What is bitcoin?
It’s a digital currency, both created and distributed electronically. Unlike the banks that print money on authorization, the creation of bitcoin is in the hands of a peer network that’s stationed around the world.
Circa 2009, an entity named Satoshi Nakamoto published a white paper on a cryptography mailing list, detailing his invention. He had come up with a system that would facilitate value transactions between two parties without involving financial institutions.
Satoshi mined the first block and added it to the public ledger; effectively kick-starting the bitcoin network.
After bitcoin gained wide acceptance, Satoshi faded away from the scene, and conspiracy theories have sprouted about his identity since.
The bitcoin network operates on the back of blockchain. The blockchain technology simply provides a public ledger on which all approved transactions are put down. More and more transactions are always being added to the public ledger.
Transactions are first sorted into a block, and then published on the blockchain, a process that takes roughly ten minutes.
Once a block is published, it cannot be edited or deleted, and consequently, the transactions cannot be canceled.
This quality of inestimable authenticity makes blockchain an electronic data silo that would perfect systems were it adopted elsewhere.
Mining is the process of confirming transactions. Miners supply verification services by ensuring that transactions are recorded in blocks and are under the cryptography protocol. The network rewards miners with transaction fees levied on the transacting peers and also rewards them with new bitcoins.
Bitcoin is like gold, in the sense that, as time goes, its availability becomes less and lesser. A time will come when miners will deplete the “bitcoin mine” so they won’t get new ones. The bitcoin protocol was set up to produce only 21 million bitcoins, and so far, over 15 million bitcoins have been mined.
Most people want to know whether bitcoin has legal status or whether it’s backed by the government.
Well, bitcoin’s legality depends on who you are, and where you live. Where I come from (Planet K) it’s totally legal, by the virtue that no clause prohibits its use, and the Japanese have taken a bolder step and legalized it (Yay). However, in governments that take absolute control over citizens, like Russia, Venezuela, etc, bitcoin was long banned.
Not hard to figure out why.
Bitcoin is the smart Alec that’s saying: “fuck this system!”
Once you install a bitcoin wallet on your computer or smartphone or sign up for a cloud-hosted wallet, you’ll be given both an address and a key, and be on your way to send or receive bitcoins.
Hardware wallets provide the most secure bitcoin storage because you have the private keys.
Where to buy bitcoins?
A company like Coinbase accepts people from all over the world to register accounts and buy bitcoins, but when it comes to trading bitcoins with fiat currency, it restricts citizens of most countries!
I toot the horn for the following two companies because they have no restrictions whatsoever:
What’s the future of bitcoin?
It’s hard to predict the future of bitcoin because of the challenges it faces at present; for instance, the hard fork challenge, where the bitcoin protocol threatens to abort!
But I’m near-certain that digital currencies will take the place of fiat money in the future.
***Terrible news for the mushy-assed banksters ***