BLOG
Here's Everything You Need to Know About Bitcoin
Bitcoin is a digital currency, a means of payment that exists exclusively in digital form. Unlike traditional money, which can be touched, Bitcoin only makes sense and exists in the digital space, consisting of a series of bits.
Satoshi Nakamoto invented Bitcoin in 2009, but his real identity is not known at the moment. He authored the Bitcoin white paper, deployed its first implementation, and continued to collaborate with software developers until mid-2010, when he gave control over Bitcoin's source code repository to Gavin Andresen, a software developer from Amherst, Massachusetts.
Key Article Points
- Bitcoin only makes sense and exists in the digital space
- All the accounts utilize public and private keys
- The technology uses peer-to-peer transactions
Why did Satoshi choose to remain anonymous? Perhaps he didn't like to garner a lot of attention from the media. Or, being the virtual currency's inventor, he has managed to mine plenty of bitcoin for himself, and he did not want to become a target for criminals.
Bitcoin has much lower transaction fees in comparison with traditional online payment methods and is run using a decentralized group of computers. It is created, stored and traded using a blockchain, a list of records which are linked using cryptography and cannot be modified. By the way, Satoshi Nakamoto has invented the blockchain as well.
Bitcoin accounts make use of public and private keys, strings of characters which are encrypted using an advanced algorithm. While public keys are utilized as a means to send bitcoins to a particular account, private keys are similar with online banking account passwords, being used by the account owner to authorize Bitcoin-based transactions.
The technology uses peer-to-peer transactions, without needing a central authority to manage them. The so-called "miners" which are a part of the Bitcoin network can earn digital currency by using the power of their computers to solve difficult puzzles, with the goal of discovering new blocks that can be added to the blockchain.
New bitcoin is released regularly, but its amount is constantly decreasing; there are now less than 3,000,000 bitcoins left to be mined. The mining rigs were inexpensive back in 2009; any regular computer would have been able to do a decent job; however, these days people need powerful network servers and/or computers with fast Graphic Processing Units (GPUs) to achieve similar results.
The price for a bitcoin has hit a maximum of $19,000 in 2017; a currency unit is now being traded for about $7,000. Some companies accept bitcoins as a means of payment for their products or services, and transactions are usually carried out by making use of mobile devices.
Many individuals believe that digital currencies will shape the future; this explains why lots of people consider Bitcoin a worthwhile investment. However, these investments are not for the faint of heart; Bitcoin values tend to fluctuate a lot, dropping over 60% in a single day back in 2013, for example.
Also, individuals who plan to invest in Bitcoin should be aware that most officialities dislike virtual currencies, which rival government payment systems, and may also be use for money laundering, tax evasion and other illegal activities.
Over 90% of people have bought bitcoin fractions (rather than mining them) by making use of legit Bitcoin exchange services. However, just like regular websites, these sites can be hacked as well. And when this happens, hackers can get access to the customers' digital wallets/private encryption keys, and then steal the virtual currencies, transferring them to other accounts. Bitcoin transactions are irreversible, so if someone steals your digital money, you won't be able to get it back.