Bitcoin – what is it?
In simple terms, Bitcoin (BTC) is a new generation cryptocurrency that operates exclusively on the Internet. For its production and distribution, special mathematical algorithms are used that make the bitcoin network independent and decentralized.
Bitcoins can be used as a regular means of payment, just like any other electronic currency. They can be used to buy goods, pay for services, exchange for other banknotes.
But unlike traditional money, Bitcoin is not backed by anything. Theoretically, any banknotes can be exchanged for gold in a bank, and the Central Bank is obliged to keep as much precious metal as it has issued money in circulation. Bitcoin, on the other hand, is not physically secured with anything, but it is supported by the unusual idea of currency decentralization, its complete autonomy and anonymity. Those. bitcoin is valuable on its own.
Features of BTC
In order to imagine what its key features are, it is better to compare them with traditional money:
- Decentralization. The emission of any currency is carried out by the Central Bank, which is also the main regulator. In the bitcoin network, each computer is a mini-node that provides a coin transaction. There is no central authority that can prohibit the distribution and issue of currency – BTC is produced by the users themselves.
- Anonymity. Each wallet has its own alphanumeric designation, which simultaneously serves as a login and address for transferring funds. Transactions are coded. All! No data about the owner of the wallet and the addressee is transmitted, it is impossible to calculate its owner by the wallet number.
- Transparency. Nevertheless, the history of transactions is stored in the so-called blockchain – a sequence of blocks that are “mined”. So all operations take place “in plain sight.”
- Ease of use. In order to use BTC, you just need to open a wallet. The wallet number will be used as an address for receiving transfers. Withdraw bitcoin, i.e. you can exchange it for any other currency, you can on the relevant exchanges or from individuals.
- Transaction speed. If a bank transfer can take a week, then bitcoins are exchanged almost instantly – as soon as the block is processed. It should be noted, however, that the transaction cannot be canceled. If money is accidentally transferred to another address, it is impossible to dispute or reverse the operation.
- Almost complete absence of commission. Transfers between users are carried out free of charge on a first-come, first-served basis. To speed up the transfer, you can pay a small commission – then the payment will be prioritized by the algorithm.
- Limited number of coins. A total of 21 million BTC can be in circulation. More than half have been processed so far. At the same rate of production, the last bitcoin will be mined in 2025.
It is incorrect to compare bitcoin with ordinary money. It works on completely different principles, offering users a completely alternative online payment system. But beginners should not delve into the technical details of BTC, it is enough to know its key features and how it can be applied.
How bitcoin was created
Nothing is known for certain about the creator of bitcoin, except for the name – Satoshi Nakamoto. And even then this is most likely a pseudonym. There are several theories about who is hiding behind this name, but none have been confirmed. It has not even been proven that Mr. Nakamoto is Japanese, as can be judged by his pseudonym.
It is known that for the first time information about a decentralized cryptocurrency appeared in 2008. The very next year, the first version of the client, developed by Nakamoto, appeared. In fact, from that time the triumphant procession of bitcoin across the planet began.
In 2010, when BTC had already strengthened its position, Satoshi unexpectedly left the project. Who he was and what he is now doing is unknown. What is the amount of bitcoins remaining in his hands is also unknown. According to various estimates, the size of his fortune ranges from $ 100 million to $ 1 billion.
In any case, whoever the creator of Bitcoin is, the main thing is that he provided the world with an unusual concept of creating a means of payment. The source code created by Nakamoto has been repeatedly refined, the interaction protocols have been improved and developed.
Other cryptocurrencies were created according to the same principles, the most famous are:
- Reeple and other.
There are more than a hundred cryptocurrencies in total, but only two dozen reach a market capitalization of over $ 1 million. Many of them are built on original algorithms that are fundamentally different from BTC, so the principle of their extraction and use may be completely different.
Despite the large number of cryptocurrencies, Bitcoin is the most popular
How to use bitcoins
In order to be able to receive and spend bitcoins, you need to create a bitcoin wallet. There are two options:
- Offline wallet. To do this, you need to download and install a special program on your computer, for example, Bitcoin Core. Such a wallet will become a full-fledged node in the bitcoin network and will process and verify transactions. However, the program takes up significant space on the hard drive, eats up a significant part of Internet traffic and slows down the device somewhat. In addition, initial synchronization will take time – up to 3-4 days, depending on the complexity of the protocol.
- Online wallet. This is the most common option among bitcoin holders. Such a wallet is connected to special services, in fact, it is located on a third-party service and is supplied through an intermediary. The security level is lower here, but you can access the wallet from any device. Considering that most online wallets are integrated with bitcoin exchange and withdrawal services, it is much more convenient to use them. You can start them and start using them in a minute.
To receive a transfer via the bitcoin network, it is enough to tell your sender the name of the wallet. The funds will come as soon as the blockchain is processed. With a free translation, it doesn’t take more than 10 minutes.
To pay, you also need to get the recipient’s wallet number and send him a transfer. Transactions are irreversible and not protected by a protection code, so you need to be careful when specifying the destination.
As for the withdrawal, you can exchange Bitcoin on any online exchange that works with cryptocurrency. The service will definitely take a commission (about 3-5%), this must be taken into account.
How to earn bitcoins
The cost of bitcoins is constantly fluctuating, and quite significantly. In 2012, 1 BTC cost a little more than $ 50, in 2014 its explosive growth took place – in a month the price jumped from $ 200 to 1089 (the maximum value reached at the moment). Naturally, a rebound followed, in 2015 the price dropped to the previous $ 200. At the moment, the cost of 1 BTC ranges from $ 400 to $ 600. The maximum cost for 2016 is $ 740 (June).
Thus, Bitcoin is quite volatile. Naturally, such fluctuations in the Bitcoin exchange rate against the dollar are of interest to both professional and novice investors. So, in three days from July 31 to August 2, the price of 1 BTC fell from 640 to 545 dollars, at the moment it is returning to the previous corridor. At this point, many investors had the opportunity to purchase cryptocurrency at a relatively low price, expecting its growth in the future.
Naturally, for an initial investment, you need to have some kind of base. Many are interested in how you can earn bitcoins. There are several main ways:
It involves the installation of special software on a computer that processes blockchains. After processing the block, the owner of the program receives a reward. Given that the complexity of mining grows over time, it is currently irrational to use a personal PC for this purpose: the cost of a video card and electricity will not correlate with profit. To obtain 1 Bitcoin, entire “bitcoin farms” are now used – several computers engaged only in mining.
Just the case when “it is impossible, but really want to.” You can do your own mining by renting a piece of a bitcoin farm. The “tenant” will take all the profits for himself, and the owner will receive a pre-agreed remuneration.
This term refers to sites that offer a small bitcoin reward for simple actions: registering on a resource, entering captcha, etc. “Earnings” are really small here – about 1 satoshi (this is 0.00000001 bitcoin or 0.00039 rubles at the rate of 38563.2 rubles for 1 BTC).
This purchase is cheaper and the sale is more expensive. The basic principles of trading are no different from the principles of trading with any currency.
There is another way to get bitcoins – to sell some product or service for this currency. The main thing is to find a buyer who is willing to pay in this way.
Bitcoin rating and reviews
Despite the large number of analogues, Bitcoin is still the main cryptographic currency. While there is still a reserve for mining new coins, and the system is in demand, it will definitely last for several years, so it can be used to earn money, store funds and make transfers.
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