What is Bitcoin in simple words. What are bitcoins and cryptocurrency in simple terms?

Bitcoin problems are causing its price to fall immediately after a short-term rise. At the time of writing, the cryptocurrency rate was $8,658. Over the past twenty-four hours it has dropped by 3.15%.

There are problems

Search giant Google recently announced that it would ban all cryptocurrency-related advertisements. It is possible that this measure will affect Bitcoin trading and the entire industry as a whole. Let's look at the main problems that may arise due to Google's actions.

Decline in cryptocurrency trading volumes

The first effect will be that the number of people wanting to invest in the Bitcoin market or its peers will decrease. This is a problem. After all, if there are no ads on the world's most popular search engine, fewer will be able to see the trading opportunities available to them.

Companies whose business is based specifically on cryptocurrency (for example,) will face the problem of attracting new customers. This will lead to a drop in profits.

Cost reduction

Market participants undoubtedly noticed that Bitcoin and its peers lost a lot of value in the wake of the news, at least in the short term.

This asset class is known to be highly volatile, which is one of its main problems. The value of digital currencies is very sensitive to any events, both negative and positive.

A Google ban could harm the popularity of Bitcoin. The market may begin to sell off and reduce the price of virtual assets.

No problems

Despite the bad news received from the search engine, it is possible that Bitcoin and other coins will lose little or no damage in the long term.

Cryptocurrency has already become one of the important events of recent years. Therefore, it can be argued that Google will not be able to stop the current surge in interest.

The latest developments will likely impact companies offering cryptocurrency services and will not be an issue for Bitcoin or other digital currencies.

Recent research has also influenced the popularity of online exchanges. According to them, Bitcoin.de and Coinbase are the safest, while Bitstamp and Livecoin are the most susceptible to financial theft.

Reliability problem

The free password manager Dashlane examined accounts on 35 Bitcoin exchanges. The study was conducted among trading platforms that allow users to create accounts in browsers.

According to the data obtained, more than 70 percent of Bitcoin exchanges have customer accounts susceptible to financial theft due to insecure passwords.

The fact that most platforms allow their users to register such weak passwords speaks to the insecurity of accounts, says Dashlane CEO.

Forty-three percent of Bitcoin exchanges allow users to use passwords with seven or fewer characters, and 34% do not require alphanumeric passwords. This creates security problems.

Less than 50% of trading platforms provide clients with tools to assess the strength of secret codes during account creation.

Studies conducted among sites such as Apple, Facebook, etc., gave a failing score to only 36% of participants. And among Bitcoin exchanges, 71% did not pass the exam.

Do you think cryptocurrency can cope with the challenges it faces? Write about it in the comments to the article.

Many Internet users are wondering: what is Bitcoin (bitcoin, btc, btk)? In short, it is a decentralized (which means it cannot be counterfeited or banned) electronic currency, completely protected from wear and tear. In the first 2 years of its existence, the idea did not leave the boundaries of the World Wide Web itself. The population simply did not know about the currency or did not understand what Bitcoin was. But in a number of countries in South America and Japan it is already recognized as a means of payment. There, along with the state currency, you can use bitcoin.

Bitcoin what is it? What is Bitcoin? (+video)

What is Bitcoin in simple words? The first thing you need to know is that it is a virtual currency and it works on both computers and mobile devices. In addition, the Bitcoin currency does not have a central administrator or any control by people. As a result, this results in significant benefits for users.

The creation of Bitcoin was started in 2008 by a programmer under the pseudonym. The new currency came to world fame just 2 years later, demonstrating a steady upward trend. The name of the creator gave the name to the smallest particle (one ten-millionth part) - satoshi.

How do cryptocurrencies work (using Bitcoin as an example)?

So how does it work? To understand the principle of operation, it is best to compare it with an online bank, payment system or real bank. A transfer in traditional payment systems looks like this:

1. You send the bank a request “I want to transfer 5 rubles from account A to account B.”
2. The bank or server decides whether the payment can be processed and also charges a commission.
3. Money comes from your account to the one you specified.

This results in a large number of inconveniences for the user: a server malfunction, legal problems with the bank, or any other issues make both payments and, possibly, withdrawal of money from the account inaccessible. Now let’s see what Bitcoin is and how the system works.

