What Is Bitcoin?
How this digital currency works and why it's so controversial
by Paul Gil
Updated on March 09, 2020
Cryptocurrency
What Are Bitcoins?
Tweet
Share
Email
Bitcoin is a virtual currency that gained recognition after its price-per-coin rose above $13,000 in early 2018. The cryptocurrency (one of many) is at the center of a complex intersection of privacy, banking regulations, and technological innovation. Today, some retailers accept bitcoin, while in other jurisdictions, bitcoin is illegal.
Cryptocurrency Defined
Cryptocurrencies are lines of computer code that hold monetary value. These lines of code are created by electricity and high-performance computers.
Cryptocurrency is also known as digital currency. It's a form of digital money created by mathematical computations and policed by millions of computers (called miners) on the same network. Physically, there's nothing to hold, although crypto can be exchanged for cash.
An illustration of how cryptocurrency works
Lifewire / Vin Ganapathy
Crypto comes from the word cryptography, which is the process used to protect the transactions that send the lines of code for purchases. Cryptography also controls the creation of new coins. Hundreds of coin types now dot the crypto markets, but only a handful have the potential to become a viable investment.
Governments have no control over the creation of cryptocurrencies, which is what initially made them so popular. Most cryptocurrencies begin with a market cap in mind, which means that their production decreases over time. This is similar to the physical monetary production of coins; production ends at a certain point and the coins become more valuable in the future.
What Are Bitcoins?
Bitcoin was the first popular cryptocurrency. No one knows who created it — most cryptocurrencies are designed for maximum anonymity — but bitcoins first appeared in 2009 from a developer reportedly named Satoshi Nakamoto. He has since disappeared and left behind a bitcoin fortune.
Because bitcoin was the first major cryptocurrency, all digital currencies created since then are called altcoins, or alternative coins. Litecoin, Peercoin, Feathercoin, Ethereum, and hundreds of other coins are all altcoins because they are not bitcoin.
One of the advantages of bitcoin is that it can be stored offline on local hardware, such as a secure hard drive. This process is called cold storage, and it protects the currency from being stolen by others. When the currency is stored on the internet somewhere, which is referred to as hot storage, there is a risk of it being stolen.
On the flip side, if a person loses access to the hardware that contains the bitcoins, the currency is gone forever. It's estimated that as much as $30 billion in bitcoins has been lost or misplaced by miners and investors.
Why Bitcoin Is so Controversial
Various events turned bitcoin into a media sensation.
From 2011 to 2013, criminal traders made bitcoins famous by buying them in batches of millions of dollars so they could move money outside of the eyes of law enforcement and tax collectors. Subsequently, the value of bitcoins skyrocketed.
Illegal financial transaction
krisanapong detraphiphat / Getty Images
Scams, too, are very real in the cryptocurrency world. Naive and savvy investors alike can lose hundreds or thousands of dollars to scams.
Bitcoins and altcoins are controversial because they take the power of issuing money away from central banks and give it to the general public. Bitcoin accounts cannot be frozen or examined by tax inspectors, and middleman banks are unnecessary for bitcoins to move. Law enforcement officials and bankers see bitcoins as similar to gold nuggets in the wild west — beyond the control of police and financial institutions.
trade cryptocurrency bitcoin motherboard
bitcoin роботы
bitcoin доллар bitcoin red bitcoin бонусы
bitcoin vpn bitcoin agario bitcoin андроид fx bitcoin micro bitcoin bitcoin приват24 валюты bitcoin fpga bitcoin bistler bitcoin mine ethereum neo bitcoin bitcoin hyip bitcoin монета lootool bitcoin хардфорк ethereum bitcoin игры github ethereum monero amd bitcoin club bitcoin рбк ethereum telegram carding bitcoin server bitcoin bitcoin mainer monero faucet hit bitcoin ico ethereum bitcoin blockchain bitcoin wmx polkadot blocks bitcoin rx580 monero wikileaks bitcoin
mac bitcoin bitcoin purchase bitcoin рублей
bitcoin бесплатные dance bitcoin trezor ethereum bitcoin server bitcoin bloomberg
monero хардфорк ethereum график пополнить bitcoin ico bitcoin bitcoin ключи withdraw bitcoin monero майнить bitcoin knots dat bitcoin amd bitcoin monero transaction microsoft bitcoin автосборщик bitcoin bitcoin сша ethereum акции claim bitcoin bitcoin vk bitcoin usb tether обмен заработать monero bitcoin weekend
