You can find the ultimate bitcoin guide which will help you about what is bitcoin, how do you purchase it, where does it come from, etc.
What is Bitcoin?
Bitcoin is the first widely traded digital currency. It is created, used, stored – all digitally. Unlike today’s of paper currencies, bitcoin is regulated by a distributed network of its users so it can’t be manipulated by any individual or central bank. Only a limited supply of bitcoins are created at a steady rate.
Why are Bitcoins Valuable?
When it comes to money, all value is a matter of agreement and confidence, determined by people’s willingness to buy and sell in a certain currency. This is just as true for dollars and euros as it is for gold and silver. In fact, throughout history, the term “currency” has applied to many things, including squirrel pelts, clams, potato mashers, feathers, gems, precious metals, and, of course, paper. As time goes on, the need to associate value with physical objects will continue to decline in relation to the scale and global nature of trade. In November 2013, bitcoin’s perceived value peaked when bitcoin/yuan exchanges opened up in China and a massive wave of buying ensued.
Where Do Bitcoins Come From?
Just like precious metals are dug from the earth, bitcoins are mined from blocks. Blocks are ledgers that contain a complex mathematical problem that, if solved, will reward its solvers with a number of bitcoins. Just as several miners might come together to share the burden of chipping away at boulders, bitcoin miners join pools and share their collective CPU processing power to help “solve” blocks. Once solved, the reward of brand new bitcoins is split between all the miners in the pool. As more miners enter the system, blocks become increasingly difficult to solve. This constrains the flow of new bitcoins to a near-constant rate.
The Block Chain
Every block contains a history of the block that came before it and some or all recent bitcoin transactions. When a new block is discovered, it’s added to what’s known as the Block Chain, which constitutes a complete and public record of every bitcoin transaction that’s ever occurred.
New blocks are made when miners bundle several bitcoin transactions together. Not all blocks will contain bitcoins but only those which do will be added to the Block Chain.
What Can I Do with My Bitcoins?
While options are limited now, as bitcoin gains more steam its user base will broaden beyond currency speculators and a few technophiles. Amazon and Overstock have already begun to accept bitcoins in exchange for goods and services. But with a global limit of only 21 million possible bitcoins, the question is: Will you sit on your bitcoins in hopes they will become an even hotter commodity, or buy a truckload of junk food? Whatever your choice, don’t expect bitcoin’s value to rise forever.
You’ll need a bitcoin wallet to put your invisible money in. Wallets are often software but are sometimes web-based applications. Software is inherently safer but web-based wallets are more convenient.
Then hop into a mining pool. Mining bitcoins alone is like drinking alone (you might have a problem). The bigger the pool the faster you mine but the smaller your reward. Just be sure to choose a pool with a reputable operator.
Download a mining app. Mining apps use the spare processing power from your graphics card. However, if you’re really bailer, you can get a special machine just for bitcoin mining and really clean up.
Sit back and watch the numbers climb. One bitcoin buys a lot of chewing gum these days. Keep an eye on the exchange rates and your electricity bill because mining will come at a hefty price.
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