Explaining the Bit in Bitcoin On your way to work, you stop by the gas station to fill your car with gas. When it comes time to pay, instead of pulling out your credit or debit card, you enter your Bitcoin information. What is Bitcoin? Is it just another online payment method like PayPal, or is Bitcoin something more? Googling “Bitcoin” returns a vague answer that defines Bitcoin as a peer-to-peer crypto-currency. This “answer” only raises more questions. The problem with defining crypto-currency lies in the fact that the term itself is linked with Bitcoin. Crypto-currency is used as a general definition for Bitcoin and other similar online currencies. Knowing what the term crypto-currency stands for still does not answer the core question, what is Bitcoin? To truly understand Bitcoin, more precise questions are needed. What is Bitcoin, how does it function and should you use it? To fully understand Bitcoin, you need to have a basic understanding about how traditional currency works. Currencies like the dollar bill and the Euro are backed by a central bank. This central bank is controlled by one or more countries. The dollar, for instance, is backed by the US government through the Federal Reserve System. The only reason people have faith in the US dollar is because it is backed by the US government. Consumers therefore, have faith not in the physical currency itself, but in the government behind it. The only value in currency is the faith we place in the country controlling it. The controlling government has complete control over the currency it backs. For example, every dollar bill is marked with a specific ID number. This allows the government the ability to track the bank note through the global market... ... middle of paper ... ...foot hold as an accepted currency before people should start using it. Works Cited page Babbage, Charles. "Bits and Bob." Web blog post. The Economist. The Economist, 13 June 2011. Web. 7 May 2014. Bornholdt, Stefan, and Kim Sneppen. "Do Bitcoins Make The World Go Round? On The Dynamics Of Competing Crypto-Currencies." (2014): arXiv. Web. 7 May 2014. Hanley, Brian P. "The False Premises And Promises Of Bitcoin." (2013): arXiv. Web. 7 May 2014. Jacobs, Edwin. "Bitcoin : A Bit Too Far?." Journal Of Internet Banking & Commerce 16.2 (2011): 1-4. Business Source Complete. Web. 7 May 2014. Nakamoto. Satoshi. “Bitcoin: A Peer-to-Peer Electronic Cash System.” Bitcoin.org. The Bitcoin Foundation, n.d. Web. 11 May 2014. Sorge, Artus Krohn-Grimberghe Christoph. "Practical Aspects Of The Bitcoin System." (2013): arXiv. Web. 7 May 2014.
Bitcoin is a digital currency that was started in 2009. It is a digital representation of currency with no actual tangible representation. Bitcoin, commonly abbreviated as BTC or XBT, is distributed worldwide, decentralized digital money (also called cryptocurrency). It is decentralized, meaning it is not controlled nor backed up by any government, country, or individual entity. Unlike traditional currencies, such as dollars and euros, bitcoins are issued and managed without any regulation from any central government. Thus, it is more resistant to inflation and corruption. A Bitcoin derives its value basically from the demand and usage of bitcoins, similar to a stock. Bitcoin doesn’t derive its value from the government; it derives its value from the people. The more that use/accept it, the more of a demand there for it, and the more valuable it becomes. Bitcoin is controlled by the people; you are your own bank. Transaction terms are determined by the user. Bitcoins can be bought with credit cards, PayPal, bank transfers, or even going to a local bitcoin exchange and buying them with cash. A person can acquire bitcoins as a payment for goods or services, purchase them with real money at a Bitcoin exchange, exchange bitcoins with someone you know, or earn bitcoins through performing mining services for the network. It has value and can be exchanged for real physical money, it’s valued exchange rate goes up and down like a stock, and it’s traded online like PayPal, but it is none of these. It’s widely considered as the future of world currency, but also scrutinized as a gateway for illegal activity. So which is it?
Goodale, Gloria. "Rise of Bitcoin: Is the digital currency a solution or a menace? (+video)." The Christian Science Monitor. The Christian Science Monitor, 23 Nov. 2013. Web. 25 Nov. 2013. .
The topic that I’m going to write about in this paper will be on the electronic currency released in 2009 known as Bitcoins. Bitcoins is a type of currency that entails computer software to be used with one person exchanging with another person for a different kind of trading option such as the US dollar, products or services. There is a fourth reason why Bitcoins can be exchanged which is done when a person is mining, that occurs when a participant acts as a mediator for transactions whereas mediator approves and documents. Bitcoins is one of the largest and first electronic currencies ever created by any developer including the makers Satoshi Nakamoto. Bitcoins doesn’t meet the characteristic guidelines to be considered an actual type of currency, though the US Treasury recognizes it as a type of decentralized currency in that no person or organization including governments oversees the transaction of Bitcoins.
Many people have been trying hard to get their hands on bitcoins while their prices are still rising. The creation and acquisition of bitcoins is a complex and unique one. The most common way to garner bitcoins is by a process called “mining”, in which users solve complex mathematical proofs to complete bitcoin transactions. When someone uses bitcoin to pay for something, the miners are the ones to process these transactions, and the bitcoins are seen as a form of payment for their service. Mining can be done by just about anyone, but calls for very expensive investment in
Imagine a world where there are no banks or even a need for wallets. This may sound like a nice freedom at first until illegal activities sky rocket; including the drug and sex trade. The economy will crash and millions of people will be left high and dry with a worthless currency. This type of chaos will not only devastate the United States but will also be seen world wide. With the way technology has been advancing this could be a very plausible future, thanks to Bitcoins. Bitcoins are a new form of digital currency in which the consumer uses and stores all of their money on a computer. This allows for quick trade, not only within your own country but others as well (Ethley par. 2-4). Although there may seem to be great benefits that Bitcoins offer, they are actually more damaging then beneficial. Bitcoin use will have a huge negative effect on the economy, they are filled with security issues, and support criminal activity due to their anonymous nature.
