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 money. Now only the lazy did not hear about virtual tools, almost everyone has WebMoney or Yandex money. They prefer to store such funds in online wallets. Many people even get their salaries with virtual money, which they then withdraw to a plastic card or pay them in online stores. You can order equipment, pay utilities, or even order food now on 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. In 2009, the new cryptocurrency was created by the programmer (s), under the pseudonym Nakamoto Satoshi. This person (group of people) is not known to anyone (s). The creator came up with not only the currency itself, the algorithm of work, but also a special bitcoin wallet - an application in which you can contain them (you must admit, this is very convenient). When you read this name, then eastern associations arise immediately, you can decide that you created the currency in Japan, but there are suggestions that the program was actually developed by an American scientist who talked with fans of the currency in various forums, but then somehow stopped contacts. The last message from him was left in 2011.
It is also known that as soon as this brilliant person appears, he will instantly become an unheard of rich man. For the first time the creation of bitcoins, he became the owner of hundreds of thousands of coins. Given that 1 bitcoin costs a lot, their owner will become a multimillionaire. Although, you must admit, it would be strange to create something, not wanting to get profit in return, especially since money, even electronic, became the object and creation. The proverb that left the shoemaker without boots rarely works in our time; it is more likely an exception than a rule. Gavin Andersen is now a leading 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 calculating for products or services.
- Possible exchange for other types of currency.
- They serve as a means of saving savings.
Bitcoins - what is it? In fact, this is a type of cryptocurrency, i.e., a type of digital cash. Accounting and emission of bitcoin is based on cryptographic methods. In a distributed Internet network, it works in a decentralized way. Also in the online space there is a similar cryptocurrency, only it functions faster. This virtual money is called - lightcoin. Both currency units can be compared with a precious metal, such as silver or gold. It is immediately worth noting that both currencies are not associated with the pyramid.
Difference of Bitcoin from conventional payment systems
This currency is fully decentralized. Other payment systems (e.g. Visa) are owned by companies that work in their 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 between themselves, controlling the process via the Internet.
Another important difference is that this system has its own currency. These are new monetary units - bitcoins. What does this mean for society, we will analyze further in the article.
This is the first open network in the world that has become one through complete decentralization. If you want to create a regular financial network, you will have to work with many banks, follow all the intricate rules and instructions. Bitcoin is not such a system, it does not require anyone'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 investors, but on the supply and demand for it.
Work process
The actions of the participants on the Internet are very simple and quickly feasible. No intermediaries are required; operations take place instantly from one to another interested person. Money is transferred directly to the seller from the buyer. No need to change anything in the bank or transfer to a card - just send bitcoins to the right person directly. Once again we will answer the question: Bitcoins - what is it? For dummies (even it will become clear to them) - this is a mathematical cache code. Each is unique in its own way; it cannot be used twice.
Is it an imaginary currency?
This question arises for almost everyone who first encounters Bitcoin. The market dispels all doubts. One only has to pay attention to the bitcoin growth chart. The truth is that the currency is not stable, there are sharp jumps or drops, but for 4 years now, the growth trend has dominated - the bitcoin exchange rate has been growing. In 2009, this project was launched. Then for some time people wondered: Bitcoins - what is it? The course was low, but over time more and more people became interested in him, and he began to grow. What attracts people? For some it is a protection against inflation, for others it is a profitable investment.
Bitcoin exchange rate is constantly changing. Basically, the growth dynamics is positive. To date, 1 bitcoin in dollars is 230.9 units. You must admit that the course is impressive for someone invented by someone.
Where to use the new cryptocurrency
Bitpay - a wonderful company - in 2012 announced that thousands of users (sellers) agree to accept payments with bitcoins. A year later, the figure was 10 thousand 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 which currency unit: Bitcoin, dollar or euro will be used for payment, the main thing is the desire to purchase the goods. You can even say more: many stores prefer cryptocurrency, as this reduces costs, and you can offer goods to the buyer much cheaper. Also, e-currency is preferred by adult shops and online games.
Also, coins can be used as international payments (Western Union), which in our time are very slow, inconvenient and expensive. Bitcoin is an international system, thanks to which the process will become more pleasant, simple, fast, convenient, and most importantly, that will be cheaper, or even completely free.