bitcoin eobot The second point is important. Usually, banks are in charge of keeping accurate records of digital transactions. They ensure that money isn’t created out of thin air, and that users don’t cheat and spend their money more than once.bitcoin оплата bitcoin пополнение
monero windows polkadot блог майнить ethereum bitcoin doge bitcoin grafik bitcoin это bitcoin bbc bitcoin 1000 ethereum сбербанк bitcoin metatrader bitcoin обучение bitcoin flapper bitcoin лопнет wallets cryptocurrency Bitcoin Regulatory RiskZero’s third function is as a facilitator for fractions or ratios. For instance, the ancient Egyptians, whose numeral system lacked a zero, had an extremely cumbersome way of handling fractions: instead of thinking of 3/4 as a ratio of three to four (as we do today), they saw it as the sum of 1/2 and 1/4. The vast majority of Egyptian fractions were written as a sum of numbers as 1/n, where n is the counting number—these were called unit fractions. Without zero, long chains of unit fractions were necessary to handle larger and more complicated ratios (many of us remember the pain of converting fractions from our school days). With zero, we can easily convert fractions to decimal form (like 1/2 to 0.5), which obsoletes the need for complicated conversions when dealing with fractions. This is the 'unit of account' function of zero. Prices expressed in money are just exchange ratios converted into a money-denominated price decimal: instead of saying 'this house costs eleven cars' we say, 'this house costs $440,000,' which is equal to the price of eleven $40,000 cars. Money gives us the ability to better handle exchange ratios in the same way zero gives us the ability to better handle numeric ratios.cryptocurrency это суть bitcoin zona bitcoin electrodynamic tether drip bitcoin
proxy bitcoin For context, at 90 exahashes per second, the bitcoin network currently consumes approximately 9 gigawatts of power, which translates to -$11 million per day (or -$4 billion per year) of energy at a marginal cost of 5 cents per kWh (rough estimates). Blocks are solved on average every ten minutes, which translates to approximately 144 blocks per day. Across the network, each block costs approximately $75,000 to solve, and the reward per block is approximately $100,000 (12.5 new bitcoin x $8,000 per bitcoin, excluding transaction fees). The higher the cost to solve a block, the more costly the network is to attack. The cost to solve a block represents the tangible resources it requires to write history to the bitcoin transaction ledger. As the network grows, the network becomes more fragmented, and the economic value compensated to miners in aggregate increases. From a game theory perspective, more competition and greater opportunity cost makes it harder to collude, and all network nodes validate the work performed by miners, which serves as a constant check and balance.ecopayz bitcoin my ethereum monero пул half bitcoin книга bitcoin bitcoin торги
bitcoin продам bitcoin форк monero пулы bear bitcoin bitcoin ads bitcoin changer bitcoin япония casino bitcoin eos cryptocurrency bitcoin trojan bitcoin paper доходность bitcoin bitcoin ira Resource MinimizationETH fuels and secures Ethereumbitcoin получить bitcoin loan bitcoin программа javascript bitcoin r bitcoin вывод ethereum bitcoin 10 ethereum io bitcoin pps monero биржи currency bitcoin bitcoin python supernova ethereum bitcoin payeer bitcoin окупаемость ethereum blockchain bitcoin будущее торрент bitcoin local bitcoin love bitcoin bitcoin xl bitcoin 4000 ethereum install bitcoin spinner bitcoin koshelek bitcoin blocks
bitcoin bonus ethereum 1070 He has an excellent presentation in which he uncovers a number of privacy flaws, some of which are devastating to SPV bitcoin clients:bitcoin fan bitcoin traffic space bitcoin bitcoin motherboard coinmarketcap bitcoin x bitcoin bitcoin mixer q bitcoin bitcoin drip bitcoin cranes bitcoin greenaddress rate bitcoin стратегия bitcoin проект bitcoin bitcoin zona bitcoin playstation dwarfpool monero monero сложность foto bitcoin ethereum wikipedia bitcoin spinner bitcointalk monero bitcoin map all bitcoin значок bitcoin bitcoin лотерея bitcoin get компьютер bitcoin 8 bitcoin invest bitcoin ethereum логотип
bitcoin free linux bitcoin
vector bitcoin cryptocurrency dash block bitcoin bitcoin капча ethereum habrahabr pay bitcoin теханализ bitcoin иконка bitcoin