The electronic currency bitcoin uses a special algorithm (blockchain), which evenly involves every computer working in the system in operations. Moreover, the devices themselves are not connected in any way geographically and can be located in different parts of the globe. Each device is also used to store information about current funds; everything is encrypted and duplicated many times.

Bitcoin payment algorithm

If we simplify and write it in the “bitcoin for dummies” style, then the sequence of events when sending a payment in cryptocurrency is as follows:

1. You create a request “I want to transfer 5 rubles from account A to account B.”
2. An algorithm decides which computer will process your transaction.
3. The information is “written in” and transferred to all devices in the system.
4. Bitcoins also go to B’s account.

How does Bitcoin work? Bitcoin what is it? All technical details (video)

How many are there?

Many people are interested in how many bitcoins there are in the world at the moment. Their approximate number is slightly more than 17.5 million (as of February 2019). The system provides for the creation of a new bitcoin by using a special device for computing operations and processing transaction data - . But it won’t be possible to “print” a lot of new currency in this way - the system sets a limit on the number of bitcoins created per day (3600 BTC).

There is a maximum allowable number of btc, upon reaching which mining (creation of new units of currency) will no longer be possible and it is 21 million. Using simple calculations from current indicators, it is easy to calculate that the increase in the number of virtual coins to the maximum will last for 150 years (approximately 2140), which means the questions “how many bitcoins are there in the world?” and “how many zeros does it have?” You can simply not ask yourself.

What is Bitcoin and what is its practical significance for the end consumer? There is no even theoretical possibility of producing such a quantity of cryptocurrency that this would lead to a fall in its price for a long time. A striking example: the US dollar has fallen more than 300 times over the past 100 years due to the emergence of more and more new money. At the same time, only one structure had control over their release. As a result, the investments and savings of millions of people could and could become worthless at any time. In fact, this statement works for every classical currency and payment system.

How is Bitcoin different from electronic and paper money?

There are a huge number of differences between cryptocurrency and regular (fiat) money. Therefore, it is difficult for many to understand why bitcoin is needed. Let's try to figure it out:

• The theoretical impossibility of inflation. Even the creators of the system will not be able to “print” more bitcoins. Their number is specified at the program code level. If previously it was possible to create new units of currency (mining), now its quantity has irrevocably stabilized.
• The absence of any intermediaries when carrying out transactions with Bitcoin: no server or other user can either accidentally or intentionally block the transfer or stop the operation of the system - it is not subject to outside influence.
• Decentralization means that the operation of the system is ensured by each computer connected to it separately. In fact, the virtual currency Bitcoin will exist as long as at least one device is working. And now there are tens of millions of them in the world and the number is growing exponentially.
• The absence of a central hub, administration and management means that no legislative or regional prohibitions on Bitcoin Internet money apply. When making transfers within the system, cryptocurrency is not subject to the jurisdiction of any state or individual.
• Very high performance. Even international transfers take up to several minutes, regardless of the time of day and your location. And the commission for one transaction is minimal. In this component, the electronic currency Bitcoin has no equal.

A few more differences

• Records of transfers are public and available to the public. You can track where your money went and where it came from. At the same time, anonymity remains at a high level.
• Easy registration: the Internet currency bitcoin does not require the disclosure of personal data. You don't need to go through complicated procedures to create one. The process takes a few minutes at most. The number of accounts is also unlimited.
• Division into ultra-small shares opens up completely new opportunities for trade and entrepreneurship that were previously unavailable. In most cases, there is no transfer fee at all or less than $0.01.
• No one can block your account under any circumstances. Once created, it will exist as long as the system itself operates.
• No one, not even the state, can take away the money in your wallet. If only you own the key to your account, then you have a real one hundred percent guarantee of the safety of your money. The digital currency bitcoin is completely safe.
• The number of transfers, the volume of bitcoins sent or received are simply not available.
• During all the searches in the system, we did not find almost a single critical bug; the client for work is constantly updated. The software is convenient even for those who do not know why bitcoins are needed.
• Soaring prices. No type of fiat money has increased by several thousand times in a decade. Compared to fiat, the Internet currency bitcoin, the rate of which is already over $3,600 apiece (February 2019), was able to easily increase demand and rise in price.

So, what are bitcoins and how to earn them in 2019. There are several ways to receive cryptocurrency:

1. On stock exchanges.

At the moment, there are many options that actually work and are usable:

The main part of the market (about 70%) is held by the btc-usd pair. Most of these services require authorization, which includes sending scanned documents for verification.

