If you’ve turned on your TV or gone online, it’s almost impossible to ignore the buzz about Bitcoin. Talk about the cryptocurrency has been cropping up everywhere – from major news portals to popular TV shows. Despite the rising popularity of bitcoins, many still do not understand what it is or how it works. Here’s a rundown on Bitcoin, and whether it’s a passing fad or genuine opportunity.
First, it is important to make a distinction between Bitcoin and bitcoin. Bitcoin, with a capital B, refers to the technology and network of the peer-to-peer payment system and digital currency involved in processing bitcoins. The currency itself, bitcoin, is a cryptocurrency, which is a currency that uses cryptography for its creation and transfer. Bitcoin is unique because the entire system is powered by the peer-to-peer network of Bitcoin enthusiasts themselves, with no regulating central authority or government involved.
Bitcoin works by providing a personal wallet from which a user can send or receive bitcoins. This software generates and stores public and private keys, which act as both identifiers and safeguards for the bitcoins. The Bitcoin network is made up of a ledger called the “block chain,” which contains all the transactions ever processed.
The first Bitcoin specification was published by someone named Satoshi Nakamoto in 2009. Although Nakamoto left the project in 2010, other developers stayed on to continue working on the project. Bitcoin is open source, meaning that anyone can make changes to the Bitcoin protocol. However, the protocol will only work when users have the same compatible version, providing a strong incentive to keep a consensus on Bitcoin protocol.
There are different methods of acquiring bitcoins. These include:
There are a number of reasons why people use Bitcoin. These include:
All things considered, Bitcoin has a promising, if not totally predictable, future. However, with a number of factors working against Bitcoin, it’s probably advisable to hold off on major investment of bitcoins until the currency has stabilised and has achieved a larger following.
Meanwhile, Australians can now run to the Bitcoin ATM. Australian Bitcoin and Krypto Currency Solutions were among the entities that installed Bitcoin ATMs in late March, with one machine installed in Sydney’s Pitt Street Mall.
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