There’s virtual money, and then there’s Bitcoin. The super geeky Bitcoin is a mathematically-derived currency that promises to change just how people use money. Bitcoins aren’t real coins-they’re strings of code locked with military-grade encryption-and people who utilize them to buy and sell goods and services are difficult to trace. Along with 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 include the most common transaction fees and is impossible to counterfeit. Bitcoin also promises to be disaster-proof, as you can’t destroy numbers in exactly the same way that you can destroy gold reserves or paper money.
What is Bitcoin?
Bitcoin is a digital currency created in 2009 by a developer hiding under 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 central authority like an economic institution, country, government or individual. It is peer-to-peer and open-source, distributed across the net from computer to computer, without importance of middlemen. Compared to U.S. dollars, Bitcoin is virtually untraceable, which makes it appealing to libertarians afraid of government meddling and denizens of the underworld. 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 cash from Bitcoin exchanges. Using real cash to buy Bitcoins defeats the whole intent behind anonymity, however, because you will need to add your bank-account to a 3rd party site bitcoin mixer. You can even buy Bitcoins utilizing your mobile phone or through cash deposit establishments. New Bitcoins are made by “mining.” Mining is completed automatically by computers or servers-it’s not real-world mining where you have to dig underground to unearth commodities, but the concept is similar. You have to exert effort to dig up gold, and you (or your machine) also have to spend time and resources to verify and record Bitcoin transactions.
One of the coolest things about Bitcoin is that it gets its value not from real-world items, but from codes. Bitcoins are pulled out from the ether by machines (and individuals who run them) as a swap for solving complex mathematical problems linked to the existing number of Bitcoins. These bulky and pricey supercomputers include powerful encryption capabilities (and reportedly suck electricity like nobody’s business). In an average 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 central server. Whomever solves the puzzle first gets the Bitcoins. About 25 new Bitcoins are made for every 10-minute block, but that number can increase or decrease depending how long the network runs.
How to Use Bitcoins
Once you obtain your hands on some Bitcoins, you’ll need to store them in an on line wallet via a computer program or a third-party website. You feel area of the Bitcoin network when you create your virtual wallet. To send Bitcoins to another user or buy online purchases, get that person/seller’s identification number and transfer Bitcoins online. Processing takes about a couple of minutes to an hour or so, as Bitcoin miners across the globe verify the transaction.
How to Make Money on Bitcoins
If you’re still skeptical, one Bitcoin happens to be worth about $90 (as of 18 April 2013), with hourly fluctuations that may make a day trader dizzy. Volatile because it is, more and more people are needs to milk the phenomenon for all it’s worth-while it lasts. How to truly 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 even start mining. Any person can mine Bitcoins, but until you are able an efficient setup, it can take a typical PC annually or more to fix algorithms. Many people join pools of other miners who combine their computing power for faster code-cracking.
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