Currencies have had a long history on this planet and their fortunes quite literally rise and fall with the times that we live in. In addition, the latest in this long line to rise to prominence is that of the ever amazing and the extraordinarily cryptic cryptocurrency of Bitcoin.
This brand new form of online currency which was introduced by its mysterious creator Satoshi Nakamoto in 2008, finally came tumbling out of the currency closet a year later and since its grand introduction, this piece of digital moo-la has been burning a hole in digital wallets ever since.
Bitcoin with its unheard of rapid advancement to the top of the digital currency food chain has surprised every-
one, what was once just a past time and novelty of bored techies and cyber geeks is now a household word. Just
the word“Bitcoin” ushers in many different thoughts and images. There is both the controversy and the triumph of this new mode of transaction.
Something akin to when the first credit cards came out or even the creation of the internet, the introduction of
this sleek and efficient digital piece of commerce is nothing less than world changing. Whether you agree or not, if you have been paying attention to its progress it can’t be denied that the ascendancy of Bitcoin is nothing short of remarkable.
And what this currency consists of and what it is not backed up with has made it an altogether unique phenomenon all to itself.
Bitcoin is considered a decentralized digital currency. This is to imply that it can be stored and used anywhere
without a centralized control of its supply. Every other currency in world circulation is backed up, one way or another, to a national currency. But Bitcoin is free of all that, it is not locked down to the whims of local inflation or the edicts of congress and parliament. Bitcoins are simply worth whatever it is that they are exchanged for.
There is nothing else quite like it.
The decentralized nature of Bitcoin is something akin to a precious metal like gold. Gold is a decentralized currency that always has the same value. You dig up a piece of Gold in a mine and it is considered exactly the same as a gold bar lying around at a Fort Knox gold reserve, it doesn’t change. But unlike bitcoins, gold is not digital and that same gold bar from Fort Knox would not do much good for you when making a purchase on Amazon, you can’t send a solid bar of gold through your computer screen.
Bitcoins have the stand-alone property of a precious metal like gold yet they ARE digital, and you CAN send them through your computer, cell phone or any other digital relaying device and buy that Wiz Khalifa CD or whatever else it is you want!
This is where Bitcoin has the best of both worlds; it is just as decentralized as gold but digital. Which of course has lent Bitcoin the self-explanatory nickname of,“digital gold”, and as Bitcoin’s profits and prospect soar it continues to be that proverbial and literal gold mine for its patrons as they mine and pine their lives away for this digital super currency.
Introduced by a creator who elected to remain anonymous, the inventor of this currency may remain a bit of a
mystery but the applications of how to use it are not. Using Bitcoin does not require a banker or some other savvy administrative official it is so easy and straightforward that anyone can use it, anyone can store it, and amazingly, just about anyone can mint this form of digital currency.
There are absolutely no middlemen involved in the process; no bank is needed and there are no transaction fees. With this currency no one even needs to know your name, since all transactions can be carried out com-
There is a public log of activities and the transactions themselves are recorded in the public ledger but the name of the person who is using Bitcoin is not made known. This creates quite a revolution when it comes to currency and privacy.
While this pseudo-anonymous nature of the public ledger has been criticized as aiding cybercriminals, it has in reality prevented much cyber-crime in the way of identity theft since users can rest assured that they don’t have to put any blatantly identifiable information they don’t have to worry about anyone stealing.
And as we will discuss in later chapters of this book, there is a way we can still trace the transaction histories of crooks if need be, so really the public log only helps those that it is meant to; the honest and law-abiding consumer.
The public log that user activity is recorded into is known as the“blockchain”. The public log is referred to as this because all information is recorded in chunks or“blocks” of information that are tied (chained) together.
This activity that lies stored in this blockchain is not processed by any administrative official it is computed directly by a vast network of communicating nodes that are running the Bitcoin software.
As the name implies a block (new group of accepted transactions) spirals out in a chain from every transaction. It is also known as cloud mining Approximately every ten minutes transactions are bundled into a block and added to a blockchain.
Once a block is created and added to the chain it is then published to all nodes allowing the software to record what amount of Bitcoin has been spent in each transaction, preventing any possible double charge or discrepancy.
A copy is also automatically stored in what is known as a“digital wallet”, a collection of addresses and“private keys” owned by one person. This wallet is a program that exists in the cloud or in the computers of Bit-
coin“miners” who participate in adding collected transactions to the blockchain.
The“private key” is your PIN number when using Bitcoin; this is used, coupled with your account number which is the“public key”. It is after this verification of the private key to the public key that the funds are released.
The private key consists of a long sequence of letters and numbers and it usually begins with the number“five”.
This series of numbers and letters in the private key is matched up with your Bitcoin address (public key) and your bitcoins are then unlocked at that address.
Working just like an e-mail address but used just for the receipt of the Bitcoin itself, you can send money through
Bitcoin to any email address or Bitcoin wallet address.
Working on a“peer to peer” network to verify and authorize the transactions that are performed. With no reliance on any government, bank or organization these digital coins rely on cryptographic protocols and a network of every day normal people to store, mint and transfer these funds.
Bitcoin is quite a revolution in convenience and personal freedom. Bitcoins are easily transferable and can even be transferred from phone to phone through mobile applications. The simplistic nature of how Bitcoin works allows you to cut out any middlemen or any other everyday stressors of maintaining normal bank accounts.
With Bitcoin if you have a mobile phone in your pocket, then you essentially have a bank in your pocket as well. It’s that easy. Just download the application and you can control your currency.
Freelance Digital Marketing Strategy Consultant with a focus on SEO. I love writing tech related stuff while I drink my first coffee at 5 am. I also have 2 dogs that make my life complete.