I am pleased that more and more people are showing interest in the loudest innovation in the financial world in recent years - cryptocurrencies, including Bitcoin. Let's see what it is and why there is so much talk about them. And not only in social networks and forums, but also in central banks, parliamentary committees and governments of many countries of the world. It is very easy to join the community and start using the new digital money.
Term "cryptocurrency"- a direct translation of the English "cryptocurrency", that is, a virtual currency protected by cryptography. First of all, cryptocurrency is a fast and reliable payment and money transfer system based on the latest technologies and not controlled by any government.
bitcoin, bitcoin, bitcoin, btc
Word bitcoin formed in English from "bit" is the smallest unit of information and "coins"- coin. Following the rules of English-Russian transcription, this term should be translated into Russian as "Bitcoin". This spelling is used by the official website bitcoin.org, Bitcoin Wiki, Wikipedia, the Central Bank of the Russian Federation and other resources. Still a widely used variant bitcoin" came from the first illiterate translation of the wallet interface based on direct transliteration. However, it is better to spell this word correctly.
The most common abbreviation for Bitcoin is BTC- usually used in stock trading and financial articles. cyrillic abbreviation, BTK, did not take root in the community.
What is Bitcoin?
Bitcoin is the first cryptocurrency, the most famous of many other cryptocoins, the symbol and flagship of the cryptocurrency world, as well as the monetary unit of the same name that circulates within the system. Later in this article, we will explain how the cryptocurrency works, using the example of Bitcoin.
What is the most significant feature of Bitcoin in terms of economics? It is a digital commodity with a limited supply, its algorithm is designed in such a way that a maximum of 21 million coins can exist in the system - units, each of which is also called "bitcoin". The emission schedule is programmatically determined and known in advance. After the last coins are generated, their number will not change. The Bitcoin economy is built on a deflationary model that many economists fear. But they do not find practical justification.
In fact, such a relatively small number of coins is quite enough for everyday calculations, since 1 bitcoin is divided into 100,000,000 parts, which are called "satoshi", in honor of the creator of the system. Sometimes the terms "millibitcoin" (mBTC, one thousandth) and "microbitcoin" (uBTC, one millionth) are used.
Bitcoin is a digital currency (cryptocurrency), which allows the parties to exchange it for material values, like paper money (fiat) and gold that preceded bitcoin. Unlike previous means of exchange and accumulation, bitcoin is digital and decentralized. Now people can exchange material values without intermediaries (states, banks), which allows them to exercise more complete control over their funds and pay low commissions for transactions.
All over the world, they are now talking about a new generation of currency - bitcoins, the first information about which appeared on the global Internet in 2009. During this time, digital coins have shown amazing volatility with a predominance of the growth dynamics of their value. At the beginning of December 2016, the weekly timeframe of the bitcoin chart looks like this:
Below we will talk about how bitcoins appeared, what they are and how they are currently used, as well as where and how to exchange bitcoins for real money.
How Bitcoin appeared - the creation of cryptocurrency
To find out what bitcoin is in depth, you can turn to the crypto-folk wisdom on the web called bits.media. But I will still try to talk about Bitcoin in simple and, I hope, understandable words (which everyone understood).
So, with the development of the Internet, people had to make payments "at a distance", which sometimes can be quite small, because financial relations often connect residents of different hemispheres of the planet. It is impossible to transfer funds directly: it is simply impossible to transfer money from hand to hand. Therefore, it is necessary to turn to intermediaries - banks, electronic payment systems, payment transfer systems like Western Union, etc.
Any intermediary charges not a small commission for the operation performed, since no one wants to work “for no reason”. The larger the amount of transferred capital, the higher the level of commission losses. With the development of information entrepreneurship, people have thought about how to avoid costs and do business in conditions of 100% efficiency.
Many solutions to the problem were proposed, but all of them were rejected, because even if a commission-free settlement platform is created, how to protect yourself from fraud and prove that you transferred a certain amount to the indicated address, or that you received it?
Bitcoin started with a concept paper published on October 31, 2008 by a mysterious individual who went by the pseudonym Satoshi Nakamoto. Who is the real developer, one is Satoshi's person or a group - is still unknown, despite numerous journalistic investigations. On January 3, 2009, the practical implementation of this concept in the program code begins. AT 18:45 GMT (22:45 Moscow time) 03.01.2009 the first block in the network was generated, the so-called genesis block. This day is considered the birthday of Bitcoin and is celebrated by the community around the world.
How is bitcoin different from electronic and paper money?
Features of Bitcoin that distinguish it from other types of electronic and paper money:
Cryptocurrencies in life
Initially, bitcoins were in demand only among mathematicians, cryptographers, and people who were very keen on computer and network technologies. Back then, bitcoins were simply proof that electronic money was possible without a guaranteed backing. Rather, they can be called an electronic analogue of gold - like gold, bitcoin is difficult to mine, its quantity is limited, and the laboriousness of mining only increases over time. In autumn 2009, 1 BTC could already be bought for 0.8 cents. Since then, the history of exchange trading began, in which there were many ups and downs, high-profile bankruptcies and successful projects. Transactions for bitcoins were at first rare and episodic. The first and most famous was the purchase of two pizzas for 10,000 BTC, which took place in May 2010 (at that time the equivalent of $25). Since then, the exchange rate has risen above $1,000 and dropped back to $150, but that's another story...
