Dec 13, · Bitcoin is everywhere, and it’s grabbed the world’s attention. There is still a great deal of confusion, however, over what it is and why people are so excited about it. Bitcoin Depot is here to demystify Bitcoin, and help clear away the hype and confusion surrounding it. Let’s Buy a Cup of Coffee. Jun 04, · Bitcoin is a digital asset and a payment system. It is commonly called a decentralized digital currency. It was invented by Satoshi Nakamoto in It is an open source software. Feb 13, · Simply put, bitcoin is a digital currency. No bills to print or coins to mint. It's decentralized -- there's no government, institution (like a bank) or .
What is bitcoin in simple englishBitcoin - Wikipedia
Note that the amount of awarded bitcoins decreases over time. Ultimately, the value of a bitcoin is determined by what people will pay for it. In this way, there's a similarity to how stocks are priced. The protocol established by Satoshi Nakamoto dictates that only 21 million bitcoins can ever be mined -- about 12 million have been mined so far -- so there is a limited supply, like with gold and other precious metals, but no real intrinsic value.
There are numerous mathematical and economic theories about why Nakamoto chose the number 21 million. This makes bitcoin different from stocks, which usually have some relationship to a company's actual or potential earnings.
Without a government or central authority at the helm, controlling supply, "value" is totally open to interpretation. This process of "price discovery," the primary driver of volatility in bitcoin's price, also invites speculation don't mortgage your house to buy bitcoin and manipulation hence the recent talk of tulips and bubbles.
Bitcoin has made Satoshi Nakamoto a billionaire many times over, at least on paper. It's minted plenty of millionaires among the technological pioneers, investors and early bitcoin miners.
If you're willing to assume the risk associated with owning bitcoin, there is an increasing number of digital currency exchanges like Coinmama, CEX, Kraken and Coinbase -- the largest and most established of them -- where you can buy, sell and store bitcoins. Getting started is about as complicated as setting up a Paypal account. With Coinbase, for example, you can use your bank or Paypal account to make a deposit into a virtual wallet, of which there are many to choose from.
Once your account is funded, which usually takes a few days, you can then exchange traditional currency for bitcoin. You can sell it. Or you can just hang on to it. Note that there are no inherent transaction fees with bitcoin, although exchanges like Coinbase typically charge a fee when you buy or sell.
Short, qualified answer: Yes, for now, as long as -- like any currency -- you don't do illegal things with it. For instance, bitcoin was the sole currency accepted on Silk Road, the Dark Web marketplace for drugs and other illicit goods and services that was shuttered by the FBI in Since then, bitcoin has largely evaded regulation and law enforcement in the US, although it's under increased scrutiny as it attracts more mainstream attention.
Legal and regulatory hazards aside, as both an investment and currency, bitcoin is very risky. When you wake up in the morning, you know pretty precisely how much a dollar can buy.
The financial value of a bitcoin, however, is highly volatile and may swing widely from day to day and even hour to hour. Exhibit A: December Bitcoin transactions cannot be traced back individuals -- they are secured but also obscured through the use of public and private encryption keys.
This anonymity can be appealing, especially with companies and marketers increasingly tracking our every purchase, but it also comes with drawbacks. You can never be certain who is selling you bitcoin or buying them from you. Archived from the original on 27 April Archived from the original on 30 November Retrieved 30 November Archived from the original on 27 May Retrieved 16 January Archived PDF from the original on 5 October Retrieved 3 September Archived from the original on 3 April Retrieved 2 April Archived from the original on 12 March Retrieved 13 March Bitcoin for the Befuddled.
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However, the difficulty of the math problem depends on how many people are mining for bitcoin at the moment. Because of how complicated the math problems usually are, they must be calculated with very powerful processors. The process of generating the bitcoins is called mining. Miners either compete with one another or work together in groups to solve a mathematical puzzle.
The first miner or group of miners to solve the particular puzzle are rewarded with new bitcoins. The puzzle is determined by the transactions being sent at the time and the previous puzzle solution.
This means the solution to one puzzle is always different from the puzzles before. Attempting to change an earlier transaction, maybe to fake bitcoins being sent or change the number of someone's bitcoins, requires solving that puzzle again, which takes a lot of work, and also requires solving each of the following puzzles, which takes even more work.
This means a bitcoin cheater needs to outpace all the other bitcoin miners to change the bitcoin history. This makes the bitcoin blockchain very safe to use. A popular image associated with Bitcoin is a QR code. QR codes are a group of black and white boxes that are similar to barcodes.
Barcodes are a row of lines, and QR codes are a grid of squares. Bitcoin uses QR codes because they can store more information in a small space, and a camera such as a smartphone can read them. The two QR codes on the Bitcoin note are the public and private addresses, and can be scanned with a number of online tools. Everyone in the Bitcoin network is considered a peer, and all addresses are created equal.
All transactions can take place solely from peer to peer, but a number of sites exist to make these transactions simpler.
These sites are called exchanges. Exchanges provide tools for dealing in Bitcoin. Some allow the purchase of Bitcoin from external accounts, and others allow trading with other cryptography-based currencies like Bitcoin. Most exchanges also provide a basic "wallet" service. Wallets provide a handy way to keep track of all of a user's public and private addresses. Because addresses are pseudo-anonymous, anyone can have as many addresses as they want.
A wallet holds all of this information in a convenient place, just like a real wallet would. A backup of a wallet prevents 'losing' the bitcoins.