Each country has its own currency. In Belarus and Russia - the ruble, in the USA - the dollar, in Ukraine - the hryvnia, in China - the yuan. So the Internet also has its own money. Now only the lazy have not heard about virtual funds, almost everyone has WebMoney or Yandex money. They prefer to store such funds in online wallets. Many people even receive a salary with virtual money, which they then withdraw to a plastic card or pay with it in online stores. It is now possible to order equipment, pay utility bills or even order food over the Internet. The virtual world is developed at such a high level that you can live almost without leaving the screens. And if so, then this world should have its own currency.
If you are reading this article now, you probably wondered: “Bitcoins - what is it?” The answer is very simple at first glance. Bitcoins are virtual electronic money. A new cryptocurrency was created in 2009 by a programmer (s), under the pseudonym Nakamoto Satoshi. This person (group of people) is unknown to anyone (s). The creator came up with not only the currency itself, the algorithmwork, but also a special bitcoin wallet - an application in which you can keep them (agree, this is very convenient). When you read this name, oriental associations immediately arise, you can decide that they created the currency in Japan, but there are suggestions that the program was actually developed by an American scientist who communicated with fans of the currency on various forums, but then for some reason stopped any contacts. The last message from him was left in 2011.
It is also known that as soon as this brilliant person appears, he will suddenly become an unheard-of rich man. During the first time of the creation of bitcoins, he became the owner of hundreds of thousands of coins. Considering that 1 bitcoin is worth a lot, their owner will become a multimillionaire. Although, you see, it would be strange to create something without wanting to receive benefits in return, especially since money, even if it is electronic, has become an object and a creation. The proverb that left the shoemaker without boots rarely works in our time, it is rather the exception than the rule. Gavin Andersen is now the lead developer of a high-profile and profitable cryptocurrency project.
The properties of bitcoin coins are no different from ordinary money in any country:
- You can use them when paying for products or services.
- Exchange for other types of currency is possible.
- They serve as a store of value.
Bitcoins - what is it? In fact, this is a kind of cryptocurrency, i.e. a type of digital money. Accounting and emission of bitcoin is based on cryptographic methods. In a distributed Internetnetwork it works decentralized. There is also a similar cryptocurrency in the online space, only it functions faster. This virtual money is called Litecoin. Both monetary units can be compared to a precious metal such as silver or gold. It should be noted right away that both currencies are not connected with the pyramid.
Bitcoin is different from conventional payment systems
This currency is fully decentralized. Other payment systems (such as Visa) are owned by companies that work in their own interests. Bitcoin has no owner or manager. It is distinguished from the rest by a peer-to-peer structure. Thus, all owners of bitcoins are equal, and their computers are engaged in processing transactions among themselves, managing the process using the Internet.
An important difference is that this system has its own currency. These are new monetary units - bitcoins. What this means for society, we will analyze further in the article.
This is the world's first open network, which became such thanks to full decentralization. If you want to create a conventional financial network, you will have to work with many banks, follow all the intricate rules and regulations. Bitcoin is not such a system, it does not require someone's permission or help to create a financial service based on it.
Bitcoin - what is it in simple words?
Cryptocurrency is a common software product. How much 1 bitcoin will cost does not depend on the number of depositors, but on demand andoffers on it.
Workflow
The actions of participants on the Internet are very simple and quickly feasible. No intermediaries are required, transactions pass instantly from one to another interested person. The seller receives money directly from the buyer. No need to change anything in the bank or transfer to the card - just send bitcoins to the right person directly. Let's answer the question again: bitcoins - what is it? For dummies (even they will understand) - this is a mathematical cache code. Each one is unique and cannot be used twice.
Is this an imaginary currency?
This question arises for almost everyone who encounters bitcoin for the first time. The market dispels all doubts. One has only to pay attention to the bitcoin growth table. The truth is that the currency is not stable, there are sharp jumps or falls, but for 4 years now, as the upward trend has dominated, the bitcoin rate has been growing. This project was launched in 2009. Then for a while people wondered: Bitcoins - what is it? The rate was low, but over time, more and more people were interested in it, and it began to grow. What attracts people? For some, this is a protection against inflation, for others - a profitable investment.
Bitcoin exchange rate is constantly changing. In general, the dynamics of growth is positive. Today, 1 bitcoin in dollars is equal to 230.9 units. Agree that the rate is impressive for the money invented by someone.
Where to use the new cryptocurrency
Bitpay is a great company - said in 2012 that thousandsusers (sellers) agree to accept payments in bitcoins. A year later, the figure was 10,000 outlets. You can use the Shopify platform to find more than ten thousand online stores where you can pay with virtual money, including bitcoin cryptocurrency. Thanks to this, it no longer matters what currency: bitcoin, dollar or euro, will be used for payment, the main thing is the desire to purchase goods. You can even say more: many stores prefer cryptocurrency, as it reduces costs, and you can offer the product to the buyer much cheaper. Also, e-currency is preferred by adult stores and online games.
