‘Bitcoin’ is a word that now trips off most people’s tongues. A year ago, if you hadn’t heard of bitcoin, or cryptocurrency, people might have assumed you’d just emerged from the cave you were living in – on another planet. Today, if you don’t talk about bitcoin and cryptocurrencies as if you know exactly what they are and how they work, they’ll assume the same – at best. So, everyone talks about bitcoin as if they are 100% ‘savvy’ on the subject, but how many people really understand it?
A brief history of bitcoin, and a basic explanation of ‘bitcoin mining’ are the foundation blocks in understanding bitcoin. So… ‘get bitcoin’… before you buy bitcoin.
A brief history of bitcoin:
Bitcoin was created as an online trading currency that could bypass centralised banking, and was totally secure, as you had to create it through an algorithm that found all its constituent parts. Essentially, it’s a math’s equation. No-one knew who created it at first, but it’s now thought to been invented by a man called Satoshi Makamoto. He invented it in 2007 and first used for a transaction in 2009.
Bitcoin is a ‘virtual’ currency. It exists in code, in blocks (bits) that are scattered all over the world’s virtual networks. Bitcoin has value and can be traded because you can find those blocks and link them together to make a ‘blockchain’. This value is based on how hard the code that links the blocks is to find (the equation or algorithm) – just like gold, diamonds and other ‘hard to get’ things in the ‘real world’. So, bitcoin is obtained through the process of getting the code – a process call ‘bitcoin mining’.
Mining bitcoin means running programs to find the blocks that make up an existing bitcoin and linking them together to make a transaction, a process that is rewarded through the issuance of new bitcoin – every 10 minutes. This process requires exceptional computer processing power, but it’s human driven. People mine bitcoin. This is crucial. The ‘value standard’ that underpins currency is a combination of effort, difficulty and rarity. If money grew on trees, and anyone could just go and pick as much as they wanted, it would have no value.
Still don’t get it? Don’t worry…it will be taught in schools soon! The only thing you need to get…is some bitcoin! Open your wallet for your cryptocurrencies and start spending and trading with debit cards that are now available.