BTC had no value at that time, but this BTC still exists. As of 11:00 on December 11, 2013, the public value was $ 906.00 per BitCoin. When I finished writing this sentence, it was $ 900.00. At the beginning of 2013, the value was about $ 20.00. As of November 27, 2013, it was valued at more than $ 1,000.00 per BTC. Thus, it is currently unstable, but it is expected to be resolved.
The total value of all BitCoin – as of the end of this sentence – is about $ 11 billion.
How can I get it?
First, you must have a BitCoin wallet. This article has links to get one.
Then one way is to get it from another private party like these guys on Bloomberg TV. One way, Mt. It’s like buying some on the stock market like Gox.
And finally, one way is to dedicate a lot of computer power and electricity to the process and become a BitCoin miner. This is completely beyond the scope of this article. But if you have a few thousand extra dollars around, you can get enough equipment.
How can I spend it?
From cafes to car dealerships, there are hundreds of merchants of all sizes who buy Bitcoin for payment. There is even a British Columbia and a BitCoin ATM in Vancouver to convert BTC into cash in Vancouver.
And so on?
Money has a long history – millennia. A new legend tells us that the island of Manhattan was bought for wampum – sea shells and the like. In the early years of the United States, various banks printed their own currencies. While visiting Salt Spring Island in British Columbia recently, I spent only the best currency on my favorite island. A common theme was the trust agreement between users about the value of the currency. Sometimes this value was directly linked to something as solid and physical as gold. In 1900, the United States tied its currency directly to gold (the “Gold Standard”), and in 1971 it cut that link.
Currency is now traded like any other commodity, although the value of a particular country’s currency can be supported or reduced by the actions of their central bank. BitCoin is an alternative currency and, like other commodities, its value is determined by trading, but is not maintained or reduced by the actions of any bank, directly by the actions of its users. Its supply is limited and known, and (unlike physical currency) the history of every BitCoin is the same. Its acceptable value, like all other currencies, is based on its usefulness and reliability.
As a form of currency, BitCoin is nothing new in Genesis, but it is certainly a new way to make money.