One of the most talked-about and buzzworthy topics in technology today is the concept of bitcoins. The simple explanation is that bitcoins are computer codes that are programmed into a transaction system that allows instant transfer of one kind or another between two parties. This transaction is processed without needing a third party to act as an intermediary like you would with conventional money transfer systems. There are some basic similarities between conventional money and bitcoins though. Below are a few examples.
No Physical Existence
The major difference between conventional money and bitcoins is that, unlike conventional banks, bitcoins cannot be printed. Instead, the nature of the coding that underlies the transactions that happen on the bitcoin exchange makes it impossible for any physical asset to be duplicated, hacked into, or misused by a third party. This also makes it impossible for a government to freeze funds in the event of an emergency. While there have been concerns expressed by officials in the US and elsewhere about the legality of the use of bitcoins, it still has not been outlawed as of this writing. People like this free app for investing and trading.
No Intrinsic value
Unlike traditional digital currencies like eucalyptus or other “virtual” currencies, bitcoins have no intrinsic value. What a buyer receives in exchange for one unit of bitcoins is equivalent to what they could previously get from a centralized issuer of that specific amount of digital currency. This value is based on the total number of units that have been issued. No matter how many millions of bitcoins there are floating around, their value is always going up. Therefore, the supply is never finite.
Decentralized Ledger System
Another difference between the conventional banking system and the bitcoin model is that most people will not be able to participate in the decentralized ledger system of the bitcoin. Transactions on the bitcoin are held off-blockchain by a group of software developers who monitor and regulate the activity that occurs on the public ledger. While anyone can view the public ledger, there are certain aspects of it that are only accessible to a select group of users and groups of institutions.
Consequently, those who want to make regular updates to the ledger will have to work with an organization such as the bitcoin protocol developers to accomplish these changes. This also creates a system of checks and balances that is not available on the traditional public ledgers.
There are two major differences between the public ledger that bitcoins function upon and that are not readily apparent. The first is that all transactions are recorded in the bitcoin protocol ledger and are not actually recorded in the physical world. Transactions are cryptographically signed and are therefore protected by complicated mathematical algorithms. Secondly, all activities on the bitcoin are actually governed by a system of decentralization. Miners participate in a self-organizing process whereby they agree to work together in order to increase the speed at which they mine new blocks of bitcoins.
In order to mine bitcoins, you must have specialized hardware which is referred to as a ” miner”. Unlike a typical computer where you would use a CPU or an equivalent application that would be programmed to mine those specific coins automatically when the set amount of coins were released, miners must instead configure their software in a manner that allows them to identify particular coins and then begin to mine them.
To do this, miners must download and install specific bitcoin software which assists in the mining process. Once this software is installed, it continuously runs twenty-four hours a day, seven days a week, and anywhere in between to assist in the mining process.
The main motivation for initiating the creation of the bitcoin concept was the fact that the monetary unit that was being used at the time, the United States dollar, was not convertible into any other type of currency. One bitcoin can only be purchased at a rate of one bitcoin per one thousand nine hundred and forty-two dollars at the time of this writing. Even after this has been adjusted, there is still no certainty as to what the excha exchange rate will look like because the value of the virtual currency is always fluctuating.
The only reason why someone would ever sell off a single bitcoin is to take advantage of the rising value of the currency because it was unable to be bought by the general public due to the fact that the US government-controlled the financial supply of the currency.
Nakamoto’s original intent with the creation of the bitcoin network was to make it easier for people to test out the system before it was made available to the general public. The testing phase of the system occurred for almost a year before Nakamoto introduced the software to the public in July of 2008.
At the start, the network was known as the bitcoin test net and was comprised of approximately two hundred and fifty users. Shortly after the release of the software to the public, approximately one hundred and fifty people began testing the system in order to contribute to the development of the project. In July of 2021, around one hundred and fifty people mined the bitcoin network.