There’s virtual money, and then there’s Bitcoin. The super geeky Bitcoin is really a mathematically-derived currency that promises to change the way people use money. Bitcoins aren’t real coins-they’re strings of code locked with military-grade encryption-and those who utilize them to buy and sell goods and services are difficult to trace. Along side anonymous drug dealers, Ashton Kutcher and the Winklevoss twins have reportedly jumped on the bandwagon. There’s something to be said about using currency that isn’t regulated by the us government or banks, doesn’t come with the usual transaction fees and is impossible to counterfeit. Bitcoin also promises to be disaster-proof, because you can’t destroy numbers in exactly the same way that you could destroy gold reserves or paper money.
What is Bitcoin?
Bitcoin is really a digital currency created in 2009 by a developer hiding beneath the pseudonym of Satoshi Nakamoto (supposedly a Japanese guy who has perfect command of American English). Bitcoin is decentralized, meaning it’s not controlled by a main authority like a financial institution, country, government or individual. It is peer-to-peer and open-source, distributed across the internet from computer to computer, without requirement for middlemen. In comparison to U.S. dollars, Bitcoin is virtually untraceable, making it appealing to libertarians afraid of government meddling and denizens of the underworld bitcoin mixer. You should use it to pay for purchases online and off, from illegal drugs on the Silk Road to legit restaurant meals.
Where you can Get Bitcoins
You may get Bitcoins from friends, online giveaways or by buying them with real money from Bitcoin exchanges. Using real money to buy Bitcoins defeats the complete intent behind anonymity, however, because you might need to incorporate your bank account to a third party site. You can also buy Bitcoins using your mobile phone or through cash deposit establishments. New Bitcoins are made by “mining.” Mining is done automatically by computers or servers-it’s not real-world mining where you’ve to dig underground to unearth commodities, but the idea is similar. You have to exert effort to dig up gold, and you (or your machine) also have to spend some time and resources to verify and record Bitcoin transactions.
One of the coolest reasons for having Bitcoin is so it gets its value not from real-world items, but from codes. Bitcoins are pulled from the ether by machines (and individuals who run them) in trade for solving complex mathematical problems linked to the present number of Bitcoins. These bulky and pricey supercomputers come with powerful encryption capabilities (and reportedly suck electricity like nobody’s business). In a typical transaction, buyer A from location X pays seller B some Bitcoins online. Miners then race to authenticate and encrypt the transaction, logging Bitcoin codes in a main server. Whomever solves the puzzle first gets the Bitcoins. About 25 new Bitcoins are made for every single 10-minute block, but that number can increase or decrease depending on what long the network runs.
Just how to Use Bitcoins
Once you receive your hands on some Bitcoins, you’ll need to store them in an on the web wallet through a computer program or perhaps a third-party website. You feel area of the Bitcoin network after you create your virtual wallet. To send Bitcoins to another user or pay for online purchases, get that person/seller’s identification number and transfer Bitcoins online. Processing takes about a couple of minutes to an hour, as Bitcoin miners across the world verify the transaction.
Just how to Make Money on Bitcoins
If you’re still skeptical, one Bitcoin is currently worth about $90 (as of 18 April 2013), with hourly fluctuations that could produce a day trader dizzy. Volatile since it is, more and more folks are just starting to milk the phenomenon for all it’s worth-while it lasts. How to really get your slice of the virtual gold rush? Some ways: Sell Bitcoin mining computers, sell your Bitcoins at crazy prices on eBay and speculate on Bitcoin markets. You can also start mining. Any person can mine Bitcoins, but until you are able to afford an efficient setup, it will need a regular PC a year or more to fix algorithms. Most people join pools of other miners who combine their computing power for faster code-cracking.
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