Throughout 2016, the Bitcoin exchange rate has been steadily growing. If at the beginning of the year 1 coin could be bought for 340-360 dollars, but at the beginning of December 2016 the exchange rate of bitcoin rose to 770 dollars for 1 BTC. Even just investing part of the money at the beginning of the year in this high-risk asset, now you could get more than 120% return.
At an early stage in the development of Bitcoin, its popularity was created by the Japanese exchange MtGox and the illegal online market Silk Road. Now Bitcoin does not depend on one exchange or pool, and law enforcement officers have learned to deal with illegal activities in cryptocurrencies in the same way as with other economic crimes.
Today, Bitcoin is a modern digital currency that is perfect for payments on the Internet. More and more shops are accepting bitcoin as one of the payment options. The simplicity and convenience of opening a Bitcoin account is attracting more and more people from developing countries to this digital currency. In many countries in Asia and Africa, the Bitcoin network is replacing people with hard-to-reach and expensive banking services. In developed countries, POS terminals for bitcoin payments in stores, ATMs for cryptocurrencies, and hardware wallets for Bitcoin have become widespread. There has been a real boom of startups that use Bitcoin. It turned out that blockchain technology is suitable not only for financial settlements, but also for distributed storage of data on various assets. There are already several thousand other cryptocurrencies created on the basis of Bitcoin or from scratch.
A little about politics
The attitude of states towards cryptocurrencies is very different. There is both clear encouragement - in Australia, Germany, the Netherlands, New Zealand, Singapore, some US states, various offshore companies, as well as serious restrictions that can outgrow and prohibitive measures - these are Indonesia, China, Russia, Ukraine. Only ardent Latinos in Bolivia and Ecuador decided on outright bans.
Many governments have chosen the line of observation with cautious optimism - most of the EU countries, the UK and Switzerland, the US federal government, Canada, Japan and the countries of Southeast Asia. In most developed countries, financial legislation is being adapted to regulate cryptocurrencies, and this issue will be resolved soon.
Before answering the question of why Bitcoin is needed, you need to know what it is. Bitcoin is an innovative one that is rapidly gaining popularity in society. Every day more and more people learn about this type of income as cryptocurrency mining. However, not everyone fully understands what bitcoins are and why they are needed. Let's try to understand this issue, and also try to understand where such a demand for digital currency came from.
Where can you pay with bitcoins?
If you are going to become a professional miner, you should understand that in Russia you will not be able to officially pay with cryptocurrency. For example, if you want to buy a car, real estate or just a cup of hot coffee, you will have to pay with the state currency - the ruble. No seller will be able to give you a check if you are going to pay for the goods with bitcoin, as this violates the current legislation. However, you should not give up bitcoin mining ahead of time, since by the end of 2017 the situation may change for the better. The State Duma, with the direct participation of the Ministry of Finance and the Central Bank, is already working on the creation of a bill that will control existing types of cryptocurrencies and allow every citizen to make transactions using digital money.
This begs the logical question, why do we need bitcoin if today you can’t buy anything for it? You can buy, but only in the shadow market. All transactions are fairly fast, secure and anonymous. You can pay for almost any product on the Internet without any commission or go to one of the resources that offers the exchange of cryptocurrencies for money familiar to most people, such as euros, dollars or rubles.
Where does cryptocurrency come from?
Bitcoin is the result of the most complex computer calculations. There are more and more bitcoins every day, which leads to the complication of computational processes and an increase in the time for their processing. At the same time, emissions are constantly decreasing, and in 2021 it will be equal to zero. The limited number and difficulty in mining cryptocurrency leads to the fact that the cost of bitcoin is constantly growing. This is the reason for the increased interest in this currency.
Why do we need bitcoins, and who buys them?
As a rule, citizens of Eastern countries and Europeans are interested in purchasing electronic currency. For example, in Germany, you can legally buy real estate by paying the seller with bitcoins. In Japan, you can have a good meal in a restaurant by paying the bill with cryptocurrency. This is very convenient, because you do not need to have a lot of time and lose huge interest for a completed transaction.
However, not everyone is in a hurry to spend their savings, which are stored in the form of digital currency, in this way. Most bitcoin owners who buy coins from miners, deep down, hope that the rate will suddenly rise and it will be possible to profitably sell the cryptocurrency. This is one of the ways to make money with bitcoins. Thus, many of those who bought digital currency as soon as it began to gain popularity were able to make a fortune.
How to withdraw digital currency?
Before you start mining cryptocurrency, you need to know how to withdraw bitcoins. For this purpose, there are special wallets. In them, you can create an unlimited number of addresses to which a certain cryptocurrency is transferred, in our case, bitcoin.
In order to make a transaction, for example, to buy bitcoins, give the seller of digital coins your wallet address. As soon as the receipt comes to the account, the system will notify you about it. Now we know why you need a bitcoin wallet. Let's figure out how to create it on the official website.