2. Exchange services for Bitcoin and other cryptocurrencies

• Telegram bot for Bitcoin
• Telegram for Bitcoin Cash
• Telegram for Ethereum
• Telegram for Litecoin
• Telegram for DASH
• Telegram bot for DOGE (Dogecoin)

They work on a principle completely similar to conventional exchange offices, charging a fixed percentage for the operation. Synchronize the rate several times a day with one of the exchanges listed above. Allows you to purchase btc using almost any traditional payment method.

3. Bitcoin -

Sites that give away a small portion of Bitcoin for free. There is no danger to the user in them - the service simply uses your computer for certain operations, such as mixing flows of funds. The amounts that can be received in this account are extremely small, but the process itself will allow you to answer questions like “Do you need the virtual currency bitcoin btc?”, “What is bitcoin and how does it work?” etc.

4. Buying second hand

On forums dedicated to bitcoins, you can find a large number of cryptocurrency owners in your city. It is important to carefully monitor the seller’s reputation and ask which services can promptly verify receipt of funds. This is not difficult even for those who do not know how to work with bitcoins.

A few years ago, the above-mentioned mining (generation of bitcoins) could have been included in the list. But now the popularity of cryptocurrency has reached too high a level. With a limit on the daily rate of created blocks, this makes earning even a meager amount of money in this way an almost impossible task.

Bitcoin cryptocurrency: how can you use it?

And yet, what to do with bitcoins? There are many options for both those who like to make money and investors, as well as those suitable for less risky users who do not know what bitcoins are and why they are needed:

1. Storage

The best answer to the question, what are Bitcoins for? If we analyze the graph of the behavior of the currency price against the dollar, then the unconditional maximum was in December 2017 - $20,000. Virtual money Bitcoin, the rate of which exceeds $3,600 per 1 BTC (February 2019), periodically breaks value records. In addition, all trends indicate that the demand for cryptocurrency will grow very quickly and within 2 years they will displace international payments from the market. Where is the best place to store bitcoins is a controversial question and will be discussed in one of the sections below.

Considering the limit on the amount of currency in the system (21 million), with increasing demand, electronic money Bitcoin will inevitably increase in price. Another thing is that the security requirements for your computer are increasing significantly. Because all transfers in the system cannot be canceled. In fact, it is precisely the original limitation that Bitcoin is secured with. There is basically no chance of your investments depreciating in the long term. It’s worth thinking about how to store them now.

2. Make international payments

Among freelancers and remote workers, paying with bitcoins has become commonplace. It's cheap, reliable and anonymous, which is what he's always been famous for. The operating principle of which is based on decentralization and powerful encryption. In addition, this is a very simple process: even those who have no idea what electronic money Bitcoin is can figure it out in two minutes.

3. Pay for services using Bitcoin

At the moment, btc can be used to pay with Dell, Microsoft and Amazon. Not to mention hundreds of smaller stores and services. In the countries of the European Union, South and North America, as well as in the Far East, you can easily pay for food, clothing and other small goods with them. Bitcoins are in great demand around the world. Even in Russia, Rostov-on-Don, a famous cafe began to accept them.

4. Gamble, make sports bets

Play gambling, make sports bets, use them for trading on stock exchanges, even if they simply do not exist in your country. Here everything is limited only by the imagination of the developers of various projects and the possibilities of cryptocurrency. After all, what is Bitcoin in simple words? The ability to spend money anonymously and quickly.

Disadvantages of Bitcoin

Although Bitcoin has many advantages, the currency also has many disadvantages and it is worth considering them during the dating process:

1. If a virus erases your Bitcoin wallet file (this applies to accounts that are located on local devices) or is able to track your password, your money will not be returned. In addition, this includes a fairly large amount of space taken up. The entire block of transactions (early 2019) already occupies more than 200 GB. This is a consequence of how cryptocurrency is structured. Secure synchronization (database update) will also take some time. As a result, this will affect ease of use.
2. If you figure out why Bitcoin is needed and decide to invest money, you may experience a drop in price due to lack of demand. The value of a cryptocurrency is determined by capitalization and demand (and only by them) - this is a consequence of how Bitcoin works.
3. Bitcoin virtual money does not support refunds in case of password theft or fraud. As a result, no one has the power or authority to reverse a Bitcoin transaction unless the person who took it back returns it to you.