Also coins can be used as international payments (Western Union), which are very slow, inconvenient and expensive nowadays. Bitcoin is an international system, thanks to which the process will become more pleasant, simple, fast, convenient, and most importantly, it will be cheaper, if not completely free.
Illegal use
Bitcoins are often used for illegal purposes. This is truly dangerous for society. Nobody should suffer. But, unfortunately, the world is such that people will find a way out of any situation if they need to pull off an illegal deal. If not Bitcoin will help them in this, then some other system. Whether or not to blame cryptocurrency is a personal matter, but all its advantages make people vehemently oppose the "cover" of bitcoin.
Satoshi Dice, for example, allows people to get involved in gambling, butin many countries it is punishable by law. Until recently, the Silk Road website has brought a lot of suffering and evil, as through it dealers have sold millions of dollars worth of illegal substances. Also, the porn industry, which is constantly looking for ways to get around the laws, is interested in cryptocurrency.
Creation process
In the ordinary world, money is printed or minted in Central Banks. The Bitcoin system works differently. Many computers around the world process transactions over the Internet. The computers that perform these actions are called "miners". The process of processing bitcoin transactions is "mining". Every 10 minutes someone wins a race in computing, gets a reward. Thanks to this stimulation, more and more new people are constantly joining this process. The reward is reduced every four years. So, in 2012 it was 50 BTC, now it is 25 BTC, and in 2016 it will not exceed 12.5 BTC. It becomes clear that bitcoins will soon stop being mined.
Will there be deflation?
Usually, all economists are accustomed to consider this process a problem. Even if such a situation happens (may not happen), we hasten to please that this is a negative only for certain national economic systems.
Take the US as an example. All their loans are paid in dollars. If the rate jumps, then people will not be able to pay them. Bitcoin is not used as a settlement currency, there are no long-term leases or loans in cryptocurrency. Even the bitcoin organization itself, which pays employeessalary in bitcoins, setting prices, uses the dollar, then converts it into his currency.
Process mining
Now we have de alt with the question: what is bitcoin. And how to earn them - now comes to the fore. This process is called mining. To extract valuable electronic coins, you need to solve complex mathematical equations. The computer uses the brute force method. The only sad thing is that a regular PC will not work, miners use super-powerful servers or mega-productive computers. There is a lot of competition among miners. The winner is determined every 10 minutes and given 25 coins. Since the network is constantly growing, mining has become a very difficult process.
Other ways to get currency
Now it has become difficult to mine bitcoins. That this is almost unrealistic - we have already seen. However, there are other ways to get this currency for yourself. So what are the options?
- Buy bitcoins with other virtual or real money.
- Sell the goods to the buyer for these coins, you can also get them on a bitcoin wallet for the services rendered.
- Exchange with someone private.
Good points in currency
The fact is that cryptocurrency has some advantages even over ordinary money. Consider them.
Open currency code
What does this mean? Bitcoin uses the same method as internet banking. The only difference is that the information is open, i.e. you can alwayssee when and how many coins were transferred to the wallet. Hidden is only information about the recipient or sender of the payment. Whose bitcoin wallet, no one will be able to find out, except for their owners, since no one else has access to personal information.
Inflation will not be able to set in
Coincidentally, the time it takes to get the coins is equal to the mining rate of precious metals like gold. Money used to be backed by something, but now some countries are issuing more than they can realistically afford. This is not possible in cryptocurrencies. Bitcoins are limited to 21 million coins. Thanks to this, the Internet currency has become more reliable than usual, and perhaps even better than gold. Mathematical calculation guaranteed the lack of coins. Thus, forecasts are made that virtual money will not depreciate, but on the contrary, over time, the bitcoin rate will only increase. This is the rule that the creator put into the wallet program. As with any rule, there are exceptions, so in this system they came up with a way out. It so happened that any change in the bitcoin wallet system can only be made with the consent of 99% of users. This is the true crown of democracy.
No one can control the exchange between wallets
Neither banks, nor tax authorities, nor the state can do this. A very useful thing. It's a pity, of course, that this allows some kind of fraud to occur, but nothing can be done about it.
Transactions without borders
No one can freeze an account. You can pay from anywhere in the world, to anyone and for whatanything (again, cons, since you can pay for illegal goods).
Don't pay taxes on money transfers
Enough of the extortions from the banks. Cryptocurrency will avoid unnecessary costs or significantly reduce them compared to expensive bank transfers, which are also inconvenient to use.
This money can't be faked, can't be canceled
The system is absolutely honest (mathematics cannot be otherwise), with great potential. Many online stores already accept this currency. Coins cannot be copied or spent multiple times. The above arguments allow us to consider bitcoin as a fairly reliable means of payment.
Flaws
As with everything around us, there are downsides to the idea of cryptocurrency. The bitcoin rate is very dependent on the news. Namely, from what the politicians of different countries of the world say. But, in general, this is a good opportunity for long-term investment.
How to use magic coins
It's very simple. For bitcoins, you can buy goods in online stores, pay for online games, and completely anonymously, make payments across all countries freely.