How to get a wallet?
Most novice miners spend a lot of time on various resources, looking for information on how to create a bitcoin wallet on a computer. There is nothing difficult in this. It is enough to go to the official website and download the software client. This method is considered the safest. A wallet installed on a computer allows you to both withdraw bitcoins and store them (accumulate).
It is also worth considering the fact that when installing a wallet from the official website, you need to have access to the Internet, as information about all completed transactions will be downloaded. The available hard disk space must be at least 100 GB.
How to get bitcoin?
There are several ways to become a happy owner of bitcoin:
- Mining.
- Purchase by hand.
- Exchanges.
- Exchangers.
Most often, people who know why bitcoin is needed and how to turn it into a source of income use online exchangers. However, it is worth considering the fact that each exchanger offers its own conditions for making a transaction. It is necessary to carefully study all available information so as not to run into sky-high commission, which resourceful entrepreneurs disguise behind an attractive course. As a rule, many exchangers offer up to $5,000 for bitcoin, although the real one against the ruble is 1:228,000.
You can independently engage in the extraction of digital currency, using the power of your computer for this. This method is called mining. As a rule, in order to increase the speed of mining, so-called farms are made, which are equipped with several powerful video cards that allow more calculations per second. According to unofficial statistics, a productive farm can pay for itself within a year, and maybe even earlier, because the bitcoin rate against the ruble is constantly growing.
The most reliable and easiest way is to buy bitcoin on one of the major exchanges. But it will be problematic to make such a transaction with a bank card. To date, all banking institutions under the jurisdiction of the Russian Federation have an extremely negative attitude towards transactions of this kind. No risk management department wants to deal with the gray currency, so they prefer to block such financial transactions, which have increased dramatically in recent times, as people have become more aware and know why bitcoin is needed.
Reliable protection
The most common payment method in online stores is a credit card. However, it is worth considering the fact that when “credit cards” were created, no one even imagined that the Internet would appear, and even more so that financial transactions would be made in it. That is why credit cards cannot be called reliable. By purchasing any product and leaving personal data, you risk losing control of your funds in your bank account.
Despite the rather high cost of bitcoin, a transaction in this currency does not involve the disclosure of personal data. All that is required of you is to enter a public and private account. A public account can be known to many, including the person with whom you make a deal. However, private - known only to you. Only when these two keys interact does it become possible to sign a check and make a transfer.
No inflation
The most common problem that all world currencies face is inflation. It occurs when the country's economy is in a critical state and to maintain it, it is necessary to pour in. As soon as the state starts its typewriter, inflation immediately sets in. Such measures lead to the fact that the monetary unit loses its value by exactly as many percent as new banknotes were issued.
Bitcoin is reliably protected from such a negative phenomenon, since the number of coins that can be created is strictly limited. According to official data, the maximum number of bitcoins is 21 million coins, which will be mined as early as 2021.
Anonymity
Sometimes people strive to ensure that no one knows about a particular purchase. Using cryptocurrency for calculation, you can securely hide your personal data. Despite the fact that information about your wallet and how many bitcoins are in it is available to any user, no one will know the real name of the owner. The payment system does not oblige users to enter personal data during registration.
Decentralization
By keeping your money in a bank, you demonstrate your trust in this financial institution. However, as practice shows, you can only trust yourself, since any bank has the full right to dispose of the funds available in storage at its own discretion. Often there are situations when you need a substantial amount of money, but you cannot get it either at an ATM or in an office. The procedure for issuing cash is deliberately delayed in order to gain time.
If you have bitcoins, then you are truly independent of the services of all kinds of intermediaries. Your funds are always available, and you can spend them at your discretion at any time.
Access
Unlike other payment systems, a bitcoin wallet will never deny you access to personal funds. Take a look at Yandex, for example, which can at any moment consider that you are spending money incorrectly or limit your functionality, explaining that the security service doubts that the owner is in control of the wallet. In this case, you will have to identify yourself in all sorts of ways, which takes an enormous amount of time and effort.
More Benefits of Cryptocurrency
A huge plus of using bitcoin in the calculation is speed. Unlike banking services, when you have to wait several days when paying a check or during a transfer before the money is credited to the account, the cryptocurrency comes to the balance almost instantly.
Minimal commissions or their complete absence. People who make transactions using credit or debit cards constantly pay some percentage of the amount for bank services. Using bitcoin as a unit of account, the commission is almost never charged, except in some cases.
Afterword
Now you not only know what bitcoins are and why they are needed, but also understand the principle of the system, and also get acquainted with the main ways to make money on cryptocurrency. Unfortunately, no one can give you a guarantee of how successful this digital currency will be even in the near future, so carefully consider the possible risks and only then invest your personal savings.
Hello! In this article, we will talk about cryptocurrency and try to give all the most important information about it.
Today you will learn:
- What are the cryptocurrencies.
- Why are they so popular.
- How can you earn money on them.