Bottom line

Now we have dealt with the question of Bitcoin - what is it - an interesting alternative to money, which has a right to exist. Yes, the currency also has a number of disadvantages, but they are completely offset by a huge list of advantages and the ever-growing demand for cryptocurrencies. Over time, its price and importance in the world will only increase.

Now we understand what the essence of bitcoin is. Tell us your opinion about this digital currency. How long has she come to our world and what will her future be like? Let's share our experiences and help each other with this.

In print and electronic sources it is growing exponentially. Against this background, more and more people are becoming directly or indirectly familiar with this term. Bitcoin has long ceased to be a sphere of interest for “geeks”, but has become quite firmly established in the lives of ordinary people. And sooner or later you will have to deal with Bitcoin directly. We invite you to prepare for this meeting and get to know Bitcoin better through this guide for beginners.

What is Bitcoin and why is it needed?

Bitcoin (abbreviated BTC) is an electronic payment system in which virtual “money” (bitcoins) circulates. Do you have VISA or Mastercard plastic cards? Both Visa and MasterCard are also electronic payment systems. However, they use the currencies we are familiar with - dollars, euros, hryvnia, rubles, and all transactions undergo bank processing. Such currencies are called fiat. The Bitcoin system uses cryptocurrency - a purely digital currency that is not tied to any world bank or the economy of any country. It has its own cost (rate), which is formed against the background of demand.

Key features of Bitcoin:

The entire system is decentralized. This means that Bitcoin is not regulated by any bank, agency or government entity. All network participants are absolutely equal, regardless of nationality or other characteristics. For example, Visa and Mastercard have Gold, Platinum, Vip cards, systems like Webmoney or QIWI have user levels. There are restrictions on the size of transactions. And in Bitcoin, everyone is equal and there are no limits.

Pseudoanonymity. When transferring to BTC, participants do not reveal their identity. For transactions, an address (a hash of 27-34 characters) is used without disclosing other data about the recipient and sender. Think about transfers between cards or other electronic systems. Transactions often reveal the name of a person or the name of an organization.

Irreversibility. All operations in Bitcoin are irreversible. They cannot be canceled, stopped or blocked. Theoretically, a complete rollback of the system (blockchain) is possible. In practice, this is extremely difficult to implement.

Safety. It is impossible to hack a Bitcoin wallet. All data is stored in a special file that only you have access to. It is also unrealistic to “intercept” data during a transaction, as happens in the banking system. Bitcoin uses cryptographic records - encrypted data that guarantees confidentiality and security.

• Direct nature of operations. In Bitcoin, transfers are carried out directly between participants - the P2P (peer to peer) principle is used. The transaction occurs without the participation of a third party: bank, processing center, server. Therefore, no one except its participants can track a Bitcoin operation.

History of Bitcoin creation

The history of the creation of cryptocurrencies does not have a clear chronology. For decades, experts in the field of cryptography have been working to create a unique decentralized system, the work of which is based on mathematical calculations. Using the experience of their predecessors and their own developments, Hal Finney and Hal Finney created the world’s first cryptocurrency in 2008 – Bitcoin. Nakamoto received the main fame - he published a file with the Bitcoin protocol and briefly described the features of the new payment system. The smallest fractional part of the coin is named in his honor - 0.000 000 01 BTC.

Why was Bitcoin created? Part of the reasons for developments in the field of cryptocurrencies reveal their features: anonymity, decentralization, security, and general availability. Ideally, the Bitcoin ecosystem should guarantee fast transactions without the participation of a third party (bank, cash desk) with a high level of security.

An interesting point of view was expressed by the famous Russian entrepreneur Sergei Mavrodi back in 2013:

“All this hype about cryptocurrencies is due to their anonymity. People are tired of Big Brother watching their every move. Everyone is tired of this. And Bitcoin in this regard is a breath of fresh air.”

This quote answers the question why bitcoins are needed. Transaction privacy is the most important feature of cryptocurrencies.

How does Bitcoin work?

The entire Bitcoin ecosystem rests on . To put it complicatedly, blockchain is a continuous chain of blocks of all transactions. The block is closed after selecting a digital signature. After this, a new block can be formed. Now let's decipher this in simple words. Imagine that each transfer (transaction) in Bitcoin is recorded on a separate page. The sequence of pages forms a chapter of the book - a block.