Where to store coins
- Online wallet. You can access it from your phone, tablet, computer. Easy to use. Everything is similar to other wallets: WebMoney or Qiwi.
- Offline wallet. It is installed on a computer (you can only log in from it using a password). A huge minus is that if you forget your password or a harddisk, you can say goodbye to savings.
The data of the two types of wallets is stored on the server, which, as you know, can be hacked.
Investing
As we have already understood, virtual money is an excellent type of investment. The fact is that sometimes there are active surges in the growth of bitcoin. Just at such moments, you can make very good money. One of the unprecedented surges was in 2013.
Pizza story
In 2010, an ordinary American bought a pizza for 10,000 bitcoins, which was little money back then. If he had kept them, he would have become a dollar millionaire.
I would still like to warn you that investing in cryptocurrency, like this process as a whole, is a very risky undertaking. Here it is worth drawing an analogy with gold, the fact is that in the long term, the risks are reduced. Here, as they say, who does not take risks, he does not drink champagne!
Will Bitcoin replace regular money?
This scenario is possible, but unlikely. The fact is that the population wants to use a convenient and more or less stable currency, because today it is the dollar. But the fact that bitcoin will become a competitive currency is very likely. Over time, the system will be upgraded, become more convenient, simpler and universally applicable.
Bitcoin millionaires
The leaders are the Wicklevoss brothers. These guys became famous for their lawsuit against Mark Zuckenberg. Both boys are now 31 years old. They invested 11million US dollars back at a time when the public little wondered: "Bitcoins - what is it?" The brothers sensed the potential right away. Their contribution to date is $400 million.
Tony Gallippi wins silver for the best bitcoin investment race. Since 2011, he has been actively buying cryptocurrencies for small amounts and has now reached a result of 100 million US dollars.
Roger Ver is known to everyone for his charitable work, which made the cryptocurrency famous.
Charlie Shrem earns a well deserved third place (bronze). He created the BitInstant service. His fortune is estimated at 45 million US dollars. For these achievements, he thanks bitcoin.
Jared Kenna - the owner of the last, but no less important, fifth place. In 2010, he bought 5 thousand bitcoins. Now he has 111 thousand 114 BTC on his wallet.
How many satoshis are bitcoins made of? What is it: 0.00000001 BTC? These are not prime numbers. This means that 1 Satoshi equals the above figure from Bitcoin.
So what is this bitcoin? Is it zero without a wand or a real way to make money? You never know where you will find and where you will lose. But on the example of the considered millionaires, it is clear that they took the right risk.
Perhaps soon the ranks of millionaires who got rich on cryptocurrency will be replenished by you? Take risks, but do not forget that both an unprecedented “rise” and a rapid “fall” are always possible, therefore, approach decisions regarding money carefully and deliberately.
Prohibitionto bitcoins
For the first time in the world, this currency was banned in Thailand. The fact is that Bitcoin Co applied to the Bank in order to obtain a license for the official circulation of its currency. However, they were denied this. There is already a ban on bitcoins in Bolivia due to the fact that people can suffer impressive losses because of them. Ecuador wants to introduce its own "Bitcoin". At the government level, they are considering this issue and want to get rid of competitors. There are also ongoing debates in Belarus to ban bitcoin settlements at the legislative level, and possibly even introduce a ban on virtual money in connection with the fight against drug dealers who receive funds for electronic wallets. Russia is also against private virtual money.
In general, will the issue of issuing private money, which, in fact, are bitcoins, become resolved? Can they be taxed? Will the state be able to make money on this system? These are all important questions to consider before rejecting bitcoin as a means of payment at the state level. In the US and Canada, the phenomenon is being carefully studied, and until the emergence of a regulatory framework on this issue, financial institutions are not recommended to use bitcoin.
Fans of Internet earnings should definitely try out this type of investment in order to form their own opinion. It seems that bitcoin has a right to exist. Perhaps, if there is a question about the illegality of cryptocurrency everywhere, then amendments will be made to the rules for using it, but do not losepeople their investments!
Bitcoins - what is it? Feedback from experienced users and beginners who are just starting their journey in investing in cryptocurrency is usually positive. Especially for people who consider bitcoins as a long-term investment. The fact is that by buying 1 bitcoin today for one amount, you can get 3 times more money and pleasure in a year or three, without straining at all. Those who wanted to invest for a short period of time are usually dissatisfied, because the exchange rate is unstable. Bitcoin can always “fall” and disappoint the depositor for a long time. Just because of this situation, one can often hear or read arguments on the topic: “Bitcoins - what is it? "Divorce" or salvation from inflation?"
Someone loses money, and someone becomes even richer. Everything should be approached with intelligence and common sense. You can’t just rely on your own experience to say that it’s worth investing in bitcoin money, but it should be noted that many people become richer right before their eyes, having made a choice in their favor. Perhaps this option is much more reliable than buying lottery tickets, casino games and horse racing bets. We hope that we have satisfied the curiosity of citizens and fully answered the question in the article: “Bitcoin - what is it?” Photos are also presented for a better understanding and perception of the text by readers.