What is a cryptocurrency
Let's figure out what is hidden under the term "cryptocurrency", what it is in simple words, and why it is called that way. The very name Crypto Currensy, meaning "cryptocurrency", appeared in Forbes magazine in 2011. And since then, the name has become firmly established in everyday life.
Cryptocurrency called a special kind of electronic means of payment. Strictly speaking, this is a mathematical code. It is called so due to the fact that cryptographic elements, namely an electronic signature, are used in the circulation of this digital money.
The unit of measurement in this system is "coins" (literally - "coins"). Cryptocurrency has no real expression like metal coins or paper banknotes. This money exists exclusively in digital form.
The fundamental feature that distinguishes crypto money from real money is the way they appear in the digital space. So, real means of payment must first be deposited into a specific account or electronic wallet, and cryptocurrency units appear already in electronic form.
The “release” of digital money occurs in various ways: this is ICO (initial placement of coins, system), and mining (maintaining a special platform for creating new crypto-money), and forging (formation of new blocks in existing crypto-currencies). That is, cryptocurrency arises literally “from the Internet”.
Another important difference from conventional currency is the decentralization of issuance. The issue of electronic currency is the generation of a mathematical code followed by an electronic signature.
Only the Central Bank has the right to issue real money, but anyone can issue crypto money. In order to make transactions using cryptocurrency, you do not need to contact any third-party organizations (banks).
Payments using digital money are carried out in exactly the same way as regular electronic transfers using a cashless settlement system. The only exception is exchanges, through which crypto money can be monetized, that is, converted into ordinary means of payment.
The circulation of such a currency takes place according to the “block chain” system (literally “closed chain” in English). This system is a database distributed over millions of personal computers around the world. At the same time, the storage and recording of information during the circulation of crypto money occurs on all devices at once, which guarantees absolute transparency and openness of transactions.
Why is cryptocurrency so popular
The popularity of cryptocurrency is due to the requirements of the times. In the age of ubiquitous dissemination of information technologies, universal means of payment are extremely in demand, which could be used to pay in electronic space without being tied to a specific country or institution. Cryptocurrency has become such a tool.
For payments with virtual money, only their number is used, so the cryptocurrency does not need real expression. Digital means of payment are protected by a cryptographic code, which makes them more secure than "real" money. And due to the absolute decentralization of the emission of virtual coins, they can neither be faked nor banned.
Another feature that contributes to the popularization of cryptocurrencies is complete anonymity. When conducting transactions, no one will receive any information about the payer or recipient, only the number of the electronic wallet will be used from all the data.
And also the attractiveness of the cryptocurrency is that it can be obtained independently. That is, digital currency can be obtained almost “out of thin air”. But on buying and selling, as well as investing in cryptocurrencies, you can also. At the same time, crypto money can be exchanged for traditional money, as a result of which they are able to bring quite tangible income.
Types of cryptocurrencies
Digital money first appeared in 2008, and by now there are already several thousand varieties. There is a large category (almost 50%) of crypto money that is not actually backed by any content. These are the so-called soap bubbles. Let's not take them into account.
The most common types of cryptocurrencies:
1. (BTC, bitcoin, at the moment one bitcoin is equivalent to 4200 US dollars). Cryptocurrency Bitcoin in simple words is the very first digital currency, on the basis of which all subsequent ones were developed. Bitcoin developer (developer group) - Satoshi Nakamoto. For this currency, a limit of 21,000,000 is stated, however, at present it has not yet been reached.
2. Ethereum(etherium, equal to 300 US dollars). This is the development of the Russian programmer Vitaly Buterin. Such a currency appeared relatively recently - in 2015. Now it is quite popular along with bitcoins.
3. Litecoin(litecoin, LTC, equal to 40 US dollars). The currency was developed by programmer Charlie Lee and has been issued since 2011. Litecoin is considered an analogue of silver among cryptocurrencies (and bitcoin is an analogue of gold). The release of lightcoins, like bitcoins, is also limited and amounts to 84,000,000 units.
4. Z-cash(Z-cash, $200).
5. dash(dash, $210).
6. Ripple(Ripple, $0.15).
In addition to these names, Darkcoin, Primecoin, Peercoin, Dodgecoin, Namecoin and many others are also used in electronic circulation.
The most popular of all cryptocurrencies is bitcoin. Its name is made up of the words "bit" - the smallest unit of information and "koin", which means "coin" in English. For BTC, or bitcoin, not only a program has been created, but also a special digital wallet in which you can store this currency.
In addition, now there are even special ATMs where you can convert bitcoins into the usual paper money, and a number of retail chains and shops accept this currency for settlement along with ordinary bills and coins.
Advantages and disadvantages of cryptocurrencies
According to its main characteristics, digital money is significantly different from conventional money. This entails not only continuous pluses, but also some minuses for users.
Pros:
- Anyone can get such money with the help of specially organized activities (mining). Since there is no single emission center and no bodies controlling this process, no one can prohibit ordinary citizens from mining crypto money on the network.
- All transactions with cryptocurrencies (so-called transactions) are completely anonymous. The only open information in this case is the number of the electronic wallet. And all information about its owner is closed.