Illegal use
Bitcoins are often used for illegal purposes. This is truly dangerous for society. No one should suffer. But, unfortunately, the world is such that people will find a way out of any situation if they need to crank out an illegal transaction. If not Bitcoin will help them in this, then some other system. Blaming or not cryptocurrency is everyone's personal business, but all its advantages make people vehemently resist the “cover” of bitcoin.
Satoshi Dice, for example, allows people to get involved in gambling, and in many countries this is punishable by law. The Silk Road website, in general, until recently brought a lot of suffering and evil, since through it dealers sold prohibited substances for millions of dollars. Also, the porn industry, which is constantly looking for ways to circumvent laws, is interested in cryptocurrency.
Process of creation
In the ordinary world, money is printed or minted at Central Banks. Bitcoin system works differently. Many computers around the world process transactions through the Internet. Computers that perform these actions are called miners. The process of processing bitcoin transactions is “mining”. Every 10 minutes, someone becomes the winner of the race in the calculation, receives a reward. Thanks to such stimulation, more and more people are constantly joining this process. Compensation is reduced every four years. So, in 2012 it amounted to 50 military-technical cooperation, now - 25 military-technical cooperation, and in 2016 it will not exceed 12.5 military-technical cooperation. It becomes clear that soon Bitcoins will cease to be mined.
Will there be deflation?
Usually all economists are accustomed to consider this process a problem. Even if such a situation happens (it may not occur), we are in a hurry to please that this is a negative only for individual national economic systems.
Take the United States as an example. They have all loans paid in dollars. If the course jumps, then people will not be able to pay them back. Bitcoin is not used as a settlement currency, there are no long-term lease agreements or loans in cryptocurrency. Even the Bitcoin organization itself, which pays workers wages in bitcoins, setting rates, uses the dollar, then converts it into its currency.
Mining process
Now we figured out the question: Bitcoin - what is it. And how to earn them - now comes to the fore. This process is called mining. To mine valuable electronic coins, you need to solve complex mathematical equations. The computer uses a brute force method. The only sad thing is that a regular PC will not work, miners use heavy-duty servers or megaproducting computers. There is a lot of competition among the miners. The winner is determined every 10 minutes and given him 25 coins. As the network is constantly growing, production has become a very complex process.
Other ways to get currency
Now it has become difficult to mine bitcoins. That it is almost unrealistic - we have already seen. However, there are other ways to get this currency. So what are the options?
- Buy bitcoins for other virtual or real money.
- To sell goods to the buyer for these coins, you can also get them on a bitcoin wallet for the services provided.
- Exchange with someone from private individuals.
Positive points in currency
The fact is that cryptocurrency has some advantages even over ordinary money. Consider them.
Currency code open
What does it mean? Bitcoin uses the same method as in Internet banking. The only difference is that the information is open, that is, you can always see when and how many coins were transferred to the wallet. Only information about the recipient or sender of the payment is hidden. Nobody will be able to find out whose Bitcoin wallet, except their owners, since no one else has access to personal information.
Inflation cannot come
Coincidentally, the time required to obtain coins is equal to the rate of extraction of precious metals such as gold. Earlier, money was backed up by something, but now some countries issue more of them than they can really afford. In cryptocurrency, this is not possible. Bitcoins are limited to 21 million coins. Thanks to this, the Internet currency has become more reliable than usual, and possibly better than gold. Mathematical calculation guaranteed a lack of coins. Thus, forecasts make that virtual money will not depreciate, but rather, over time, the Bitcoin rate will only increase. This is the rule that the creator put into the wallet program. As in any rule, there are exceptions, and in this system they came up with a retreat. It so happened that any change in the Bitcoin wallet system can undergo only 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 inspectorates, nor the state can do this. A very useful thing. It is a pity, of course, that this allows some fraud to happen, but nothing can be done about it.
Transactions Without Borders
No one can freeze the account. You can pay from anywhere in the world, to anyone and for anything (again, cons, since you can pay for illegal goods).
Do not pay taxes for the transfer of funds
Enough of exactions from 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 undone
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 several times. The above arguments make it possible to consider bitcoin a fairly reliable means of payment.
disadvantages
As with everything that surrounds us, there are cons in the idea of ​​cryptocurrency. Bitcoin exchange rate is very dependent on the news. Namely, from what the politicians of different countries of the world declare. But, in general, this is a good opportunity for long-term investments.
How to use magic coins
Everything is very simple. For bitcoins, you can buy goods in online stores, pay for online games, and completely anonymously, make payments in all countries freely.