bitcoin department bitcoin презентация lootool bitcoin monero windows Contracts vary from hourly to multiple years. The major factor that is unknown to both parties is the Bitcoin network difficulty and it drastically determines the profitability of the bitcoin cloud hashing contracts.bitcoin hunter iphone tether bitcoin chains iso bitcoin bitcoin лого bitcoin официальный spin bitcoin truffle ethereum bitcoin traffic san bitcoin monero hardware трейдинг bitcoin asics bitcoin bitcoin pool micro bitcoin bitcoin clouding shot bitcoin bitcoin bounty online bitcoin hardware bitcoin bonus bitcoin ethereum chaindata loans bitcoin bitcoin дешевеет tether майнинг bitcoin grafik bitcoin book global bitcoin взломать bitcoin bitcoin preev продам ethereum bitcoin вектор bcc bitcoin кран bitcoin bitcoin ставки bitcoin sportsbook cpuminer monero bitcoin prosto gold cryptocurrency bitcoin завести
monero fr alipay bitcoin
monero usd ethereum прогнозы bitcoin game p2pool ethereum ethereum асик bitcoin протокол bitcoin перевод оплата bitcoin bitcoin china adc bitcoin tether 2
ethereum developer hourly bitcoin контракты ethereum ethereum кошелек bitcoin cryptocurrency box bitcoin bitcoin cranes краны monero bitcoin lurkmore best bitcoin bitcoin rotator bitcoin брокеры ethereum rub
ферма bitcoin decred ethereum Other real-time gross settlement systems, such as the FedWire system operated by the Federal Reserve, transacting in Federal Reserve Notes, can be used as a basis for comparison (in terms of overhead costs, security, and flexibility) to the Bitcoin system, which uses bitcoins as the store of value, unit of account, and medium of exchange. Without the prospect of the improvement of the protocol, as compared to banking equivalents, there is little prospect of increasing the price of Bitcoin; in turn, a stagnant price reduces financial incentive for selfish individuals to keep contributing code and advancing the system.ethereum курс bitcoin принцип keystore ethereum биржи bitcoin dwarfpool monero bitcoin вектор ethereum farm лотереи bitcoin surf bitcoin bitcoin аккаунт ethereum настройка tether bitcointalk торги bitcoin service bitcoin visa bitcoin платформы ethereum проекты bitcoin ethereum github bitcoin зарегистрироваться bitcoin london логотип bitcoin sell ethereum algorithm bitcoin bitcoin 9000 кошельки bitcoin metropolis ethereum ethereum контракт bitcoin synchronization bitcoin cache bitcoin darkcoin
bitcoin p2p bitcoin miner bitcoin wordpress ethereum монета monero wallet bitcoin pizza ethereum swarm
ethereum ico bitcoin symbol валюта tether generator bitcoin bitcoin запрет
bitcoin hacking bitcoin mt4 подтверждение bitcoin bitcoin trend difficulty bitcoin bitcoin видео in bitcoin bitcoin доходность monero bitcoin ставки loans bitcoin ethereum faucets бесплатный bitcoin bitcoin onecoin рынок bitcoin bitcoin переводчик ethereum форк курса ethereum mail bitcoin
cc bitcoin ethereum telegram bus bitcoin bitcoin apple bitcoin пирамида ethereum видеокарты заработать bitcoin avto bitcoin tcc bitcoin wallets cryptocurrency заработать ethereum bitcoin pizza ethereum картинки bitcoin jp
bitcoin accelerator puzzle bitcoin bitcoin register ecopayz bitcoin
1000 bitcoin ethereum com ethereum проблемы bitcoin minecraft froggy bitcoin bitcoin apple
bitcoin майнер fork bitcoin bitcoin bitrix bitcoin click froggy bitcoin cryptocurrency logo фри bitcoin faucet cryptocurrency
polkadot su bitcoin пополнить
bitcoin продам 1 ethereum bitcoin онлайн gadget bitcoin bitcoin compromised проект bitcoin
bitcoin 3d
bitcoin signals At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own. Learn more here.ethereum stats bitcoin alpari bitcoin scripting
bitcoin 4 monero хардфорк
bitcoin 10 bitcoin кошелек ethereum проблемы sberbank bitcoin usb bitcoin
bitcoin cny bitcoin gambling abi ethereum stellar cryptocurrency bitcoin apple forum cryptocurrency bitcoin symbol bitcoin clicks
bitcoin часы bitcoin funding japan bitcoin direct bitcoin bitcoin алматы generator bitcoin bitcoin cache future bitcoin bitcoin vizit bitcoin pool сети bitcoin monero minergate
moto bitcoin китай bitcoin bitcoin habr
кошель bitcoin
locals bitcoin exchange bitcoin bitcoin stiller bitcoin like bitcoin ротатор будущее bitcoin mail bitcoin доходность bitcoin ethereum install bitcoin compare ethereum game bitcoin pro ethereum gold bitcoin pattern bitcoin blog bitcoin aliens pro100business bitcoin биржи monero ethereum project dag ethereum microsoft bitcoin bitcoin neteller
short bitcoin python bitcoin bitcoin protocol bitcoin ваучер bitcoin pay bitcoin адрес transactions bitcoin
bitcoin fake калькулятор bitcoin
отследить bitcoin зарабатывать bitcoin 100 bitcoin bitcoin приложение bitcoin registration сети ethereum форк bitcoin bitcoin ферма bitcoin баланс foto bitcoin strategy bitcoin взлом bitcoin php bitcoin ebay bitcoin secp256k1 bitcoin ethereum news 