What Is Bitcoin, How Is It Different From “Real” Money, and How Can I Get Some?
A virtual currency is called bitcoin. It doesn’t exist in the same physical form that our familiar coins and currency do. Even in a physical form, like Monopoly money, it doesn’t exist. Rather than molecules, it’s electrons.
But take into account how much money you manage on your own. You either receive a check that you take to the bank with you or it is automatically deposited without your knowledge or even your seeing the paper it is not printed on. In order to access those funds, you next use a debit card (or a checkbook, if you’re old school). 10% of it is, at most, visible to you in the form of cash in your pocket or wallet. So it turns out that 90% of the money you manage is virtual, consisting of electrons in a spreadsheet or database.
Yet, those are Americans. funds (or those of whatever country you hail from), safe in the bank and guaranteed by the full faith of the I believe the FDIC covers accounts up to about $250K. Not quite, as your financial institution might only be required to hold 10% of its deposits in escrow. It’s less in some instances. It extends your remaining funds’ borrowing terms to 30 years to other people. They are charged for the loan, and you are charged for the privilege of allowing them to lend it out.
What is the process of making money?
By making loans, your bank is able to produce money.
A $1,000 deposit to your bank, for example. Afterward, they lend out $900 of it. One moment you have $1,000 and the next someone else has $900. Where there was previously only a grand, there is now mysteriously $1900 floating around.
Let’s say that instead, your bank lends 900 of your dollars to another bank. That bank then advances $810 to a different bank, which advances $720 to a client. Poof! $3,430 was created in an instant, almost $2500 out of nothing, as long as the bank complies with the central bank regulations set forth by your government.
Bitcoin is created differently from bank funds than cash is from electrons. It is governed by its users and nodes rather than the central bank of a particular government. It is produced by open source software and distributed computing, not by a small mint in a single structure. Additionally, it needs some kind of actual labor to be created. More on that shortly.
Who invented BitCoin?
The first BitCoins were in a block of 50 (the “Genesis Block”) created by Satoshi Nakomoto in January 2009. At first, it didn’t seem to be of much use. Based on a paper Nakomoto published two months earlier, it was merely a toy for cryptographers. Nobody seems to be able to identify Nakotmoto, who appears to be a fictional character.
Who manages it all?
Since the Genesis Block’s creation, new BitCoins have been produced by recording all transactions for all BitCoins as a kind of public ledger. Calculations on the ledger are performed by nodes or computers, which are rewarded for their work. For each set of successful calculations, the node is rewarded with a certain amount of BitCoin (“BTC”), which are then newly generated into the BitCoin ecosystem. Hence the term, “BitCoin Miner” – because the process creates new The work required to update the public ledger becomes harder and more complex as the supply of BTC rises and as the volume of transactions rises. As a result, the system is set up to accept 50 BTC (or one block) every 10 minutes from all over the world.
Even though the computing power for mining BitCoin (and for updating the public ledger) is currently increasing exponentially, so is the complexity of the math problem (which, incidentally, also requires a certain amount of guessing), or “proof” needed to mine Any time the transactional books need to be settled, BitCoin is used. Therefore, the system continues to produce just one 50 BTC block every 10 minutes, or 2106 blocks every two weeks.
As a result, everyone keeps tabs on it, since every node in the network keeps track of every BitCoin’s history.
What quantity and location are there?
There is a cap on how many Bitcoins can ever be created, and that cap is 21 million. The Khan Academy predicts that the number will peak around the year 2140.
As of, this morning there were 12.1 million BTC in circulation
Your BitCoin wallet is a file that is kept on your computer, which serves as your personal storage. The file itself serves as evidence of your Bitcoin holdings and can be carried around on a mobile device.
Your Bitcoin supply is also lost if the file containing the cryptographic key in your wallet is lost. And you can’t get it back.
How much is it worth?
The value varies based on how much people think it’s worth – just like in the exchange of “real money.” However, because no centralized authority is attempting to maintain the value at or near a specific level, it can fluctuate more rapidly. Although the initial Bitcoins were essentially worthless at the time, they are still in existence. The public value of a BitCoin was $906.00 US at 11 a.m. on December 11, 2013. It was $900.00 when I was finished writing this. It was worth about $20.00 US at the start of 2013. The price of a bitcoin was over $1,000 USD on November 27, 2013. So it’s currently a little volatile, but it’s supposed to calm down.
As of the period after this sentence, the total market value of all Bitcoin is approximately 11 billion US dollars.
Where do I find some?
Having a Bitcoin wallet is a prerequisite. Links to buy one are provided in this article.
Then, one option is to purchase some from another private party, such as these people on Bloomberg TV. One method is to purchase some on an exchange, such as Mt. Gox.
Finally, one method is to become a Bitcoin miner, which involves investing a lot of computer resources and electricity in the venture. That is clearly outside the scope of this article. However, you can purchase a decent rig if you have a few thousand extra dollars lying around.
How can I spend it?
Numerous businesses of all sizes, including cafes and car dealerships, accept Bitcoin as payment. Even a BitCoin ATM can help you turn your bitcoins into cash in Vancouver, British Columbia.
And so?
The history of money dates back thousands of years. A somewhat recent urban legend claims that Manhattan Island was purchased in exchange for wampum, including seashells and other artifacts. In the early years of the US, various banks printed their own money. I recently spent money that was only valid on the charming island of Salt Spring Island in British Columbia. These all shared the belief among their users that the respective currencies were valuable. Sometimes, that value was directly linked to an actual, tangible object, like gold. In 1900 the U.S. tied its currency directly to gold (the “Gold Standard”) and in 1971, ended that tie.
The value of a country’s currency can be increased or decreased by the central bank of that country, but currency is now traded like any other commodity. In the same way that the value of other commodities is established through trade, the value of Bitcoin is also traded and is directly influenced by its users rather than being held up or diminished by the actions of any bank. Contrary to physical currency, its supply is constrained and known, and every BitCoin’s history is also known. Like all other forms of money, its perceived value is determined by its usefulness and level of trust.
BitCoin is a new way to create money, though it is not entirely a new concept in the history of money.