Bitcoins are the currency of the internet that independently operates without involving of the Central bank. In layman terms, this means that it is virtual money. When bitcoins first came into play, hackers would steal information and demand payments through bitcoins because they are harder to track. Some sources say that a person going by the pseudonym Satoshi Nakamoto made bitcoins in the year 2009. Through the years, more and more business vendors have began to adapt to the use of Bitcoins. Nevertheless, many people still have no clue how bitcoins work.
How Do Bitcoins Work?
Bitcoins are a decentralized form of currency since they do not belong to any government. Notwithstanding, you can exchange them like any other currency for any currency. It requires that you install a special software on your computer or tablet for you to make a bitcoin wallet. A block chain records all bitcoin transactions and is responsible for each bitcoin in circulation.
How Anonymous Are Bitcoins?
As mentioned earlier, when you use bitcoins, there are no intermediaries. This means that you can buy services and goods without leaving a trace of the transactions made. However, the transactions done are not completely anonymous because the wallet IDs are revealed since they are recorded in a public log. Nonetheless, real names of people involved in transactions are never revealed and that is why bitcoins are a currency preference for people involved in illegal activities.
The Value Of Bitcoin
Currently, one bitcoin is worth $2583.67. Its price constantly fluctuates with the ever-changing demand. This means that one bitcoin has more value than an ounce of gold.
Bitcoin popularity has gradually increased over the years. Some of the reasons for its increased value are its decentralized state, transaction privacy and increased transaction security. In Europe, the no-VAT ruling has made this virtual currency more popular. The general acceptance of bitcoins all over the world by business merchants and various companies have propelled its popularity even further. Moreover, some gambling companies are even considering the use of bitcoins to improve the betting security of their clients.
Bitcoin mining is the basis of bitcoin security. Mining is the technique of generating hashes by miners. They use very powerful computers and have a specialized software which they use to create the hashes. The block chain records the hashes. As a result, a miner gets a bitcoin as compensation for the work done. The bitcoin algorithm is set up so that there can only exist a maximum of twenty-one million bitcoins at a time.
Uses For Bitcoin
The bitcoin popularity is still low compared to other forms of currency such as cash and credit cards. However, studies show that there are many companies and businesses that accept bitcoins as a transaction medium. The reason for this is because using bitcoins is cheap especially if you are dealing with the international market since it is not tied to any specific government. Furthermore, there are people who buy bitcoins at the bitcoin exchanges only to sell them once their value increases.
As earlier stated, the person behind the bitcoins used the alias Satoshi Nakamoto. He created bitcoins in the year 2009 and as soon as they had began to attract worldwide attention, Nakamoto disappeared. Most pundits, however, think that Nakamoto`s disappearance is not an issue since the bitcoin algorithm works better on its own. A few years later, an Australian merchant claimed that he was the bitcoin founder but was later dismissed since he had no proof.
Owning And Storing Bitcoins
For you to store bitcoins, you need a bitcoin wallet. This is a digital wallet that serves as an online bank. The bitcoin wallet comes either in form of an online cloud-based wallet or a computer software based wallet. It is through the bitcoin wallet that you can complete transactions or save. However, the FDIC does not insure bitcoin wallets like a bank. Setting up a bitcoin wallet is easy and does not need any proof corroboration.
Even so, the future of bitcoins is not yet clear since most countries still view it as a tax evading and avoiding scheme. In spite of that, it is still early to give a final verdict on the future of bitcoins since people are still getting adapted to it.