What is Bitcoin based on?
Bitcoin is the largest (by volume and market cap), most popular cryptocurrency, and first cryptocurrency. Cryptography lies at the core of Bitcoin’s functionality. Unlike traditional currencies such as dollars, euros, pounds sterling, francs, Bitcoin are mined by the people, without any central authority. There are no governments, companies, or banks in charge of Bitcoin. Because of this, it is more resistant to runaway inflation, corrupt banks, and unscrupulous powerful political and privatized organizations. Bitcoin makes each user responsible for the trust of the network.
Simply put, Bitcoin is:
a decentralized payment network
a currency founded on modern cryptography
a ledger of transactions
power computational network
What is bitcoin? Why does it matter?
This video touches on the broad strokes of the creation and merits of bitcoin. Though it is a bit outdated as of the time of this posting on a few points. The exchange Mt. Gox referenced has since fallen and folded while the value of bitcoin has since significantly risen. The underlying foundation of what a bitcoin exactly is remains constant.
What is bitcoin?
Ever since I first heard about and knew about what a Bitcoin is, with all i’ve learned the way to describe it’s essence is this. It’s a digital currency that exists in the realms of computers networked together on and off the internet. It’s not backed by any central governing authority out of the reaches of government, or private company, or backed based on something like the availability of orange concentrate or price of gold. It’s a computer code, 1’s and 0’s, that’s run on thousands upon thousands of computers, all communicating with one another through a network on the internet.
The code solves a series of complex math problems. All the computers communicating together via network solve equations to complex math problems. The solution to each problem solved is a long string of letters and numbers that comprise a Bitcoin. Once a Bitcoin is generated it’s awarded by random to one of the computers in the network. Then it moves on to solving the next set in the math problem. This describes the process of “mining” a Bitcoin.
Programs built to mine for Bitcoins rest on top of hardware always evolving and becoming obsolete are available for computers to engage in this process. The size of the computing power determine how many Bitcoins are generated based on how much processing power one wields. The amount of Bitcoins that can ever be created is finite, unlike for instance fiat currency which can be created through central banking institutions.
It would probably take you years at current mining setups to mine a Bitcoin from a home computer without any specialized miner equipment hooked up to it.Now that Bitcoins are being mined from the system they exist for readily available purchase through various websites, digital currency exchanges setup to facilitate the acquisition of them.
Bitcoins have a reputation for mis-use due to it’s affiliation with a black market website called the Silk Road. A federal bust in late 2013 put an end to the site permanently. Silk Road was a website that paired buyers and sellers of illegal black market goods which were priced in Bitcoins.
Bitcoin has the power to change the world
This Guardian video glazes over the simplicity of Bitcoin. It’s not for everyone and some governments are working hard to regulate it.
Nonetheless people are willing to buy, sell, hold, and denominate goods in Bitcoins. In late 2013 a bit coin was trading at roughly $200 a coin, and as of now (September 2014) they trade at just under $500 per coin. This price is subject to daily change as the price fluctuates drastically, the price tends to be rather volatile. At one point the price per unit of BTC ran up over $1000 and has since ran down, to illustrate the kind of price swings the crypto currency has seen.
The future of Bitcoin is not set in stone, it is a blank slate. Will you be a part of it?
Last Editted: March 26, 2016