- Decentralized issuance, in addition to the possibility of extracting money by everyone, also determines the lack of control over this process.
- Each type of cryptocurrency has a release limit. Thus, excess emission is impossible and, as a result, there is no inflation in relation to this money.
- Cryptocurrency is protected by a unique code like , so it is copy-protected, and therefore cannot be counterfeited.
- There are practically no commissions during transactions, since when carrying out operations with the help of cryptocurrency, the role of a third party of relations - banks - is excluded as unnecessary. Therefore, such payments are comparatively cheaper than using conventional cash.
With all the variety of positive characteristics, cryptocurrencies also have disadvantages.
Minuses:
- If the user has lost the password from his electronic wallet, this means for him the loss of all funds in it. Since there is no control over the conduct of transactions using digital money, there are no guarantees of their safety.
- Cryptocurrency is characterized by high volatility due to the specifics of its circulation (volatility means frequent changes in its value).
- In relation to cryptocurrencies, attempts may be made to various negative influences from national money circulation regulators (for example, the Central Bank of the Russian Federation).
- Since over time the process of obtaining crypto coins becomes more and more complicated, mining with the help of equipment of individual users becomes less and less profitable.
Each of the existing types of cryptocurrencies has both advantages and disadvantages inherent in them all in the aggregate.
In general, all cryptocurrencies are characterized by the same features as modern money, namely:
- They are universal;
- They are a medium of exchange;
- They can be accumulated;
- Perform a billing function.
The value of digital money varies depending on supply and demand.
How to make money on cryptocurrency
Currently, there are a number of ways to earn money on bitcoins and other virtual currencies:
1. Purchase and sale of cryptocurrencies. This is done on special exchanges or electronic money exchangers. The principle of action is to buy a currency during a decrease in its value, and sell it during an increase. Most often, such trading is associated with bitcoins, since their value is higher than other types of cryptocurrencies.
2. Cryptocurrency investments. are made by transferring a certain amount of electronic money from one person to the trust management of another. Typically, brokers deal with trust management issues.
3.Extraction of electronic money (mining). Cryptocurrency mining in simple words is the process of obtaining cryptocurrency using special software. On an ordinary home computer, large volumes of cryptocurrencies cannot be produced, rather significant capacities are needed, and, consequently, the purchase of additional equipment. Powerful graphics card and processor required. In addition, special devices are used - the so-called mining farms that produce cryptocurrency.
4. Mining in the cloud. For such production of digital currency, you do not need to buy additional devices. To do this, there are special services where you can sell and purchase computing power. That is, the service generates cryptocurrency for you, and you pay for the spent power.
5. Distribution of cryptocurrency. Such services are usually provided for attracting referrals or entering letters from pictures (captchas), that is, in fact, for increasing site traffic. These are the so-called locks, cranes or distributors. And there are also special bitcoin games where you can earn electronic money. On such services, earnings are small: a small part of bitcoin (satoshi) is distributed per hour.
Conclusion
Thus, cryptocurrency is a new word in monetary circulation. Its emergence is due to the needs of the time. Despite the fact that crypto money has no real expression, it can participate in various market transactions almost on a par with traditional currency units.
Currently, there are a number of ways to earn cryptocurrencies, as well as options for making a profit from them, which is what the most advanced users use.
In general, according to its characteristics, cryptocurrency is in many ways similar to traditional money, however, it also has a number of fundamental differences that allow digital money to gain more and more popularity in the modern information space.
Hello, dear readers of the site! You will no longer surprise us with electronic currencies, but one of their types is truly unique - the so-called cryptocurrencies. Unlike some Webmoney dollars, they do not have a real equivalent and represent information that is securely protected and encrypted by mathematical methods, and its value depends entirely on the demand for it.
The most popular cryptocurrency is bitcoin(bitcoin). It was known all over the world after 2017, when it grew from $700 to $18,000 and even began to be called . In the article, I will talk about it, although at least several hundred cryptocurrencies already work on a similar principle - for example, Litecoin, Ethereum, Dogecoin and others.
What is Bitcoin and how does it work?
As mentioned above bitcoin(BTC, bitcoin, bitcoin) is a cryptocurrency, that is, an electronic currency that can be bought or sold over the Internet. The prefix "crypto" may be familiar to you thanks to the science of cryptography - it deals with methods of protecting data from being read by unauthorized persons.
By the way, the creator of the bitcoin system is to some extent a legendary person, Satoshi Nakamoto. Despite many journalistic investigations, it has not been possible to find out whether this is a real name or a pseudonym. Given the complexity and volume of the created algorithms, it is quite possible that a whole group of programmers worked on the project.
One hundred millionth of a bitcoin (0.00000001 BTC) is named after the creator - satoshi.
The main difference between cryptocurrencies, including bitcoins, and all currently existing ones is decentralization. There is no bank or organization that would issue (issue) currency. This is done by the system itself, based on complex mathematical algorithms. We are used to the fact that the money in our wallet is issued by the Central Bank and has a real value, because it is backed by gold and foreign exchange reserves, and depends on the state of the country's economy. But what is bitcoin backed by? Isn't it "wrappers" or even another one?