The process of Bitcoin is confusing and difficult to understand even to the deeply involved. He advises his readers not to trust reporters who only have had a brief overview of the process when learning the program (2016). Many reporters dismiss bitcoin as a means to carry out illicit activities on the internet, writing stories when Dread Pirate Roberts ruled the Silk Road, and how he use anonymity to keep one step ahead of the DEA and Secret Service. Of course you can buy anything for sale as long as the seller accepts bitcoin, because Bitcoin is money. The only difference is that is digital and the buyers are anonymous. And because it is currency, it is subjected to all that physical issues currencies are. How does the Bitcoin currency fit in to the Federal
Bitcoin was first proposed by a person known only by the apparent pseudonym of "Satoshi Nakamoto" in 2008. It is an internet based digital currency along with its own payment network which uses strong cryptography to prevent users from illicitly duplicating money. Bitcoin is independent from the control of governments, corporations, or other centralized authorities. This feature tends to appeal to people to use bitcoins for trading. But, it does not enjoy the security and protection which these large bodies can provide, and hence, it becomes volatile and insecure means of trading. Bitcoin needs lots of computers to process and record transactions. This is done by Bitcoin Mining tools. Every time someone successfully "finishes" a transaction, they receive Bitcoins in return. This provides an incentive to keep the currency running.
Bitcoin operates as both a currency and as a peer to peer payment network. Introduced in 2009, it uses cryptography to control the creation and transfer of digital tokens that represent real fiat currency value. As a currency it has a very high level of volatility as we’ve seen its value rise to over $1000 in early 2014 and as of May 2014 reside around $450. The wide fluctuation in price is what many believe to be one of the greatest hurdles for bitcoin to overcome in order to survive as a currency in the distant future.
The removal of government from a monetary system is one of the other reasons of attraction of the Bitcoin; there is no government intervention. Governments (or their central bank) regulate the supply of money and credit and most often some degree of mismanagement of this government function is at the root of a persistent high inflation problem. In the case of Bitcoin, however, there is no government or central bank regulating the supply of Bitcoins. The supply of Bitcoins is programmed to grow at a steady rate regulated by the degree of mining activity and then is capped at a fixed amount.
According to its semi-official definition, a cryptocurrency is “a peer-to-peer, decentralized, digital currency whose implementation relies on the principles of cryptography to validate the transactions and generation of the currency itself.” (While that is one dense slab of prose, to be fair to the cryptoids, it wouldn’t be easy to define the dollar succinctly either.) What this means is that Bitcoin and the rest are electronic currencies created and transferred by networked computers with no one in charge. The role of cryptography is not merely to guarantee the security of the transaction, but also to generate new units of the currency, which are “mined” by having computers solve complicated mathematical problems. Once solved, new coins are created and their birth— with digital signatures guaranteeing authenticity and uniqueness—announced to the rest of the system.
Bitcoins aren’t just an investment option. It is a new innovative independent transactional platform. It’s is the first implementation of crypto-currencies, which are virtual digital currencies that exploit the principles of cryptography and was first proposed by Wei Dai in 1998. Bitcoin is a peer-to-peer (P2P) consensus network that introduces a new digital medium of exchange. A P2P network has no centralized organization, just as when downloading a torrent file, pieces of the file or all are located & shared between peers (other individuals). Bitcoin may be probably the biggest distributed computing project in the world. Bitcoin has a public ledger called “Block chain” which records the history of all the transactions that have occurred since the foundation of Bitcoin. In a sense, it could be thought of as a black box of the platform that is available to all users to read & view. Each digital wallet has an address known to all users. The amount in that address and its transactional record is open to the public, however; no personal information is known or needed. Each address or wallet has a private key only with which you could a...
Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people…
Bitcoin has become a hot, controversial topic, but what is it and how is it used? Bitcoin is one of several digital currencies, but, as of 2014, it is the most popular one. It is a form of money, but for online use only. Bitcoin is the system of how payments are made, while bitcoin refers to the unit of online currency. Unlike traditional currency, Bitcoin is not regulated by a central organization.
The use of credit and debit cards today are taking a tour in the sense that electronic cash is becoming more admissible as the world makes a switch towar...
A cashless society will further improve the globalisation that characterise our present time. The computerised systems can be used to decrease the quantity of paper trail therefore substituting paper cash with cashless credits or electronic money transfers. However, in a cashless economy, this will change with certain crimes almost eradicated. It will also be faster to generate electronic payments than cash as Near Field Communications (NFC) chips make their way into more payments cards and mobile handsets as well providing protection not applicable to purchases made using cash. This technology is simple with low power wireless link evolved from radio-frequency identification (RFID) tech that can transfer small amounts of data between two devices identifying us and our bank account to a computer. Another benefit of drawing nearer to a cashless society is that other companies are providing pioneering cash-free solutions to the payment related problems we come across. For example, WisePay, a provider of e-payments services, is deploying technologies that ensure parents no longer have to worry about sending their children to school with cash to pay for meals, excursions and other fees that will eliminate the likelihood of being caught short for cash or children misplacing money. The Government also has valuable explanations why they may deem to turn away from cash. Due the main factor of printing and distributing cash, not to mention ensuring the economy is free from forgeries which are all costly endeavours estimating that the cost to society of using cash is between 0.5 and 1.5% of GDP annually. In addition, there are many technological innovations that propose there is a real enthusiasm for an alternative to cash with the upsurge...