Thursday, January 2, 2014

What is bitcoin?

If your like me and haven't heard about this as of yet bitcoin is actually a new type of currency.  The currency works by information being passed from computer to computer using encrypted lines of data. Bitcoin was created during 2009 by Satoshi Nakamoto. The bitcoin money is distributed to users who run the bitcoin mining software and are successful when trying to decrypt the data that is sent to there computer's.

Bitcoin mining can be done by anyone with a computer. But as more people complete harder the puzzles that get sent out gets and it becomes increasingly harder to obtain bitcoin from mining alone. This is why many people decide to join Bitcoin pooled mining which can be anywhere from 10 people mining to 100 people mining at the same time to work on more simple parts of the main puzzle.

Bitcoin mining is similar to gold mining only instead of mining gold from the ground it can be done from your home computer if your really interested enough in doing it. But at the same time the amount of electricity and system resources your using is also taking away from profits this is why more powerful computers will in turn make more money since they can figure out puzzles much faster. Bitcoin pooled mining is similar to older days when mining wasn't done by machines and people had to group mine to gather gold.

Bitcoin's currency is not backed by anything so the price from day to day can change quite drastically just simply by a bank or company not accepting the currency. The more people willing to trade for the bitcoin the more valuable the bitcoins will be and the higher the price of bitcoins will go. As puzzles get more difficult it will become much harder for someone without the processing power to make money mining bitcoins.

Buying bitcoins can be a tricky aspect too when trying to judge how much or how little they will be worth after you purchase them. The reason being there is a lot of controversy whether bitcoins are real currency and whether they are safe to use. Many news articles have been published on the illegal usage of bitcoins to purchase drugs and other black market services since bitcoins are a very anonymous when it comes to mining them and obtaining them. This is why they end up a favorite of hackers and not just your smart business's.

But regardless of how safe or unknown this new trend of bitcoins is the fact still remains that it is increasingly growing in popularity. And anything that is popular is not likely to die overnight. This means that bitcoins if you know how to obtain them can be a very valuable asset for someone. And as more companies jump on looking for ways to advertise bitcoin and offer more things to be bought as well as places that you can buy services using bitcoin the more the price will go up.

We can also look at it from a global standpoint  especially with the world economy looking so grim. While many banks like china start to try and black list or ban bitcoins from trade there own currencies continue to lose value because they keep creating more of the currency that they currently use devaluing their own currency. These countries are afraid of bitcoin because it limits them on how much money they can print. This is also why all of the countries in the world have the same currency problems. None of them are backed by anything more then a promise something is worth money.

With bitcoin countries can only mine this new currency so when they run out they must keep mining more in order to be able to spend more. Countries do not have control over the bitcoin and who gets the most a normal person can obtain bitcoin from mining if they want this isn't something that governments want because it takes away the control that they hold over people. And also allows the average person to obtain money just by mining it.

If the government was forced to use bitcoin tomorrow they would stop all of the useless spending and wasting money because they would quickly run out of bitcoin and the government would not be able to function anymore. Seeing how inflation is getting so bad in the United States will eventually need to do something about the problem and try to resolve it. They might decide to just adopt the new bitcoin currency in an effort to build a quick fix to the problem without devaluing the currency and causing catastrophic inflation on the economy.

So in the future we might see people pull out an Ipod or a phone to pay for products and services using bitcoin. And this might end up being the new global currency that we've heard people talk of on the internet. The future of it is uncertain for now so we have to wait and watch to see what ends up happening with bitcoin.