Bitcoins, the next gen currency!

What is Bitcoin ? Bitcoin is the first decentralized digital currency. Bitcoins are digital coins that you can send through the internet. Compared to other alternatives, Bitcoins have a number of advantages. Such as,  Bitcoins are transferred to person to person via the net without going through a bank or clearinghouse. This means the fees are much lower.Moreover You can use them in every country, your account cannot be frozen and there are no prerequisites or arbitrary limits!

Bitcoin uses strong cryptography to prevent users from duplicating money. Bitcoin’s notional independence from the control of governmental entities tends to appeal to libertarians, anarcho-capitalists, technophiles and criminals. At the same time, it also does not enjoy the security, protection and dispute resolution which those large bodies tend to provide, making it a volatile and often insecure asset.

Related Content :How to secure your Bitcoin account!

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Things you can buy with Bitcoins!

The best thing about coins is the software is open sourced and anyone can review the code.

How it works ??

Several currency exchanges exist where you can buy , sell and exchange for dollars, euros and more. Your Bitcoins are kept in your digital wallets on your computer or mobile device. Sending Bitcoins is as simple as sending an email and you can purchase anything with your Bitcoin.
The Bitcoin network is secured by individuals called miners. Miners are rewarded newly generated coins for every verifying transactions. After transactions are verified, they’re kept in a transparent public ledger.

Related Content : Security concerns and volatility of Bitcoins 

Who created Bitcoin?

The first Bitcoin specification and proof of concept was published in 2009 by an unknown individual under the pseudonym Satoshi Nakamoto who revealed little about himself and left the project in late 2010. The Bitcoin community has since grown exponentially.

Satoshi’s anonymity often raises unjustified concerns because of a misunderstanding of Bitcoin’s open-source nature. Everyone has access to all of the source code all of the time and any developer can review or modify the software code. As such, the identity of Bitcoin’s inventor is probably as relevant today as the identity of the person who invented paper.

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Hardware

So who’s doing the maths? The answer is the most powerful distributed computing project in the world. While other distributed computing systems are investigating protein folding or shifting through radiotelescope data for signs of intelligent communication from the stars, Bitcoins are being generated by people running hashing algorithms to process transactions on a poorly-traded virtual currency.

But it’s long past the point where you can do any decent amount of processing on a standard desktop system (or, as some less-than-ethical Bitcoiners have, sneaking processing code into JavaScript on web pages, or simply deploying a Trojan on someone’s desktop box). Bitcoin miners quickly moved to the GPUs of video cards, then field-programmable gate arrays (FPGAs) specifically programmed for the algorithm, and now mining is done on ASIC chips specifically designed for Bitcoin mining based on said FPGAs. There are even companies selling Bitcoin mining rigs; their frequently-sketchy workmanship wouldn’t endear them to IT pros or the FTC, but they’re still better than some of the firetrap rigs that Bitcoiners have put together for themselves.The many bizarre and frankly stupid cooling schemes are usually good for a laugh as well, including one Darwin Award applicant who poured a bucket of liquid nitrogen on the floor next to his rig to cool it.

The irony of all this is that once hardware and power costs are factored in, it’s hard to make a profit from Bitcoin mining. Many more-savvy Bitcoiners filch their power from someone else and don’t factor in the equipment cost at all; poor understanding of economics is a recurring theme in the Bitcoin community.

Bitcoin is also an environmental disaster, using on the order of 1 gigawatt (GW) (that’s a billion watts) according to a 2013 and 2014 apaper.Estimates would be about 7 GW by end of 2015 as the paper shows approximately power use scales linearly with mining difficulty and mining difficulty in December 2015 is about 7 times the difficulty than when the paper is published (remember, mining each Bitcoin is more difficult than the previous one.) For comparison, the entire nation of Ireland runs about 3 GW average. The network cost per transaction (of any size) is around $20 of electricity. (Thus, Bitcoin runs on libertariansexternalising their costs to others). If only they’d based it on protein folding. The actual processing done by the miners could be done by a Raspberry Pi; the only reason to waste gigajoules a day is to keep it distributed without trust between actors. It turns out trust is vastly more efficient.

 

Banks and exchanges

There are multiple Bitcoin “banks,” but most of this seems to revolve around doing things with bitcoins,leading to accusations of cargo cult economics. And scams. There are lots of scammers in the Bitcoin community, who are punished by the harshest method imaginable: getting a “scammer” tag on the BitcoinTalk.org forum.

There is a Bitcoin exchange hack or collapse approximately every month. Leaving any money exposed on a Bitcoin exchange is, statistically, a terrible idea.

One Bitcoin exchange, Bitcoin-Central (now called Paymium), has achieved bank status in France. Their aim is to supply an alternative to PayPal, and their central bank backing on balances only applies to accounts in euros rather than in bitcoins. On the other hand, other players in the Bitcoin field have had to suspend operations because US banks view companies involved with Bitcoin as too high risk to do business with,or have had to suspend US dollar withdrawals for undisclosed reasons.

 

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