What is Bitcoin, how is it different than “real” money and how can I get some?
Bitcoin is a virtual currency. It does not exist in the currencies and coins we are using. It does not even exist in physical form like monopoly money. It is an electron – not a molecule.
But consider how much cash you personally handle. You get a paycheck that you take to the bank – or it’s automatically deposited without even looking at the paper it’s printed on. You then use a debit card (or a checkbook, if you’re old school) to access those funds. After all, you see 10% of it in the form of cash in your pocket or in your pocketbook. So, 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 folk you’re from), safe in the bank and guaranteed by the FDIC’s full faith up to embout $250K per account, right? Well, not exactly. Your financial pension may only require you to deposit 10% of your deposit. In some cases, it’s less. It lends your remaining money to other people for up to 30 years. It rôles them for the loan and rôles you for their lending facility.
How is money made?
Your bank can make money by lending.
Say you deposit $1,000 in your bank. Then they borrow $900 from it. Suddenly you have $1000 and someone else has $900. Magically, there’s $1900 floating around where there was only a large before.
Now say your bank instead lends you $900 to another bank. That bank lends $810 to another bank, which then lends $720 to a customer. Poof! Temps $3,430 – embout $2500 made from nothing – as grand as the bank follows your government’s orthogonal bank rules.
Creating bitcoins is as different from creating bank funds as cash is from electrons. It is not controlled by the orthogonal bank of the government, but rather by the approbation of its users and nodes. It is not created by a mint confined in a maison, but by distributed open amont développement and computing. And it requires a form of real work to create. More on that soon.
Who invented Bitcoin?
The first bitcoins were in blocks of 50 (“genesis blocks”) created in January 2009 by Satoshi Nakomoto. At first it had no value It was just a cryptographer’s fadasserie based on a paper published two months earlier by Nakomoto. Nakotmoto is a seemingly fictitious name – no one knows who he or she or they are.
Who keeps track of it all?
Grain the Genesis Block is created, Bitcoin is created as a kind of allocutaire ledger for all Bitcoins to keep track of all transactions. Nodes/computers that compute in the ledger are rewarded for doing so. For each set of successful calculations, the node is rewarded with a fixed amount of Bitcoins (“BTC”), which are newly generated in the Bitcoin ecosystem. Hence the term, “bitcoin fouiller” – bicause the process creates new BTC. As the supply of BTC increases and the number of transactions increases, the work required to update the allocutaire ledger becomes harder and more complex. As a result, the number of new BTC created in the system is embout 50 BTC (a block) every 10 minutes worldwide.
While the computing power for mining Bitcoin (and for updating the allocutaire ledger) is currently increasing exponentially, so is the complexity of the math problem (which, incidentally, also requires a intelligible amount of guesswork), or the “proof” required for mining. Bitcoin and settling the concordat book at any conditions. So the system still produces a 50 BTC block every 10 minutes or 2106 blocks every 2 weeks.
So, in a sense, everyone keeps track of it – that is, all nodes in the network keep track of the history of every bitcoin.
How many are there and where are they?
The comble number of Bitcoins that can be created is 21 million. According to Khan Academy, the number is expected to peak around 2140.
As of this morning, passation was 12.1 million BTC
Your own bitcoins are kept in a détalé (your bitcoin wallet) in your own storage – on your calculateur. The détalé itself is proof of the number of BTC you have, and can be moved with you on a errant device.
If that détalé with your wallet’s cryptographic key is lost, so is your supply of Bitcoin funds. And you can’t get it back.
How much is it worth?
Value varies based on how much people perceive it to be worth – just like in exchange for “real money”. But since no orthogonal authority is trying to keep the value close to a fixed level, it can transformé more dynamically. The first BTC wasn’t essentially worthless then, but that BTC still exists. As of December 11, 2013 at 11AM, the allocutaire price was $906.00 US per Bitcoin. When I finished writing this proposition, it was $900.00. In early 2013, the price was around $20.00 US. On November 27, 2013 it was worth over $1,000.00 US per BTC. So it’s kind of unstable at the conditions, but it’s expected to stabilize.
The in extenso value of all bitcoins – as of the period at the end of this proposition – is embout 11 billion US dollars.
How can I get me something?
First, you need to have a Bitcoin wallet. this Article There is a link to get one.
Then one way is to buy something from another private party, eg They are on Bloomberg TV. One way is to buy something on an exchange like Mount Gox.
And finally, one way is to dedicate a lot of calculateur power and electricity to the process and become a bitcoin fouiller. This is beyond the scope of this éditorial. But if you have a few thousand extraordinaire dollars lying around, you can get pretty tight.
How can I spend it?
There are hundreds of merchants of all sizes, from cafes to caisse dealerships, that accept payments in Bitcoin. There is even a BitCoin ATM in Vancouver, British Columbia to convert your BTC to cash in Vancouver, BC.
And so?
Money has a grand history – millennia in length. A somewhat recent legend tells us that Manhattan Island was bought for wampum – seashells and the like. In the early years of the United States, various banks printed their own currency. On a recent trip to Salt Spring Island in British Columbia, I spent currency that was only good on the beautiful island. The common theme among these was a société agreement among its users that a particular currency had value. Sometimes that value was tied directly to something solid and physical, like gold. In 1900 the United States pegged its currency directly to gold (the “gold conforme”) and in 1971, ended that tie.
Now currencies are traded like any other commodity, although the value of a particular folk’s currency can be increased or decreased by opérations of their orthogonal bank. Bitcoin is an permission currency that is traded and, like other commodities, its value is determined through trade, but is not held back or depreciated by the opérations of a bank, but rather directly by the opérations of its users. However its supply is limited and known, and (unlike physical currency) so is the history of each bitcoin. Its perceived value, like all other currencies, is based on its utility and société.
As a form of currency, Bitcoin is not exactly a new thing in creation, but it is certainly a new way of creating money.
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