Gives a certain value to bitcoins confidence people to them, no more, no less. If a lot of people believe that cryptocurrency has value and are ready to receive / give it away for real goods and services - it means it is. The opposite is also true - but the convenience and reliability of the Bitcoin system itself constantly attracts new users, so interest in it has not fallen for 7 years.
In practice, it turns out that the cost of bitcoins is highly dependent on the number of active (and therefore satisfied) users of the system - this is noticeable if we compare the graphs of the cost of 1 BTC against the dollar and the number of transactions:
The blue line is the number of transactions per day, the red line is the cost of 1 bitcoin in dollars
As you can see, the more transactions took place in the system (the more users opened bitcoin wallets), the higher the price grew. In 2014, against the backdrop of the rapidly growing popularity of cryptocurrencies, the so-called “soap bubble” inflated, speculators dispersed the price to almost $ 1200, but when the buyers ran out, the bubble burst and the price fell 6 times. Well, now the rate has again exceeded $700 and continues to grow.
Are all bitcoins issued back in 2009? No, the system has gradual emission, now about 1800 BTC is issued every day. If there is no central organization, who receives them?
For the successful operation of the cryptocurrency, a certain computing power is required, and the more transactions, the more computers are needed to support the system. Not a problem - any owner of a Bitcoin wallet can load his machine with the necessary mathematical calculations for the system, and as a reward he receives ... that's right, bitcoins :) This process is called mining- one of the ways to earn cryptocurrency, further in the course of the article we will consider all the main options.
However, the number of bitcoins will not grow indefinitely. The maximum amount of currency in the system is limited to approximately 21000000 BTC, at the moment "produced" approximately 16 million. It would seem that already more than 70%, but the last bitcoin will be mined around 2140. How so?
You already know that the only way to “mine” cryptocurrency is mining, and the fact is that the reward for this activity decreases every few years. Without going into technical details, miners receive their reward once in a certain period - the more powerful the hardware, the more often they can earn. Until December 2012, the one-time reward was 50 BTC (~$700), since then the amount has been reduced twice and at the moment it is 12.5 BTC (~9000$).
The number of bitcoins mined will also decrease, and the total amount will gradually approach the pre-set limit of 21,000,000 BTC:
Expected number of bitcoins in circulation from 2009 to 2033
By the way, the word "mining", which in English means "mining (ores, minerals)" is used here for a reason - bitcoins are inherently very similar to gold. Judge for yourself:
- the cost depends on demand, gold only 15 years ago cost not $1200 but only $300, and 10 years ago $600 - you can compare bitcoin prices in 2011, 2014 and 2016 in about the same way, demand was very different;
- the more people mine gold, the less it remains and the more difficult it is to mine - the reward for mining decreases, and even the competition for BTC mining is constantly growing.
And so it turns out that Bitcoin is virtual gold! Although, judging purely by the price chart, investments in cue ball are more like. This precious metal also skyrockets and then plummets when demand drops.
Perhaps, after reading this section of the article, you still have a mess in your head, in which case I recommend fixing the information with the help of a video (at the same time, you will learn some details that I decided to skip):
Is it clearer now? If still not, ask questions in the comments, we will figure it out together.
Pros and Cons of Cryptocurrencies (Bitcoins)
Why do we need cryptocurrencies at all, why are they better than already proven options - conventional banknotes or electronic payment systems? They have their own, useful and in many ways unique properties:
- Decentralization- the emission and circulation of bitcoins is not controlled by one organization, but by the cryptocurrency system itself, which is located on millions of computers around the world. In this regard, they are similar to torrents - it is possible to block sites, but it is impossible to completely prohibit file sharing. The reliability of such a system can be compared with the reliability of the Internet itself, which means that money will be available even in the event of a global cataclysm, the network is practically immortal.
- Anonymity- the system does not use names, surnames or any other personal information. Each Bitcoin wallet is assigned a special code, which consists of a long random combination of letters and numbers. True, if someone recognizes your code, he will be able to track your transactions, because absolutely the entire history of transfers in the system is open and available for viewing. However, you can generate a new code for each new transaction and everything will be in order.
- No commissions- More precisely, they are very small, in banks or electronic payment systems they are much larger. International transfers are becoming very easy and profitable, compared to the same bank transfers, and they take place in a matter of minutes. It is believed that when almost all bitcoins are mined, miners will start earning on transaction processing fees, but, firstly, this is still very far away, and secondly, payments will still be meager.
- Simplicity- open a Bitcoin wallet, buy bitcoins somewhere and that's it, you can make purchases or pay for services around the world. In principle, this applies to any electronic currency, but personal data will still have to be indicated - and this is already additional complexity.
- High price volatility- this can be called both a plus and a minus, depending on the point of view. For traders, this is definitely a plus, because the more the price of BTC changes against the dollar, the more you can earn on the difference in rates when buying and selling.
Cryptocurrencies, and specifically Bitcoin, still have certain disadvantages:
- Cryptocurrencies — it is still new. Especially in the CIS countries. I regularly stumble upon news that in this or that institution in the USA / Germany / France, etc. allowed to pay with bitcoins, but there is no such news about our countries.