To record a new page (conduct a new transaction), we need to “turn over” all previous pages and chapters. That is, each new transaction is carried out along the chain - with the processing of old blocks (turning pages and chapters). A new chapter of a book can only be started after the old one is finished. And all the chapters form a book, and the blocks form a blockchain. Pages and chapters cannot be torn out or altered. And access to the blockchain is open to all participants in the system.
That is, a blockchain is a large open database that stores encrypted information about all completed transactions.

Blockchain and its potential are one of the reasons for the constant growth of Bitcoin’s exchange rate relative to fiat currencies and a key feature of BTC. Here are some other differences between “virtual” Bitcoin and regular money:

Form. Bitcoin is an electronic currency that has no material appearance. There are physical “coins” with a QR code or coin-shaped drives that store BTC. However, they cannot be called money in the truest sense of the word. We can say that Bitcoin is a set of numbers generated by an algorithm. Not a paper note or a metal coin.

Price. The exchange rate of a fiat currency directly depends on the economic and political development of the country or confederation to which it is attached. In fact, the money of more than 100 countries around the world is tightly tied to the dollar. The price of Bitcoin is determined by demand and does not directly depend on economic processes (although it is indirectly related).

Emission. Theoretically, ordinary money has no emission ceiling. You can print as many of them as you like. BTC has its own ceiling built into the system - 21,000,000 coins (20,999,999, 9769). According to forecasts, this figure will be reached in the middle of the 22nd century.

• Direct transfers. Even if we are talking about an electronic version of ordinary money (card, wallet), the transactions are carried out with the participation of a third party. In Bitcoin, the transaction is carried out directly (P2P).

Objectively valuing BTC is not that easy. Certain features of Bitcoin can be attributed to both its advantages and disadvantages. Let's take such a characteristic as the irreversibility of operations. On the one hand, you will receive cryptocurrency in any case - no system failure will block the transaction. On the other hand, this feature of Bitcoin is exploited by scammers or representatives of the “black” market.

The main advantages include:

Anonymity - the other participant in the transaction will only know your Bitcoin address or QR code. Other data is not disclosed.

The decentralized nature of the system - all network participants are equal and independent.

Security – hacking of wallets, data substitution, and interception of transfers are impossible.

Globality - Bitcoin allows you to quickly carry out transactions between people from different countries and time zones.

• Mining – there is an independent method of mining BTC, which is considered by many as a means of earning money.

Often the advantages of Bitcoin include the speed of operations. It's not that simple. The transaction can last 10-20 minutes, and sometimes an hour. To complete it, you need 6 confirmations from other participants. They happen automatically. When network load is high, transfers slow down. Another disadvantage is the regulatory activities of the authorities of different countries in relation to cryptocurrencies. Formally, BTC creates the same conditions for all potential network participants. However, in some countries (Vietnam, India, Ecuador, and partly China) bans have been issued.

Other cons:

Unstable exchange rate - because of this, the potential of BTC as a payment option decreases;

• Fraud – Bitcoin itself is very secure. However, inexperienced people can fall for scams: fake exchangers, fraudulent investment projects, viruses.

Where to get Bitcoin

Bitcoin, like any other cryptocurrency, is mined through the use of the hardware power of computers, or rather processors and video cards. This process is called. If in 2009-2010 To mine bitcoins, you could use a regular computer, but now this requires powerful installations - . These farms combine dozens and sometimes hundreds of video cards or special ASIC-type processors. This equipment costs thousands of dollars and requires additional care and technical skills. This method of receiving BTC is not suitable for beginners. Firstly, there are a lot of costs involved. Secondly, there are too many nuances. And in some countries, mining is completely prohibited. There are other ways to acquire Bitcoin:

Exchangers. There are services online that exchange fiat currency for cryptocurrency. In the vastness of the RuNet, the AlfaCashier resource enjoys great authority. An absolutely safe and proven service offering cryptocurrency exchange services.

Cryptocurrency exchanges. Resources where cryptocurrency trading is conducted. Largest exchanges: , . Bitcoin rates on different sites may vary.

Bitcoin faucets. These are services that distribute cryptocurrency to visitors for free. To get a small amount of BTC, just fill out a captcha or do some other small thing. There are hundreds of them on the web. Read more about how to get started with Bitcoin faucets.

Trading platforms. You can also sell goods for Bitcoin. Where? Yes, at least on Amazon or Ebay. There is a specialized site in this area - Purse.io.

