Bitcoin in a Nutshell


Bitcoin has almost become a household name with increasing coverage in the media, and it is fair to say that its notoriety continues to increase. So what is it? Bitcoin appeared around 2009 as a new form of digital currency and was developed from the outset in open source by a clever guy called Satoshi Nakamoto. We are told that his true identity is "surrounded by mystery," as though he was some kind of Marvel superhero, I guess it just means that he's a super nerd, but he does not do any of it doubt that he's a pioneer …

So what is it?

Bitcoin is a form of money identical to another, but it is not under the control of any government or financial institution. The principle is that it is owned and managed by its own community. Bitcoin is decentralized and managed by peer-to-peer members who all participate in a new transaction activity and store the previous activity in "block chains". This means that a complete "copy" of all the transactions is stored locally and used to check, between the participants, the new activity, thus preventing anyone from misrepresenting, adding or creating false transactions at the same time. within the chain of blocks. This "consensus" approach protects the security of Bitcoin transactions.

Bitcoin works quite differently from PayPal in that you have a digital wallet with a unique address where people can send you Bitcoins. You can simply install a wallet on your device or download the full Bitcoin wallet and join the network as a node.

The value of Bitcoin depends largely on supply and demand, with risky investors playing on the highs. Currently, a single bitcoin (indicated by 1.0000000) is worth £ 573 or $ 935. You can buy bitcoins at any of the 8 decimal places. So, for example, 0.0100000 would cost you £ 5.70 and £ 0.1000000 would cost you £ 57.00, which is not surprising if Bitcoin gets its name!

OK, where can I buy Bitcoins?

Unless you receive Bitcoins through a payment, you will need to buy Bitcoins in your existing currency. Buying is a matter of trust because it is unregulated. It's kind of the beginning of eBay: users trusted each other to pay and send things, and they did pretty well …

The face of Bitcoin coal

As we know, the extraction of bitcoins consists of generating (and securing) bitcoins. A small payment in the form of bitcoin units is paid for the time and effort spent using the equipment and for your participation. To do this, there are different methods, from using the CPU or graphics processor of your own computer (similar to other grid-based BOINC projects, such as Seti @ Home), to using ASIC (Application Specific Integrated Circuits). which they are built, which in this case generates Bitcoins. Unless you have a large investment in the purchase of powerful ASIC miners such as those from that can run at 600GH / s (hashes per second), you will need to turn to USB ASIC Miners such as the popular BlockErupter generating 336MH / s. Using BlockErupters, you can create your own USB hub-style platform by running several simultaneously.

The reality, however, is that it may be too late to make money with Bitcoin Mining. The complexity (hash rate) of the blockchain is now such that even membership and contribution to a mining pool, in which the miners work together and share the benefits, will likely result in an increase in electricity spending rather than in actual financial performance. In addition, the maximum limit is 21 million Bitcoins. It is currently close to 12.4 million and, as more miners join us, this limit will soon be reached. It is now more likely that you earn money by buying Bitcoins themselves rather than generating them.

The future of Bitcoin …

Bitcoin is an emerging technology, as such, its price has been volatile, but recently it has started to become more stable as the user community grows. To date, Bitcoin sees the number of transactions reaching 100,000 per day. Although banks and large companies have not yet determined whether Bitcoin is a threat or an opportunity, there is no doubt that they are beginning to sit down and become aware of this new currency. digital that continues to grow each day.

It is interesting to note that our mysterious Satoshi, the inventor of Bitcoin, would have, according to the fluctuations, 1 billion dollars of Bitcoins. Do not we all want to have such an idea … Copyright © 2014 Gareth Baxendale

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