Bitcoin: what is it in simple words

What is bitcoin in simple words? How did it all start? How does bitcoin technology work technically? What are the advantages and disadvantages of Bitcoin? Where can I pay with popular cryptocurrency?

The crypto boom is sweeping the planet, despite the fact that digital money was considered fiction. The value of the virtual currency indicates the emergence of a powerful player in the global market. What is bitcoin in simple words and how did virtual coins appear?

Lately no news about cryptocurrencies not a single ether is spared. Over the eight years of its existence, this phenomenon has become overgrown with myth-making, which did not prevent it from taking its place under the sun and giving rise to its own subculture. It all started back in 2008...

What is bitcoin: the origin of cryptocurrency or at the origins of a miracle

XXI the century has not yet reached its first ten. Mankind, step by step, made its way to a new resource - information, gradually dreaming of financial freedom and independence. The faint sprouts of dreams seemed like a utopia until, on the last day of October 2008, bitcoin.org published a document that talked about digital currency, its distributed essence, the electronic protocol that supports the payment system and what bitcoin is. The author of the invention called Satoshi Nakamoto (Satoshi Nakamoto) - a person previously unknown to anyone. Until now, there is an assumption that this is not one person, but the pseudonym of a group of developers.

The appeal outlined the properties of the new electronic currency and the system that formed its basis:

• Protection against theft, break-ins and inflation.
• Independence, democracy, anonymity.
• Simplicity and accessibility.

Information about the know-how was received by all then subscribers of the gmane.comp.encryption.general mailing list. So, a story began that has every chance to radically change the world, but its prerequisites are no less important.

Deus ex machina or bit coin

10 years before the advent of the digital embodiment of money, Neil Town Stevenson's novel about uncontrolled currency was published. Perhaps it was he who inspired the famous trinity: May-Diffie-Zimmermann, who formulated the concept of virtual cash, who proposed to the public theses on B-money by student Wei Dai and talented researcher Nick Szabo, who launched the Bitgold system in 2005 as a counterweight to rising inflation and fraud , and all of them taken together prompted the fateful invention of Satoshi Nakamoto.

One way or another, but in January 2009, the genesis block of the Bitcoin payment system started. It was generated by the inventor himself, having received 50 BTC. A few days later, he also made the transaction.

How does bitcoin technically work?

In an attempt to understand what bitcoin is in simple terms, you should get to the bottom of the essence of the monetary unit and delve into the process of its emission.

Virtual money, the introduction of Nakomoto, has no material embodiment. They are codes recorded in a special database, the work of which is organized according to a decentralized distribution principle. The basis of the system is the chain of blocks. Hence the name - BlockChain. The technology is organized so thoughtfully and skillfully that its reliability does not cause the slightest doubt. Some experts consider it much more valuable than the coins themselves.

A simple example will help to avoid difficulties in understanding: torrents. This miracle century helps most of the advanced users of the planet to exchange movies, games, books and other valuables. The network does not have a main server, since the data is stored on the computers of its clients. BlockChain works in much the same way, only it operates with logged money transactions. Information about the production, sale, acquisition and other transactions with bitcoin is available to all participants in the process.

Each new entry is consistent with other users' copies using a synchronization and consensus algorithm. Theft and fraud are excluded, as they make no sense. Attackers simply cannot replace information, because for this they will have to work with more than one account, with the data of at least half of the participants and their links in the chain.

The production of bit coins is called mining. From the English word "mining" - mining. This operation is available to every user without exception. It does not require special skills. Tools are important here. specialized equipment и Software. Just as the currencies of the world are backed by gold, the value of bitcoin is backed by the computing power that causes cash to appear in miners' wallets. Hardware has to cope with algorithms whose complexity grows in proportion to the number of miners. Each of the participants in the system receives an address embodied in a cryptographic cipher and a secret key to their treasures. Transfers to the systems are carried out absolutely transparently with the ability to trace who sent what and to whom.

What is Satoshi? How many satoshis in bitcoin?

During its existence, the digital analogue of paper money has experienced ups and downs, but it has become the most popular and expensive currency. The cost of bitcoin today has exceeded $4 per coin. For comparison, in the year the innovation appeared, two pizzas were bought for 10 coins. Such a rapid development led to the emergence of related concepts related to the production process. These include satoshi and faucets.

It is easy to explain what Satoshi bitcoin is using the example of a bit - the smallest unit of information corresponding to 0 or 1. It is in this form that the computer perceives user commands. Satoshi (satoshi) by analogy is the minimum indivisible component of bitcoin, equal to one hundredth of a million or 0,000 000 of a digital coin. It is something like a cent in a dollar or a penny in a ruble.

Those who are not involved in the world of cryptocurrencies are far from this concept. It is important for miners and traders. Their earnings depend on how many satoshis in bitcoin, which is largely organized through faucets (faucet bitcoin) - sites that pay mining rewards to their participants. In the following articles, we will talk in more detail about making money on bitcoin faucets, subscribe to blog updates so as not to miss it.

Is the game worth the candle: the pros and cons of bitcoin

Following the folk wisdom that calls to trust, but verify, it is easy to find out for yourself the advantages and disadvantages of virtual money, as they lie on the surface.

The undoubted advantages of a Bitcoin startup include:

1. Anonymity in the face of intelligence agencies and independence from governments and financial regulators.
2. Prospects in the image of the most convenient means of payment today, leaving paper cash far behind.
3. The absence of commissions and taxation stimulates the reduction in the price of goods offered for bitcoins.
4. Cross-border and the likelihood of acquiring the status of an international currency.
5. Ease of use, transparency of operations and availability.
6. Reliability, safety and equality, as well as salvation from inflation (limited edition that increases in value over time).

Unfortunately, such a perfect system has not yet been legally recognized. This is the main disadvantage, pulling a number of problems. Despite the impressive exchange rate of bitcoin against the dollar today, its success is ensured only by demand from users.

Shopping without borders or where you can pay with bitcoins?

What to buy for a currency whose capitalization exceeded $90 billion? Yes, anything! The main thing is the desire, the volume of the wallet and the ability of the seller to accept the payment.

In countries that have legalized digital coins, the following are common:

• POS terminals.
• Hardware wallets.
• Cryptocurrency ATMs.

They are used everywhere: in retail chains, shops, agencies and even kiosks. They accept virtual money and online services. You can pay with a ringing number for tickets, for example, in Expedia, buy electronics and household appliances, exchange them in a payment system. Here are just a few whales of the market that are happy to offer cryptocurrency accounts: Dell, Microsoft, Xbox, PayPal.

Having figured out what satoshi and bitcoin itself are, finding out how mining is carried out and what is needed for this, as well as assessing the level of capitalization of the cryptocurrency, all that remains is to decide on your involvement in the new era of free financial flows. To do this, you will either have to believe in the future, or continue to receive a salary in an envelope and complain about lack of money.

Best Regards, Money Hunters