Where to store coins
- Online wallet. Access to it is possible from a phone, tablet, computer. Easy to use. Everything is like other wallets: WebMoney or Qiwi.
- Offline wallet. It is installed on the computer (you can only enter from it using a password). A huge minus is that if you forget the password or the hard drive flies, you can say goodbye to savings.
The data of two types of wallets are stored on the server, and, as you know, it can be hacked.
Investment
As we already understood, virtual money is an excellent type of investment. The fact is that sometimes there are active bursts in the growth of bitcoin. Just at such moments, you can even make pretty good money. One of the all-time highs was in 2013.
The story of pizza
In 2010, an ordinary American bought pizza for 10,000 bitcoins, then it was a little money. If he saved them, he would become a dollar millionaire.
I would still like to warn that investing in cryptocurrency, like this process in general, is a very risky event. It is worthwhile to draw an analogue with gold, the fact is that in the long term, risks are reduced. Here, as they say, who does not risk, he does not drink champagne!
Will Bitcoins Replace Ordinary 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 modernized, it will become more convenient, simpler and universally applicable.
Bitcoin Millionaires
The leaders are the Wickelvoss brothers. These guys became famous thanks to their lawsuit against Mark Zuckenberg. Both guys are now 31 years old. They invested 11 million US dollars even at a time when the public wondered little: "Bitcoins - what is it?" The brothers felt the potential right away. Their contribution to date is 400 million US dollars.
Tony Gallippi receives silver for the race of successful investments in bitcoins. Since 2011, he has been actively buying up small amounts of cryptocurrency and now has reached the result of 100 million US dollars.
Roger Ver is known to everyone thanks to his charity work, which is why he “glorified” cryptocurrency.
Charlie shrem gets 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 is the owner of the last, but no less important, fifth place. In 2010, he bought 5 thousand bitcoins. Now on his wallet 111 thousand 114 military-technical cooperation.
How many Satoshi are Bitcoins made of? What is this: 0.00000001 BTC? These are not prime numbers. This means that 1 satoshi is the above digit from bitcoin.
So what is this bitcoin? Is it zero without a stick or a real way to make money? You never know: where you find and where you lose. But on the example of the considered millionaires, it is clear that they took the risk correctly.
Perhaps soon the ranks of millionaires who have become rich on cryptocurrency will replenish you? Take risks, but do not forget that both an unprecedented “take-off” and a rapid “fall” are always possible, therefore, approach decisions related to money carefully and deliberately.
Bitcoin ban
For the first time in the world, this currency was banned in Thailand. The fact is that Bitcoin Co filed an application with the Bank in order to obtain a license for the official circulation of its currency. However, they were denied this. A ban has already been introduced on bitcoin 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 is also a debate in Belarus to ban the settlement of bitcoins 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 e-wallets. Russia is also against private virtual money.
In general, will the issue of issuing private money, which, in essence, are bitcoins, become resolved? Is it possible to be taxed? Will the state be able to make money on this system? These are all important issues to consider before rejecting Bitcoin as a means of payment at the state level. In the United States and Canada, the phenomenon is being thoroughly studied, and until the advent of a regulatory framework on this issue, financial institutions are not recommended to use bitcoin.
Fans of online earnings must 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 the question arises about the illegality of cryptocurrency everywhere, then the rules for using it will be amended, so as not to lose people their investments!
Bitcoins - what is it? The feedback from experienced users and beginners who are just starting their journey in investing in cryptocurrency is usually positive. Especially in people who consider bitcoins as long-term investments. The fact is that having bought 1 bitcoin today for one amount, you can get 3 times more money and pleasure in a year or three without completely straining. Those who wanted to invest for a short time are usually unhappy, because the rate is unstable. Bitcoin can always “fall” and disappoint a depositor for a long time. Just because of this situation, you can often hear or read the arguments on the topic: “Bitcoins - what is it? "Divorce" or salvation from inflation? "
Someone is losing money, and someone is becoming even richer. Everything should be approached wisely and with common sense. It is impossible, simply relying on our own experience, to say that it is worth investing in bitcoin-money, but it should be noted that many in front of our eyes become richer, having made a choice in their favor. Perhaps this option is much more reliable than buying lottery tickets, casino games and betting on races. We hope that they quenched the curiosity of citizens and fully answered the question in the article: “Bitcoin - what is it?” Photos are also presented for better understanding and perception of the text of readers.