Bitcoins: Decentralized Digital Currency

How it WorksWhen Bitcoin was first created, 21 million coins were scattered across the digital realm and hidden in blocks of data. Instead of having one central authority control the money supply, the work is spread out across the network and performed by miners. Mining is the use of computing power to solve complex algorithms that will crack codes and extract the Bitcoins out of “blocks.” Mining requires special mining rigs (as opposed to a typical PC. Bitcoin mining rigs with the sole purpose of crunching through algorithms can sell for as high as $50,000 on Ebay. For the dedicated, Bitcoin mining can be a profitable business, although it’s mostly arduous and expensive. Pros•Money can be transferred anywhere in the world at a very low price•Bitcoin isn’t dependent on a government or company to maintain its value. •Merchants can start accepting Bitcoins instantaneously without a merchant account. •Less traceable than many other types of monetary transactions. •Can’t be counterfeited.

Cons•Bitcoin mining requires huge amounts of power (uses enough daily to power half a Hadron Collider). •Has been described as an investment bubble. •Volatile market value. •Considered the currency of the online black market. •Individual Bitcoin wallets are vulnerable to theft and the thefts are difficult to trace.

What are Bitcoins?Bitcoin was developed in 2009, by an anonymous individual or group of individuals. Bitcoins are decentralized digital currency that enables low-cost payments without the need for central authorities and issuers. Bitcoins can be accessed from anywhere in the world with an internet connection. Once a user has Bitcoins, they’re stored in a digital wallet. Bitcoins can be sent to anyone else who has a Bitcoin address. To date, they’re the fastest growing currency.

Bitcoin Mining Rig

Resources

•http://gigaom.com/2011/06/15/bitcoin-virtual-currency-may-be-the-worst-of-both-worlds

/•http://bitcoin.stackexchange.com/questions/305/what-are-the-perceived-advantages-of-bitcoin-as-a-means-of-

exchange•http://theweek.com/article/index/242753/want-to-make-money-off-bitcoin-mining-hint-dont-

mine•http://arstechnica.com/business/2013/04/mining-bitcoins-takes-power-but-is-it-an-environmental-disaster

/•http://finance.yahoo.com/blogs/breakout/bitcoin-implosion-5-signs-investing-bubble-142629328.

html•http://www.forbes.com/sites/andygreenberg/2013/04/16/founder-of-drug-site-silk-road-says-bitcoin-booms-and-busts-wont-kill-his-black-market

/•http://thenextweb.com/insider/2013/04/21/here-we-go-again-top-bitcoin-exchange-mt-gox-taken-down-for-hours-by-another-strong-ddos-attack

/•https://www.weusecoins.com/en/