• Self-service terminals. You can also receive BTC through regular terminals. There are also specialized Bitcoin ATMs - they have a better exchange rate and more modern technology. So far they have not received wide distribution in the CIS.

Read more about how to buy Bitcoin in our large.

How to use Bitcoin

Okay, we know what Bitcoin is and how to get it. Now it remains to get acquainted with the storage tools for this cryptocurrency. These are wallets. Hardware wallets are the most reliable because they store your private keys securely, that is, offline and without access to the Internet. The most popular and accessible device is a wallet. It allows you to store Bitcoin and 1000 other different types of cryptocurrencies and tokens.

In order to start using Bitcoin, you just need to set up and top up your wallet in accordance with the instructions.

What can you buy with Bitcoin?

Bitcoin is a payment system. Accordingly, purchases are made with its help. In the early years of cryptocurrency, all transactions were conducted unofficially. Buyers and sellers communicated in chats (mIRC, Miranda), social networks, and forums. It was on the forum that the most famous purchase of goods for Bitcoin took place. It is considered the first purchase of anything using cryptocurrency.

On May 18, 2010, a user with the nickname laszlo created a topic on the BitcoinTalk forum with the title “Pizza for bitcoins?” (Pizza for bitcoins?). In it, he asked who could order him two pizzas for 10,000 BTC. At the time it was the equivalent of $30. An English user agreed to the offer and ordered laszlo pizza. This is how the first and most famous purchase using BTC was made.

Not much time has passed since then, and BTC as a payment option has developed to a global scale. In the summer of 2017, it became known that 260,000 retail stores in Japan would begin accepting BTC. This is an important step towards the globalization of BTC payments. Read where to spend bitcoins in the world.

Every month there is news that a coffee shop, bar or restaurant is opening somewhere in the world that supports payments in cryptocurrencies. In some countries, taxi drivers use Bitcoin. The Coinmap allows you to find stores and services that accept Bitcoin near you. To understand the payment capabilities of Bitcoin, we have compiled a table of popular companies that support the cryptocurrency.

BTC is suitable for buying food, a car, an apartment, booking a plane ticket or booking hotels. Moreover, some universities accept tuition payments in Bitcoin. In the US, supporters of the Republican Party can donate money for its development in BTC. Cryptocurrency has even reached outer space. It is used by Virgin Galactic, a company working in the field of space tourism.

Today all network users know about cryptocurrencies that can be used to pay on the Internet, and if you have not yet learned about cryptocurrency, we have it. And although at the moment there are already more than a dozen different electronic currencies, an express analysis of which you can see at the link, yet the palm of leadership among virtual money is confidently held by the very first cryptocurrency - bitcoin. In 2009, when Bitcoin appeared, the cost of one virtual coin was $1, and now its current value is .

What does Bitcoin look like?

Since Bitcoin is a virtual currency, it does not look like traditional paper money and coins, but like an electronic file. Each monetary unit is a numerical function that satisfies the conditions specified in the original system code. Therefore, to understand what Bitcoin is, it is enough to see its code written in the Wallet.dat file.

To understand in detail what the essence of Bitcoin currency units is, you need to understand the processes of hashing and cryptography. But today, beginners do not need to learn these complex concepts, since all processes are carried out by software, and in order to earn and use Bitcoins, it is not necessary to delve so deeply into programming.

It is enough for network users to know that Bitcoin, which can be used to pay on the network, is the sum of the source code (hash function) - the so-called Bitcoin address or public key, which can be transferred to another user. This hash amount is calculated automatically from the original key of the currency, and this process does not work in the opposite direction. Therefore, any participant in the Bitcoin system can publicly announce his public keys, but until he himself transfers them to another user, no one will be able to calculate their source code, and therefore gain access to his cyber coins.

Bitcoin coins

Despite the fact that Bitcoin is a cyber currency, it would still be a mistake to say that this money is only available in digital form. The fact is that there are already quite tangible Bitcoin coins made of metal. These coins are issued by both individuals and companies with their own Bitcoin wallets.

The process of issuing such coins is as follows:

1. A coin of original design is cast from any metal
2. The denomination is applied to one side of the coin - 0.1 btc, 0.5 btc, 1 btc, 10 btc, etc.
3. Then, for each coin, a unique Bitcoin address is generated, which is applied to it and covered with a hologram
4. The first 8 characters of the public key are written on top of the hologram so that the buyer of the coin can verify its authenticity.

