Bitcoin is a digital currency – one that, unlike conventional money, is generated by computers all over the world. The idea of Bitcoin first came about in 2008 by an anonymous creator who goes by the name of Satoshi Nakamoto.
Bitcoins are not printed like dollars or euros – they’re produced by people and businesses running computers around the world. Bitcoins are created as a reward for mining, which is the process of solving difficult mathematical problems with powerful computers. As more people use Bitcoin the problems become harder to solve making it take even longer to produce new coins resulting in inflation.
Bitcoin’s potential for growth is so monumental because it’s the first time we’ve seen this kind of global connectivity. It’s actually not just for shopping or sending money anymore. Now, Bitcoin can be used for everything from taking out a loan to buying property to booking your next vacation!
What are bitcoins?
Bitcoins are a digital currency, which unlike conventional money, is generated by computers all over the world. The idea of Bitcoins came about in 2008 by an anonymous creator who goes by the name of Satoshi Nakamoto.
Bitcoins are not printed like dollars or euros – they’re produced by people and businesses running computers around the world. Bitcoins are created as a reward for mining, which is the process of solving difficult mathematical problems with powerful computers. As more people use Bitcoins the problems become harder to solve making it take even longer to produce new coins resulting in inflation.
Bitcoin’s potential for growth is so monumental because it’s the first time we’ve seen this kind of global connectivity. It’s actually not just for shopping or sending money anymore. Now, Bitcoin can be used for everything from taking out a loan to buying property to booking your next vacation!
Why Bitcoins?
There are a few reasons why Bitcoin is a good investment. The first is that bitcoins have extreme value because they’re a digital currency. If you invest in a traditional currency, like the euro or the U.S. dollar, it’s only worth what the country says it’s worth.
With bitcoins, its worth comes from people believing in it and using it to buy things and for trading for other currencies on the open market. Another reason why Bitcoin is a good investment is that they can’t be counterfeited.
You can still spend counterfeit U.S dollars or euros but nobody can counterfeit bitcoin because it’s protected by cryptography technology that makes sure each bitcoin is unique and impossible to replicate.
Bitcoins can be easily transferred without going through a bank because bitcoins are a type of virtual currency that doesn’t exist in physical form, meaning you don’t need to carry them around in your wallet or even know where they are stored as long as you have access to your online bitcoin account information!
How to buy bitcoins
Buying bitcoins is not difficult. There are several bitcoin exchanges where you can buy bitcoins with various methods of payment. You can also sell bitcoins at these exchanges.
There are many options for buying bitcoins with cash, including the following:
- Localbitcoins.com
- Wall of Coins
- BitQuick
Store your bitcoins
When you buy bitcoins, you have an address where your coins are stored. These addresses are encrypted so nobody else can see what’s in them. The only way to get access is to steal your password with a key logger or by attacking the site with malware.
Just like how you would protect your physical bank account by keeping money in a safe, you should also use a Bitcoin wallet that encrypts its contents in order to keep it safe from hackers.
You can store your bitcoins on paper, in an online wallet, or in an offline printer cartridge. If you want to hold on to them for a long time without spending them, make backups of your private key and store it somewhere secure.
Bitcoin mining is a process
Bitcoin mining is a process that generates new Bitcoins. The way it works is that people compete to find the solution to a math problem. Whoever finds the answer first gets to place the next block on the blockchain and claim their rewards.
The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released Bitcoin. The difficulty of the puzzles is adjusted so that no matter how much mining power is used, a new block will be produced every 10 minutes (on average).
The incentives for mining are what make Bitcoin so difficult to stop or manipulate. In theory, every computer with internet access could become part of this network and get paid in bitcoins.
It would take an enormous and coordinated effort to control 51% of all computing power on the network. At present time, however, there are four major entities who collectively control 51% of all bitcoin hashing power:
- Bitmain Technologies – China – BTC.com – Antpool
- Discus Fish (F2Pool) – China
- BTCC Pool – China
- GHash.io – Ukraine
Bitcoin risks
Bitcoin is a relatively new type of currency that is not backed by any country or governing body. As a result, it has the potential to be worth nothing because it could just end up being worth less than what you paid for it.
Additionally, there are many risks associated with Bitcoin. For one, the value of Bitcoins can change rapidly and unpredictably so you never know when the value might change even if you hold onto your coins for years. This can make using Bitcoins difficult in everyday transactions.
Finally, Bitcoins are also susceptible to cyber crime. Theft targeting bitcoins has become more common in recent years and this risk cannot be eliminated completely due to the anonymity of users on the internet.
How does Bitcoin work?
Since Bitcoin is a digital currency, you can use it to pay for anything that involves having money. For example, if you wanted to buy your friend a gift card for their birthday, you could purchase it through Gyft with Bitcoins. You could also use Bitcoins to purchase things on eBay or Amazon.
Another way people are using Bitcoin is by converting them into U.S. dollars and vice versa through exchanges like Coinbase or Xapo. So let’s say you have 1 bitcoin and want to convert it into U.S. dollars – you can do that and other types of currencies as well through these exchanges!
The Difference Between Bitcoin and Other Currencies
Bitcoin is a digital currency that was created in 2009 by an anonymous person or group named Satoshi Nakamoto. Bitcoin differs from traditional currencies like the dollar or euro because it’s not printed like paper money.
Instead, Bitcoin is “mined” by people and businesses using powerful computers all over the world. Bitcoins are generated on a set schedule as rewards for mining, which is the process of solving difficult mathematical problems with computers.
In theory, this makes Bitcoin more valuable because it will eventually run out of coins to mine. In practice though, inflation has been an issue. If more people start using Bitcoin, the problems become more difficult to solve and it takes even longer to produce new coins – meaning there’s an increased chance of inflation.
Bitcoin is also different from other currencies in that there are no physical Bitcoins. All transactions are done digitally and recorded in a public ledger called a blockchain. The only way to get a Bitcoin is through mining or trading with someone who already has one.
The Future of Cryptocurrency
Cryptocurrency is a type of digital currency where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
The future for cryptocurrency is very interesting. Cryptocurrencies are generating more interest this year than any other time in history, with Bitcoin leading the charge. There are now over 400 cryptocurrencies out there, but Bitcoin still has the most market cap at $42 billion USD.
As these currencies continue to make headlines and attract attention, more people will want to invest in them – which is why experts predict that Bitcoin’s value will climb significantly higher in 2018.
Who’s Behind Bitcoin?
Nakamoto set up Bitcoin so that no one person could control the currency. Bitcoin is decentralized and international, meaning that money can be sent to anyone anywhere in the world without going through banks or clearing houses. It’s a little like sending cash digitally, but also a lot more secure because there’s no vulnerable third party handling your money.
The Bitcoin system is powered by peer-to-peer transactions, which means that it avoids the need for any kind of central authority or middleman. In exchange for payment, Bitcoin miners get transaction fees and newly created Bitcoins. This provides an incentive for people to mine Bitcoin, which in turn helps process Bitcoin transactions and keeps things running smoothly.