What is bitcoin and why is it needed

Difficulties in definitions and lack of transparency in the financial system led to the creation of fictional stories about the digital currency Bitcoin. Newspapers, magazines, the Internet are full of cryptocurrency headlines. Rumors have brought the currency to the point where distrust is generated. Note that Bitcoin is compared with the MMM pyramid and predict a speedy collapse. Every person faced with cryptocurrency should know what bitcoin is and why it is needed.

About Currency

Valuable goods, electronic and cash - a list of currencies in everyday life of the population of the planet Earth. Gold, oil, gas, pearls, coffee - a list of valuable goods that countries trade among themselves. To simplify the exchange introduced electronic and physical money. Bitcoin is a representative of electronic finance. The same money as the equivalents stored on VISA or Mastercard cards in the currency chosen by the owner.

What is bitcoin and why is it needed

Compared to other electronic money, bitcoin is a decentralized currency. That is, not tied to any bank or economy of the country. The advantage of bitcoin is that no state in the world has the right to regulate the value of digital currency and receive a fee from transactions. This property of the cue ball makes the International Monetary Fund arrange a “swing” for cryptocurrency owners. Without earning financial transactions, banks incur losses, missing out on potential depositors or borrowers.

Cryptocurrency only has a rate that sets value based on supply and demand.

Security and anonymity

Hacking a bitcoin wallet is impossible. The exception is the careless actions of the owner who allowed the attackers to his own computer. Lack of two-step authorization and neglect of security have left hundreds of users with a nose.

A transaction between wallets takes place without the participation of the bank. Again, the financial structure built up over the centuries turned out to be without dividends. It is impossible to track the operation with Bitcoin to unauthorized persons. Having intercepted the packet, the attacker is not able to decrypt the data due to encryption.

Cryptocurrency is credited with anonymity. The media write about the inability to find the owner of the wallet. However, there is a reservation. To withdraw money through the exchange, the owner indicates the bank account number. Under pressure from the government, the bank will give out information about the card holder, and the exchange (which works according to official documents) will give out information about the transaction. But IT technology experts insist that it is impossible to compare the Bitcoin account with the owner, since exchanges for transferring money create one-time accounts that are processed by the Blockchain server.

The history of Bitcoin

After the furor in the digital currency market, hundreds of online publications set out to discuss who the creator of the cryptocurrency is. Laurels attribute to the programmer Satoshi Nakamoto. However, finding a person with that name was not easy. Experts suggest that the creator is hiding behind a pseudonym in order to protect his own family from reporters and international banks.

The creation of an uncontrolled and anonymous currency is attributed to American intelligence agencies. Motive - financial support for coups d'etat around the world. The idea looks crazy, but is widely discussed in Russian-speaking and Far Eastern countries, where the United States appears to be the aggressor.

How it works

Having figured out what bitcoin is and why it is needed, it becomes interesting to understand how cryptocurrency works. Bitcoin is the reward for blockchain operation. And blockchain is a chain of blocks for financial transactions. Submit books. To turn the page, you need to read the text. And not having finished reading a book, you cannot start a new one. Reading books, information is remembered by a person. So the blockchain records transactions and at the end forms an 1 block. To close the block, a digital signature is required. Which is calculated by video card processors of millions of users.

How to receive and how to use bitcoin

Two options - earn and buy.

Earnings, or rather mining, are performed by high-performance devices that connect to pools and participate in the selection of digital signatures for blocks. You can buy bitcoin on exchanges. You will need a wallet for storage.

The use of bitcoin implies financial enrichment. Miners sell cryptocurrency in order to “beat off” expensive equipment and spend money profitably for themselves. Consumers buy and sell bitcoin at competitive rates in order to make money on the difference.

In conclusion

It is impossible to know everything about Bitcoin. No one knows how the epic with cryptocurrency ends. But while there is blockchain, there are no threats leading to the collapse of electronic money. It is known that the complexity of calculations is increasing, and the last block will approximately end in 2140 year. The forecast was compiled in December 2017 and is still not accurate. Since the increased demand for cryptocurrency forced miners to mine bitcoin more intensively.

As for the cost of electronic currency, here is a lottery. The price is swung by speculators who trade in the market with other cryptocurrencies tied to bitcoin. At 2018 year, positive dynamics in the growth of BTC is outlined, what will happen next is unknown.