Bitcoin metal coins are simply carriers of unique Bitcoin addresses and in fact have no advantages over Bitcoin in electronic form.

Issue of new bitcoins

One of the main differences between Bitcoin and other financial systems is decentralization. This means that the system has neither an owner, nor administrators, nor centralized control. The owners of Bitcoin are all participants in the system, and each network user can theoretically issue this currency.

Emission, or more precisely, mining of Bitcoin. In order to generate a new block of bitcoins containing 25 coins, complex calculations are performed using special software to find the source code that would fit the conditions of the system. In simple terms, we can say that the codes of new Bitcoins are simply selected by enumerating random numbers and comparing them with the initial conditions.

Bitcoin mining on a computer and ASIC: profitability of “farming” activities in 2017-2018

At the very beginning of the system’s existence, the process of how bitcoins were created (mining) was quite simple and fast, and even users with medium-power PCs could mine new blocks. But the more Bitcoin is mined, the more difficult it becomes to find new source keys.

To find a suitable hash function today requires very large computing power.

Therefore, people involved in the emission (mining) of Bitcoin equip mining farms, which use specialized powerful equipment, which is intended for the sole purpose of generating new Bitcoin blocks.

How to mine bitcoins in 2018: in a pool or on your own?

Blockchain technology

The entire Bitcoin system works using blockchain technology. This means that absolutely all transactions made with each Bitcoin block are entered into an open database, and every user of the system can track them. All blocks in the blockchain are interconnected in a continuous chain, and it is impossible to make changes to blocks already recorded in the database. Database registers are stored not in one place, but on thousands of user computers that are participants in the system. The register is constantly automatically updated and supplemented with data on new mined Bitcoin blocks and completed transactions.

At first glance, such openness and transparency of all transactions provides enormous opportunities for fraud, but in fact, everything is exactly the opposite.

Since the database is decentralized and is located on hundreds of thousands of computers at once, in order to hack it, you need to immediately have access to at least half of all PCs of system users, which is impossible in principle. And that is why it is impossible to spend the same Bitcoin twice - a record of the transaction will instantly appear in the registry, and the user will no longer be able to reuse the same Bitcoin address.

Advantages of Bitcoin cryptocurrency

The popularity of the Bitcoin cryptocurrency is due to a number of advantages of this cyber money over bank non-cash payments. And the most important “advantages” of bitcoins are the following:

• No transaction fees
• Complete anonymity of both parties to the transaction
• A stable and steadily growing rate of cyber currency, due to the fact that Bitcoin is not tied to the dollar, the euro, or any other currency
• Transparency of transactions and the ability to track all transfers of each bitcoin
• High transaction speed
• Inability for the payer to revoke the transaction after confirmation of the transfer
• Very high security of the system and its almost complete invulnerability to hacker attacks.

It was the beginning of the formation of an independent financial system. Bitcoin is not controlled by states or banks, and its security prevents the creation of duplicates. The issuance of a currency based on mathematical calculations began in 2009 and made huge changes to the electronic payment system. Almost all major companies accept Bitcoin for payment, among which you can see PayPal, Microsoft or Dell. This cryptocurrency shows enormous growth dynamics and attracts attention with its capabilities.

Explanation: “in simple language for dummies”

Bitcoin is a digital currency that does not exist in a physical form. cannot be touched or placed in a safe. There are only digital ledgers that keep records of every transaction. This system is somewhat similar to non-cash payment using a bank card or transfer. Unlike traditional financial transactions, Bitcoin transactions are not stored locally, but are located on computers that are part of the Bitcoin network. All registries are cryptographically protected and any interference in this network is impossible.

Where did this cryptocurrency come from and what is it backed by?

The author of Bitcoin is Satoshi Nakamoto, it is his model of mathematical calculations that is implemented in the new payment system. The desire to create a decentralized monetary unit became the main idea in the concept of cryptocurrency. In this payment model there are no intermediaries, and all transactions are absolutely transparent.

The main criteria of the Bitcoin system are aimed at convenience and security when making financial transactions.

• The Bitcoin wallet is not tied to the user’s identity.
• The price of cryptocurrency is determined by demand and is not controlled from outside.
• Completed transactions cannot be canceled or suspended.
• Digital transfers are carried out directly, eliminating intermediaries.
• Complete anonymity of all transactions performed on the Bitcoin network.
• The release of bitcoins is limited at the program level.

