What is Bitcoin?
Bitcoin is the world’s first currency of its kind.
It operates in an application of blockchain technology that is secured and synchronized around the world by a peer to peer network.
In essence, Bitcoin is similar to email. It’s a technology and not a company, a service nor a product. It is not backed by a bank or government nor controlled by one.
It is open source software with a community of developers of different backgrounds contributing to its safety, security and advancement.
This digital currency is bringing something new to the table.
If you tried to buy a handmade art item out of Guatemala and get it shipped to your house, you won’t be able to do it with your credit card unless you give your bank some form of early authorization.
Also, if you sought to send somebody money say your brother in California who needs a couple hundred bucks, It going to cost you $30 to $40 to send it through Western Union. If you try to do a bank transfer, it is even more complicated.
On the other hand, Bitcoin is quick. You can send $2 to Guatemala without going through a host of time-consuming procedures. It will also cost you almost nothing to send any amount of money.
Who accepts bitcoin?
To a many people, Bitcoin is monopoly money. It is the same thing as pointing to a video game. Not really, not anymore.
The actual and practical transaction that ever happened in bitcoin was in 2010 when someone paid 10,000 bitcoins for a large pizza. Pizzaforcoin.com was born out of this incident and in remembrance of it.
Bitcoin has grown in acceptance in the years that have followed. Richard Branson’s Virgin Galactic, a space exploration company, plans to take first travelers to space with tickets bought with bitcoins.
Gyft.com is a site through which several companies sell gift cards. The site accepts bitcoins and, therefore, the brands selling on it accept bitcoins indirectly.
Other examples of companies now accepting bitcoins include Expedia, Dell, Wikipedia, Overstock, Zynga and WordPress.
Indeed, indirectly you can get your groceries in bitcoins nowadays.
Where can you get bitcoin?
Exchanges and wallets such as Coinbase are actually the most popular place to buy bitcoins. However, often they are a bit complicated, frustrating and, for this reason, some people are not successful with them.
Some of the exchanges such as Bitstamp aimed more towards professional Bitcoin traders, with an auto book log, kind you find on any stock trading website.
Localbitcoin.com is a valuable option of buying bitcoins to mention. That is where bitcoin enthusiasts around the world can make a profile and express their intention and willingness to buy or sell bitcoins. Matching local players can meet and transact using cash, Paypal, Western Union, credit card or any other service they may agree on.
On the other hand, CoinOutlet, a bitcoin ATM manufacturer, provides the right here, tangible and physical representation of an exchange. The company plans to install the Bitcoin ATMs at locations across the USA and Europe with the highest traffic. The Company’s intention is to make buying and selling bitcoin as easy as possibly for programmer and luddite alike.
Right now, we are doing ten machines a month but we hope to have a higher output when our manufacturing is up to speed.
We’ve got 100,000 on contract already.
How does bitcoin work?
Using bitcoin is as simple as sending value from one person to another or keeping it for future use.
But what is going on behind the scenes and on what happens on peer to peer network is more complicated than that, of course.
When Mary sends John bitcoins, what she is actually doing is posting a transaction to the nearest node of the peer to peer network. This node will include it in a block of transactions that has to be verified and confirmed by the system through a process known as mining.
During this process, Mary’s address on a public ledger known as the blockchain will be reduced by the amount sent and the Johns address increased by the same amount. These changes will be reflected in the Wallet software on devices used by the two individuals.
The unfinished block is typically spread throughout the network in seconds, meaning you will see the transaction within seconds in wallet software. These changes are then verified and synchronized with all the nodes on the network, and the current block often confirmed in ten minutes. Mining has a reward to those providing resources to the network, which is also how new bitcoins come into circulation.
By the year 2140, this addition of new units will stop, and there will be 21 million bitcoins in circulation
Of course, there are more granular details relating to peer to peer network and blockchain data points, but that is how it works at the basic level.
What is a blockchain?
The blockchain is a public ledger where all transactions involving bitcoin are entered. It is what truly secures and powers bitcoin
It is referred to as “blockchain” because it is a growing set of “blocks” (of data) all connected in series by including the hash output of previous blocks, in future blocks to be hashed. Thus an interconnected “chain” of “blocks”, or a blockchain is formed.
Each of these blocks also include:
- Messages in transactions
- Timestamp of transaction
Each block is not easy to modify once it has been in the chain for a while. This is because every block after it would also have to be regenerated. And this is what makes double-spending of bitcoins very difficult. The block chain is the main innovation of Bitcoin.
Because of the blockchain and bitcoin’s peer-to-peer network, it would cost more for the hardware to “hack” bitcoin than it would financially return.
It is important to mention that bitcoin has never been hacked as an application. All the scams that have taken place involve businesses built around it such as Mt Gox.
Such Bitcoin scams should be looked in the same light bank breaks, which do not invalidate the dollar in any way.
What can bitcoin do?
Bitcoin provides bank-like services, to people who have no access to a bank. Or do not want to deal with one.
It makes shopping online less complicated by removing the many stages money has to go through before reaching the seller. It also brings down the cost of e-commerce.
While transactions on the public ledger are pseudo-anonymous, nothing stops users from giving up personal information when required, to make it less anonymous and to make the user more trustworthy without being there physically.
Bitcoin allows you to send money to anyone, anywhere, with no third party having to be involved, and without any personal information being required.
What has bitcoin done?
Bitcoin started a global economy that is best suited to the technological changes happening especially with e-commerce.
It has made it easier for bodies such as Bitgive Foundation and Red Cross to raise funds cheaply and quickly for different causes.
Other benefits include credit solutions such as BTCJam and Bitlending. They have made it possible for people from around to give and take credit without the obstacles that come with the traditional credit setting.
The latest addition to the cool benefits of bitcoin is the Changetip. This is a feature that allows people to give one another small tips of money on the online platforms
While society has not accepted bitcoin as a mainstream solution, the digital currency is readying itself to change the financial ecosystem just like email has changed communication.