What is Bitcoin all about?

Bitcoin emerged in 2009 as the first digital currency. It was hailed by many (mostly those in the tech world) as the answer to the ever controversial and ever problematic traditional banking system. Traditional banking is no doubt problematized by hacking and fraud, it’s inaccessibility to people(s) in the world who do not earn enough, and comes with an invasion of privacy and a third party fee.

The block chain which is the system through which the coin is created was developed from computer scientists’ resolve to combat the double spending problem i.e. a situation in which you could spend the same coin twice.

In recent times though, bitcoin has proven its own susceptibility, with an estimated $78m worth of coins stolen from the Hong Kong based Bitfinex. The coin suffered a 20% dip in value as a result.

I think it’s fair to say if nothing, that bitcoin is the future, both as a currency and what it represents. Think a no-government, no-paper, no-bank currency, managed by and recorded on computers. Below I have put together some key questions that I might help better explain.

What is its origin?

I think you could probably guess this by putting computer and rebellious techies together, yes you guessed it-hackers. Who else could come up with a currency that is under no central bank, government or regulatory authority?

How is it made?

Within the bitcoin network are computers also known as miners. These miners solve complex maths puzzles and in the process earn 25 bitcoins. Every transaction is added to a ledger which can be found on all computers within the network.

 

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How can you purchase bitcoin online?

You can gain access to the currency through many platforms and via peer to peer exchanges. Popular bitcoin exchanges are such as Coinbase, Coincorner and QuickBitcoin.

How does it work?

Bitcoin is created through the distribution of computations and encryptions. It sole dependence on computer problem solving eliminates the need for a third party.  Every ten minutes, pending transactions are mined by computers. The process of mining entails computers within the network, converting transactions into a mathematical puzzle. One computer needs to solve the puzzle and other computers do the checking, the network also checks that the sender of the funds is authorized to spend the funds. Once a majority of the computers have approved the transaction, the block of transactions are added to the ledger and recorded. The cycle then begins again. For every mathematical puzzle that a mining computer solves, it receives 25 bitcoins after 99 other blocks have been added to the ledger.