Bitcoin is a new and latest currency that was created in the year 2009 by an anonymous person using the aka Satoshi Nakamoto. Such virtual currencies are skyrocketing in popularity as an exclusive way to buy goods and services. Transactions are made with no middlemen, that is, no banks. They are not printed like euros or dollars- they are created by numerous people running computers all across the globe, using computer programs that solve mathematical problems. The most well-known currency today is bitcoin.
What exactly is Bitcoin?
It is basically a digital currency or cash that is exchanged without any bank or government. This currency is created through a computer software and can be changed into cash once it is deposited into digital or virtual wallets. When you download the software and run it, the program connects via internet and creates a pair of exclusive, mathematical keys you will require to exchange bitcoin with any other customer. One key is privately kept hidden on the computer. The other key is public and given to other customers so that they can send the bitcoins.
These can be easily used to purchase merchandise anonymously. Since they are not subject to any regulation or tied to any country, they make international payments cheap and easy. Small businesses may also find them beneficial as there are no credit card fees. Additionally, some people simply buy them as an investment, hoping that they will rise in value. People can also easily send bitcoins from their smartphone, tablet, computer or any other device, to anyone across the globe, day or night.
What is Bitcoin Mining?
Bitcoin mining involves collecting all recent transactions into blocks and then trying to resolve a computationally arduous puzzle. The first person who solves it, gets to place the next block and claim the rewards. People send bitcoins to each other all the time over the bitcoin network. But, unless a person keeps a proper record of all the transactions, no one will be able to keep track of who has paid what. The bitcoin network deals with this by compiling all of the transactions made during a given period of time into proper list, known as a block. Then it is the miner’s job to confirm all those transactions and pen down them into a general ledger.
Bitcoin mining is totally decentralized. Any person with a proper hardware and internet connection can participate. The security of the network completely depends on this decentralization since the network makes decisions based on the accord. A potential miner requires a bitcoin wallet, which is an online bank account to hold whatever is earned. In most scenarios, these wallets are not regulated. This implies when bitcoins are stolen or lost, they are totally gone. There is no way to recoup the loses. The most popular software, GUIMiner, is needed in the mining process. When launched, the software begins on its own. The program keeps running, and the faster a miner’s PC, the faster the person will start generating bitcoins. That is how the whole bitcoin mining process moves.
More and more people are beginning to accept bitcoins- you can now buy pizza, web hosting services and even pedicures!