Bitcoin is significantly different from paper money and cryptocurrency cannot be issued when necessary. Bitcoin mining can be compared to precious metals, which also have a limited resource. The number of Bitcoins has a limit of 21 million, after which further emission will become impossible. The value of a currency is usually backed by guarantees from the issuing state. Bitcoin is a decentralized monetary unit that is focused only on market demand. The release of new blocks of cryptocurrency requires increasingly complex mining, which increases the cost of Bitcoin.

Who needs cryptocurrency: Bitcoin and why?

The development of electronic payment systems makes it possible to make purchases online regardless of the type of currency. Banking operations for a regular transfer take a lot of time, and commission rates or intermediary services will require certain costs. The use of Bitcoin is free of these disadvantages, which allows you to use this money to pay for any services. The absence of commission will be very noticeable when making large purchases and transactions in cryptocurrency will allow you to avoid unnecessary expenses.

In most European countries, America or Japan, you can make almost any purchase using Bitcoin. It will not be difficult to pay for the purchase of housing or a simple meal using cryptocurrency, regardless of the official currency of the country. But Bitcoin is of greatest interest as an opportunity to make money on the growing exchange rate. Independence from government influence makes Bitcoin attractive for storing deposits. Natural disasters or an economic crisis will not have a critical impact on the cryptocurrency rate.

The absence of inflation guarantees increased demand for Bitcoin. The mining process only becomes more complicated with each transaction, which prevents the value of the virtual currency from decreasing. In the event of a failure or suspicion of the owner of the funds, a bank or payment system may freeze accounts or block transactions. When using Bitcoin, a similar situation is impossible, which makes this cryptocurrency the most convenient for transfers and trading operations on the network. Each transaction is highly secure and the recipient of funds cannot find out the identity of the sender without his knowledge.

How to earn (mine) bitcoins?

One of the features of the Bitcoin network is the possibility. This process is called and allows you to generate the appearance of new bitcoins. The issuance of cryptocurrency requires complex mathematical calculations, for which powerful computer technology is used. The tasks of mining include calculating hash blocks, and the faster the computer performs the calculations, the greater the profit will be. The reward for creating a new block today is 12.5 bitcoins and is divided among all participants in the calculations.

Cloud mining is a simpler system for increasing cryptocurrency. In this case, there is no need for expensive equipment and energy costs. With this mining method, only a rental fee is required, and all hashing operations are performed on a remote server.

With the advent of new blocks, mining becomes more difficult, and today mining will require enormous computing power. Most of the cryptocurrency mining farms are concentrated in China, and this process has been taken to an industrial level.

Today, independent Bitcoin mining is no longer profitable and joining a pool remains practically the only opportunity to earn money.

A pool is a group of miners pooling their computing resources to optimize Bitcoin mining. When entering such a group, it will be easier to carry out computational operations, which will allow.

Bitcoins obtained through mining are distributed in proportion to the investment of each participant, and this scheme of work is the most effective.

Where can I quickly get bitcoins?

The rapid growth in the value of Bitcoin and the high level of capitalization of the cryptocurrency market make it not the best method of earning money. It is much easier to buy Bitcoin and earn income through its further sale. Before purchasing cryptocurrency, you should take care of creating a wallet. Such applications exist both for Android or iOS, and for the computer. You can also choose an online wallet, the main thing is to ensure that it is protected from hacking and that passwords are securely stored. The process of purchasing Bitcoin can be carried out using an exchange or using the services of an exchanger.

Bitcoin exchanges are the safest method for purchasing digital currency. To register, you will need to create your account, go through the verification procedure and provide payment details.

Such a purchase of cryptocurrency is beneficial due to minimal markups for transferring funds, but will require registration.

The most famous exchanges are Poloniex, Bittrex and Binance.

Their list is constantly expanding due to the increase in the cryptocurrency market. Due to the complexity of registration, this method is not suitable for everyone, and there are faster ways to purchase digital currency.

Bitcoin exchangers allow you to purchase cryptocurrency in real time. The principle of operation of such platforms is quite simple and consists in generating income from the difference in the exchange rate. Buying Bitcoin from an exchanger will take a minimum of time, but its cost will be higher than when working with an exchange. Exchange rate fluctuations in the exchanger can be up to 20%, while the exchange will not take more than 2-5%. To get started with Bitcoin, you can choose any acquisition method and there are many services for choosing the most profitable rate.