- The possibility of a ban. The Bitcoin system is not controlled by any state or organization and its users can be anonymous, which is very disliked by those in power. In addition to the desire to control citizens as much as possible, there are quite understandable arguments - it is much easier to sell drugs and hide income using bitcoins than in traditional ways. The more popular cryptocurrencies become, the more there is talk about them in parliaments - so far they are not banned, but in the future this may happen.
- You cannot cancel a transfer that has been made. This is written in the rules of the system and is due to the fact that it does not have a single center where the user could turn.
- exchange rate volatility. As we have already found out, this is a plus for traders, but for investors and ordinary users it can become a minus if they purchase bitcoins at a high price (during the “inflating” of the next soap bubble), and then it will fall sharply, this has happened more than once . This makes it impossible to effectively use, and therefore reduces the potential profitability of investments in the crypt.
As always, it is impossible to say 100% that cryptocurrencies are good or bad. There are arguments for and against, but the final decision is still yours.
How to register a Bitcoin wallet?
It's very simple! We go to the specialized site blockchain.info and select the section Purse:
Click "continue", this completes the registration. A standard letter will be sent to the mail asking you to confirm your email address, you know what to do.
It is worth saying that the Blockchain website is not the only opportunity to work with bitcoins, there are a bunch of other services and programs, including the official one. Working with it is more difficult, but also more reliable - a third-party site can still be hacked. In this article we will not deal with it, if you want - google everything that interests you.
That's basically it, you can start receive cryptocurrency in one of several ways, which we will discuss below.
How to earn or buy bitcoins?
There are several ways:
- Online exchangers. Perhaps the most obvious option is to simply exchange some electronic currency for bitcoins through an intermediary site. It may seem unreliable, but I have been using this method for about as long as I have been working on the Internet (5 years for sure) - and I have been using the Bestchange.ru website for a long time to find the best exchange rates. Thanks to the site, I use different exchangers every time, but always at the best rate, and there have never been any problems with payments. Exchange Yandex.Money, Perfect Money, QIWI for bitcoins and some other cryptocurrencies is available - and in the opposite direction there is even Webmoney.
- Free bitcoin giveaways. There are quite a few sites on the Internet that give away free cryptocurrency in small amounts (usually 1 Satoshi, sometimes more) for advertising purposes. This also includes bitcoin faucets, which require certain actions from the user - spin the drum, click on the board with prizes, and so on. All this differs little from the usual earnings on clicks and site views, so you won’t be able to earn serious money. Fun, nothing more.
- Accept payments in bitcoins. To do this, you must have some kind of product or service, such as a video course or program. However, due to the low popularity of cryptocurrencies in Runet, you are unlikely to find buyers, and selling abroad can be problematic.
- Mining. As you already know, mining is necessary to maintain the operation of the entire system - it ensures the speed of transferring transactions, saving the history of all transfers in the blockchain, as well as encrypting all information even from the site where you registered the wallet. Once every 10 minutes, a reward of 12.5 BTC (~$9000) is sent to one of the miners on the planet, the higher the performance of the iron, the higher the probability of receiving this amount. It has not been profitable for a long time to “mine” using a regular computer, so there are two options - either connect to a pool, that is, to a united group of miners and receive a reward in proportion to the work invested; or buy an ASIC - a special mining device that can do only the necessary calculations with high performance and nothing more. Prices range from hundreds to thousands of dollars and it’s hard for me to say how profitable this investment option is, but it definitely looks unusual and interesting.
Well, now let's move on to the most interesting thing - how to invest in bitcoins and is it worth it at all?
How to invest in bitcoins?
Cryptocurrencies and bitcoins - what is the result?
So, we have found out that cryptocurrencies— this phenomenon is unique and gradually moving towards the masses. Among their advantages and unique qualities - , anonymity and reliability systems proven over years of successful operation. There are also disadvantages, so the world economy will not soon switch to such a system, but over time it is still possible.
bitcoin is the flagship of the industry; several hundred cryptocurrencies have already been created following its example. At the time of this writing, the rate of 1 BTC was approximately $740, with 16 million mined coins, we get more than 10 billion dollars that belong to someone! Of course, these are no longer toys and serious investors are starting to look closely at the currency.
You can invest in bitcoins in a simple way by buying a certain number of coins with the expectation of a further increase in their price and, or you can speculate on the BTC-E exchange. Or even invest in a bitcoin PAMM account!
What to do - you decide, I completed my mission, I conveyed the information :) I hope you liked the article - do not forget click on the social button after the article, so that your friends and colleagues also learn more about cryptocurrencies - this is really interesting!
For a snack, I suggest you look at how the bitcoin system works from the technical side. The video may seem complicated, I don’t advise you to watch it in one gulp - it will definitely be a mess in your head. But in the end, when you get the full picture, maybe you will have the same feeling as I do - whoever is hiding under the name of Satoshi Nakamoto, he / they are real geniuses:
By the way, we are Webinvest, and not just anyone, so in the end I propose to vote - do we give a chance bitcoins as an investment instrument or is it for such purposes no good. Express your opinion:
And tell us about your choice in the comments! Personally, I voted for "Possibly" - there is potential, but the risks are quite large, especially if you invest in the long term.
