Bitcoin is something which has attracted a lot of media attention over the last few years. The cryptocurrency has gone from being something that was most definitely an underground thing used only by the most tech-savvy to a currency that is used by a huge number of people for everything from buying video games to ordering physical goods. There are even some airports that have machines that people can deposit their leftover foreign coins into, and be paid in bitcoins for that currency.
What is Bitcoin?
Bitcoin is a “cryptocurrency” – it exists purely in virtual form, and is exchanged by a network of digital clients. According to coinbox, users store their bitcoins in a file on their hard drive, and much like real currency, if they ever lose that file they lose all the money that was stored in that “digital wallet”. The number of bitcoins that exist is finite – bitcoins are generated by mining for specific hashes in a block chain – essentially, crunching complex numbers and performing complex calculations on your computer. When bitcoins were first released, finding new coins was easy, and the value of each individual coin was low. Now, the computational resources required to find new coins is much, much higher, and this means that coins are incredibly valuable. Transactions are carried out in fractions of coins, rather than entire coins.
The value of bitcoin is quite volatile, and no-one really knows how many bitcoins are in circulation. There could be a lot of money tied up in coins that have been taken out of circulation because the owners lost interest in cryptocurrency (but decided to keep their wallet, just in case bitcoins surged in value), and even more small amounts that have been lost for good by accidental deletion or hard drive failure.
Mining for Bitcoins
It is highly unlikely that an individual running just one computer would be able to have success mining by themselves (but the payoff would be massive if they did manage to do some successful mining). Most people join groups to mine together, and share in the results, with the amount of money that they earn being based on the amount of processing power that they put towards the mining effort. Feel free to check out more about bitcoin currency if you are interested in to it.
Other Ways to Get Coins
Mining is not the only way to get coins. There are some jobs sites that pay in coins, and there are “bitcoin faucets” that pay out tiny fractions of coins for people using their sites. These websites earn money through advertising.
Why Get Bitcoins
You may be wondering why you would want to use bitcoins when there are so many other perfectly usable ways of paying for things online – including PayPal, credit cards (with the protection they offer), debit cards, and various prepaid cards that remove the risk of providing your financial details online.
Well, one reason why it would be a good idea to use bitcoin is that it is anonymous. You can use it without having to provide any information about your identity. This could be important if you live in a part of the world where civil rights are an issue, or you simply don’t want your identity tied to a purchase for privacy reasons. It’s also interesting because as a distributed and anonymous payment method it is one that governments cannot really tax. How can you track someone’s income if the money they receive and spend cannot be traced back to them. This alone makes bitcoin a very appealing option for people who are able to make use of it for a large portion of their spending.