What the Blip is Bitcoin?
July 12th, 2017 by adminMay 22, 2010 went down in history as the day that someone purchased two pizzas. That’s great. People buy pizza every day. What makes this so special? The reason May 22 hit the charts was because this was the first transaction to be made between bitcoin and something of real world value (pizza). Laszlo Hanyecz purchased two Papa John’s pizzas for 10,000 bitcoins. Back then a bitcoin wasn’t worth much, but today that amount is equal to over $23.6 million US dollars. Hopefully that pizza was worth it.
What is bitcoin?Bitcoin is a form of digital currency, more specifically cryptocurrency. There are many forms of cryptocurrency available today including Ethereum, Ripple, and Litecoin, but Bitcoin was the first and still remains the most popular. Here are a couple defining characteristics about bitcoin:
- Decentralized: There is no centralized authority when it comes to bitcoin. That means there is no bank, government, or single server controlling and moderating every transaction. It is controlled only by the users and the system that was set up in 2009 by Satoshi Nakamoto (we’ll talk more about him later).
- Anonymous: There is no connection made between a bitcoin account and a real-world identity, so bitcoin users can remain anonymous. The software is available for anyone to download and use. Because of this anonymity, bitcoin has become a popular form of currency in the black market and continues to hit the headlines as the form of currency that hackers behind ransomware attacks demand. However, as the popularity of bitcoin grows, more merchants are beginning to accept them.
- Secure: Bitcoin addresses are incredibly secure. So secure that Blockgeeks claims “it is more probable that an asteroid falls on your house than that a bitcoin address is compromised.”
Where did bitcoin come from?Bitcoin was created in 2009 by an unknown person, or group of people, named Satoshi Nakamoto. While many speculations have been made about Nakamoto’s actual identity, it still remains a mystery. He claims to be a middle-aged Japanese man, but due to the analysis of emails and of time stamps in his code (people have spent a lot of time trying to figure out who this guy is) most believe him to live in either the United States or Europe. In 2008, Nakamoto wrote a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” This paper outlined the basics of Nakamoto’s payment system. In January 2009, the first bitcoin software was released. Since then, the popularity of bitcoin has grown and in March 2017, the price of one bitcoin rose above the price of one ounce of gold for the first time.
How does bitcoin work?People keep bitcoin in digital wallets. After all, where else would you put digital money? Anyone can download the software required to begin using bitcoin. There are two ways to acquire bitcoin: exchanging or mining it. Many bitcoin exchanges exist that allow users to buy and sell bitcoin with other forms of currency. Mining bitcoin is a little more complicated to explain, so here are the highlights:
- Technically anyone can mine bitcoin…assuming they have the heavy-duty computer power and technical skills to pull it off.
- “Miners” are awarded bitcoins when they successfully solve cryptologic puzzles. After finding a solution, the miner adds a block to the blockchain (part of the inner-workings of the bitcoin system) and receives a designated amount of bitcoins as an award. This system not only helps the miners to receive bitcoins, but also helps the system that bitcoin is built around to function.
- There are a limited number of bitcoins available and it is estimated to reach its cap sometime in the year 2140.
“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.”
– Thomas Carper, US-Senator