That's all, see you on the site! Don't worry and enjoy life :)
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Last update: 08/20/2019
Greetings, dear readers of the "site"! In this article, we will tell you what bitcoin is in simple terms, when it appeared, how it looks and works. The popularity of the Bitcoin cryptocurrency is constantly growing all over the world. That is why we decided to dedicate today's publication to bitcoin.
From this article you will also learn:
- how much did bitcoin cost when it appeared;
- who invented and created bitcoin;
- how bitcoin differs from fiat money;
- how many bitcoins are there in the world.
At the end of the article, we traditionally answer the most popular questions.
About what bitcoin is (bitcoin), how it looks and works, as well as when bitcoin appeared and who its creator is - read in our issue
Method 3. Performing simple tasks on a craneX
Question 2. How are bitcoins secured?
Bitcoin direct collateral is absent. Therefore, users may have an opinion that this cryptocurrency has no value. However, this assumption is erroneous.
Actually precious metals also do not have a reinforcement of their value. The value of all of them is formed by society, which relies on a number of factors.:
- stock size;
- the magnitude of supply and demand;
- characteristics of precious metals.
Important! The value of bitcoin lies in the fact that it can be used as a means of payment for payments for goods and services. The backing of a cryptocurrency is the value that consumers are willing to pay for an asset in a given period of time.
Another common mistake when calculating the real value of bitcoin is to tie it to the cost of electricity consumed during mining.
✍ For example, various resources are also used to produce fiat money, including electricity, as well as funds for the purchase and maintenance of equipment. However, this does not mean that the value of the currency is equated to the cost of issuing it. They can be regarded solely as a cost price.
In the process of analyzing the provision of bitcoins, it is necessary to pay attention to the following parameters:
- Bitcoin issuance is limited to 21 million coins. Most of them must be mined by 2032 year. After that, the income from their extraction will be minimal. The limited edition inevitably affects the value of bitcoin, as access to part of the cryptocurrency has been lost, and part has settled in the wallets of investors who are going to hold it for several years in the expectation of an increase in the rate.
- An increasing number of states recognize Bitcoin and legalize the circulation of cryptocurrency on their territory. In a number of countries, it is possible to pay with bitcoins, as well as through electronic payment systems and fiat money. Cryptocurrency payments for a variety of goods and services are accepted in dozens of stores around the world. Moreover, the number of merchants that accept bitcoins for settlement is constantly growing.
- The demand for cryptocurrencies is increasing. This is the most important factor that affects the price of bitcoin. At the end 2017 year, the rate of this cryptocurrency exceeded 20 000 dollars. Despite the fact that there was a pullback over the next year, many financial specialists are confident that the price of bitcoin will return to the same level in the near future. The more investors invest in buying bitcoin, the higher its value.
I would like to add!
During mining, various resources are spent, from which mining costs are formed. At the same time, the cost of mining is constantly growing. As a result, the value of the bitcoin itself increases.
Bitcoin security guarantee is formed due to the following factors:
- High level of security. Cryptocurrency is under reliable protection against counterfeiting;
- Serious verification of all transactions. For an operation to be approved by a block, at least 2 -x its confirmations;
- Mining difficulty. Today, bitcoin mining requires the purchase of high-cost equipment. Many people invest thousands of dollars in organizing a farm without fear of losing them.
- A high level of demand for bitcoins on exchanges and in exchange offices. Statistical data confirms that more is being done with cryptocurrency every minute. 100 transactions. Their number is constantly growing.
- High level of protocol reliability. To change the cryptocurrency algorithm, you will need confirmation of at least 90 % of network members.
Question 3: Where do bitcoins come from?
The issue of fiat money is carried out by the state. Indirectly, the value of the issue is related to the size of gold and foreign exchange reserves. However, the actual volume of the issue may not be limited: government prints as much money as it needs.
Unlike fiat money, bitcoins are not associated with any country in the world. New cryptocurrency coins are formed as a result of servicing the payment network by computers.
Any transaction must be added to all computers that are connected to the Bitcoin cryptocurrency network. However, before information can be added to the registry, it must be verified and signed. To this end, the miners must calculate the signature, which is the most difficult computer task. For such calculations, the miner receives remuneration in the form of bitcoin.
For a miner, this process looks elementary: his computer independently performs calculations, and he receives bitcoins in his account. The equipment seems to mine cryptocurrency, but in fact it only encrypts and signs other people's transactions. It is this process that is called mining.
In fact, it is not the bitcoins themselves that are mined, but signatures to protect the transaction register. Cryptocurrency in this process acts as a reward for work.
10. Conclusion + related video 🎥
Bitcoins are a relatively new concept in the financial arena. Therefore, so many questions arise in the process of studying them.
As well as the video "How to earn cryptocurrency - proven ways + instructions":
📌 If you have any questions about bitcoin, then ask them in the comments below. We will also be grateful if you share the article on social networks with your friends.🤝
