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What in the world is a Bitcoin?

Aaron Miller, Editor and Writer

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3bit·coin
ˈbitˌkoin/
noun
  1. a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
    “bitcoin has become a hot commodity among speculators”
    • a unit of bitcoin.
      “bitcoins can be used for online transactions between individuals”

 

But what actually is a Bitcoin? After watching the price of Bitcoin skyrocket, I had to know more. In the minds of Bitcoin users, it is the future currency of the world. Bitcoin is now the leading crypto-currency, and I, along with other humans ignorant of today’s news, had no clue what it was, but now everyone wants to know.

Image courtesy of CoinDesk.com They own all rights to the image.

Bitcoin was created in 2009, by an unknown creator, who goes by the alias “Satoshi Nakamoto.” At the moment, Bitcoin can be used to purchase a multitude of products across the internet, from Xbox games to hotel bookings. It literally is the new “gold” of the investing market and is projected to stand as a model for the future global currency.

Where did the name come from? The origin of the name is still a mystery. Some believe it is based off of “b-money,” in Wei Dai’s essay, who Satoshi quoted in his explanation of Bitcoin. Others believe it is derived from “BitTorrent.”

Image from CNN. CNN owns all rights to this image. http://money.cnn.com/infographic/technology/what-is-bitcoin/

The one significant benefit (and downfall) of trading using Bitcoin is the fact that it currently is not backed by any countries or agencies; therefore, making international payments cheap and tax free, but also allowing for sudden spikes and overall termination of the currency itself. They also don’t cultivate any interest, like a credit card would. Investing, or using Bitcoin, is a risk, but it could possibly inquire a fortune. Secondly, when completing a transaction, names are never revealed. All users create an alias, so their true identity is never on the receipt. This raises a red flag in the legal department of countries because this is a popular path for drug dealers to take to stay anonymous.

What people stress themselves over is the fact that Bitcoin itself has no value. Since it’s backed by no government, people are wary of it, but this is exactly why Bitcoin is beginning to soar in value. It derives its unique value from the fact that it’s unlike any other currency that the world has ever seen. From gold and silver being physically worth something, to paper money having a value because a government said it does, Bitcoin breaks all laws of currency and creates its own.

To get a Bitcoin, you either have to invest in one, or you have to mine for them. Mining is a whole process that you simply don’t want to get into. To mine for a Bitcoin you need a fast computer with a powerhouse graphics processing unit to render and decipher many mathematical equations in fractions of a second. The average Joe simply doesn’t have the capability of doing this because of the money and effort it requires. The entire process is also very, very slow. Professional miners have dozens (or even hundreds) of machines running multiple processes simultaneously to produce digital gold.

Now, should you invest in Bitcoin? My opinion, no, not right now. The cost of a very small portion of a Bitcoin is currently through the roof, and the return on an investment right now just isn’t worth it. Even though it is projected to reach exponential value in the coming years, it’s just much too early (or late if you consider being unlucky you didn’t invest earlier) to invest. Give it some time and educate yourself more on the topic. Just because there are examples of people hitting it big with Bitcoin, many investors are getting burned on their investments. Imagine this “Bitcoin rush” as this century’s “Gold Rush.” Everyone flocked to California to get rich quick, but many went home with less than they started with.

Bitcoin truly is a marvel that is unfolding before our eyes. Maybe the future doesn’t entitle Bitcoin being the leading currency, but it certainly opens the door for something bigger than anyone could possibly imagine.

http://money.cnn.com/2017/12/12/investing/bitcoin-regulators-warning-risk/index.html

1 Comment

One Response to “What in the world is a Bitcoin?”

  1. Smithc7 on March 2nd, 2018 3:26 pm

    Hey there, You have done a great job.

    [Reply]

If you want a picture to show with your comment, go get a gravatar.




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What in the world is a Bitcoin?