Bitcoin Board
The world revolves around money. It’s sad, but it’s a fact – almost everyone grows up with their life course chosen for them by the need for cold, hard cash, rather than chosen according to what makes them happy. Whatever we may think of it, this is and will remain a fact of life for quite some time. Why not adapt? Bitcoin is a stunning example of humans’ adaptive tendencies. It is an attempt to improve the efficiency with which we handle money. So far, it is really more of an experiment than a proven method, but the idea of Bitcoin is an interesting experiment in seeing how real people use their money.
What’s the Big Idea?
Bitcoin (BTC) is a virtual currency system that is traded by users online. It is regulated by most of the world’s peer-to-peer exchange services, and the Bitcoin supply is predetermined by a private organization. Bitcoin was introduced in 2009 as a digital, decentralized currency as an experiment in how people use money, and what would happen if money had no centralizing authority. So far, the experiment has yielded interesting results, with a recent, surprising spike in the value of Bitcoin that indicates at least some sort of success for the idea.
Bitcoin has no central bank, but it’s not unregulated. That would obviously not work for a monetary unit. The idea is to remove centralization from regulation, rather than to deregulate entirely. The amount of currency in circulation and the amount each person is responsible for is stored by every major peer-to-peer server in operation, and this record is updated every ten minutes. In addition to this update, 25 new Bitcoins are added to circulation each 10 minute cycle. This will be reduced to 12.5 Bitcoins each cycle after a few years, until inflation ceases in the year 2140, when there will be around 21 billion Bitcoins in circulation.
How are Bitcoins obtained?
Bitcoins are obtained through a special piece of software called a miner. As said before, every 10 minutes a block will be released with 25 Bitcoins in it. The software will mine the Blocks, and it will obtain your Bitcoins. The coins can be mined solo, or in a mining pool. The concept of mining in a pool is that multiple people are mining on one block, thus getting Bitcoins faster, but also in less amounts. Mining Bitcoins requires a good GPU, especially if you are solo mining. If your computer does not have a good GPU, it would be wise to buy Bitcoins on an exchange platform, as we discuss below.
How Are Bitcoins Traded?
Bitcoins are traded just like any currency – you buy them. It seems silly to pay for a different form of money, but this is just how people make an income on the foreign exchange market: You buy when you think the price of what you’re buying is going to go up. In this case, many people think investing in BTC is safer than investing in their own banks (some Europeans have tried to “store” sums of around $5,000 in Bitcoin during their countries’ respective financial crises), so they buy a certain dollar value’s worth.
To do this, they create an account on an exchange like Mt.Gox. This is a website where users can trade their own monetary funds for Bitcoins, which they can then use in whatever way they wish. Some people use them to send financial gifts of reasonably small sums internationally at reduced penalties, since Bitcoins aren’t taxed or even recognized as an official currency. Others use them as an alternative form of currency they use to pay online merchants and other service providers. These Bitcoins are traded via peer-to-peer transfer, where one party selects the other’s P2P address from a list, transfers a certain number of BTC, and disconnects. This is almost identical to the mechanics of payment with a credit card.
Is There any Insurance for Bitcoin?
Since Bitcoin isn’t formally recognized as a monetary unit and because it’s only been around since 2009, there are no insurance policies for Bitcoin. Mt.Gox doesn’t insure purchases, and no third parties will compensate you for losses incurred on the Bitcoin market. Despite Bitcoin’s advantages, this is one reason it might be wise to skip out on it as an investment vehicle. It is your own responsibility to check what the market price of Bitcoins currently is. However, the risk of the coin dropping in worth is very low, as the coin has no risk of inflation, because 21 million coins will only ever be released.
What Should I Keep in Mind About Bitcoin?
Remember that Bitcoin is a new technology, so how it will perform in the future is not something we really know yet. In addition, because we have never been able to watch a currency grow from day one before Bitcoin came along, its past performance shouldn’t be taken as a reasonable indicator of what’s to come. Aside from this, it’s important to keep in mind that Bitcoin can be volatile. You’ll never be entirely sure when it will move this way, or when it will move there. But it’s an exciting technology that’s fun to explore!