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.
up bitcoin wiki ethereum
wallets cryptocurrency
bitcoin yandex блок bitcoin
bitcointalk monero bitcoin фирмы bitcoin ethereum сбербанк ethereum bitcoin банкомат armory bitcoin vip bitcoin bitcoin счет bitcoin ticker torrent bitcoin bitcoin торговля space bitcoin bitcoin автосерфинг ethereum torrent metatrader bitcoin home bitcoin bitcoin roll card bitcoin asics bitcoin bitcoin получить bitcoin de monero новости panda bitcoin ethereum gold bitcoinwisdom ethereum reddit ethereum titan bitcoin
bitcoin xl адрес bitcoin
сша bitcoin up bitcoin casinos bitcoin up bitcoin
bitcoin metal bitcoin playstation donate bitcoin
карты bitcoin accepts bitcoin bitcoin форум bitcoin москва
genesis bitcoin invest bitcoin ethereum zcash wikipedia ethereum nubits cryptocurrency курсы bitcoin ethereum перевод
сколько bitcoin картинка bitcoin bitcoin golden ad bitcoin bitcoin suisse
основатель ethereum bitcoin bux ethereum эфириум
pizza bitcoin bitcoin koshelek bitcoin зарабатывать ethereum icon Fool me once shame on you. Fool me twice, shame on me, the saying goes. It all comes back to the breakdown of the monetary system and the moral hazard introduced by a financial system that spawned as a result of misaligned monetary incentives. There is no mistaking it; the instability in the broader economic system is a function of the monetary system, and as more of these episodes continue to play out, more and more people will continue to seek a better, more sustainable path forward. Now with bitcoin increasingly at center stage, there is a market mechanism that will de-financialize and heal the economic system. The process of definancialization will occur as wealth stored in financial assets is converted into bitcoin and as each market participant increasingly expresses a preference for holding a more reliable form of money over risk assets. Definancialization will principally be observed through growing bitcoin adoption, the appreciation of bitcoin relative to every other asset and the deleveraging of the financial system as a whole. Almost everything will lose purchasing power in bitcoin-denominated terms as bitcoin becomes adopted globally as a monetary standard. Most immediately, bitcoin will gain share from financial assets, which have acted as near stores of value; it is only logical that the assets which have long served as monetary substitutes will increasingly be converted to bitcoin. As part of this process, the financial system will shrink in size relative to the purchasing power of the bitcoin network. The existence of bitcoin as a more sound monetary standard will not only cause a rotation out of financial assets, but bitcoin will also impair future demand for the same type of assets. Why purchase near-zero yielding sovereign debt, illiquid corporate bonds or equity-risk premium when you can own the scarcest asset (and form of money) that has ever existed?bitcoin биржи
Now that we’ve covered the basics of transaction execution, let’s look at some of the differences between contract-creating transactions and message calls.bitcoin основы кредит bitcoin bitcoin транзакции принимаем bitcoin the ethereum monero faucet bitcoin банкомат ethereum rig dogecoin bitcoin bitcoin redex homestead ethereum bitcoin 10 ropsten ethereum
bitcoin ne кошелька ethereum wallet cryptocurrency tether программа This value is reflexive: people will believe in a store of value if they expect others to believe in itbitcoin unlimited tether chvrches bitcoin safe bistler bitcoin okpay bitcoin рейтинг bitcoin
bitcoin attack konvert bitcoin ethereum упал bitcoin логотип bitcoin казахстан php bitcoin ssl bitcoin bitcoin софт bitcoin uk email bitcoin bitcoin кредит bcc bitcoin bitcoin 0 робот bitcoin bitcoin debian
tether mining tether обзор kurs bitcoin bitcoin protocol bitcoin coinwarz проекты bitcoin
ethereum бесплатно ethereum rig особенности ethereum bitcoin protocol the ethereum
tokens ethereum vpn bitcoin протокол bitcoin bitcoin grant bitcoin мавроди bitcoin доходность bitcoin hacker bitcoin login bitcoin капитализация How to trade litecoinbitcoin journal testnet ethereum bitcoin nasdaq market bitcoin kraken bitcoin
miner bitcoin
lurkmore bitcoin Stellar was founded by Jed McCaleb, a founding member of Ripple Labs and developer of the Ripple protocol. He eventually left his role with Ripple and went on to co-found the Stellar Development Foundation. Stellar Lumens have a market capitalization of $6.1 billion and are valued at $0.27 as of January 2021.bitcoin pdf ethereum кран byzantium ethereum bitcoin metal
bitcoin easy nicehash bitcoin planet bitcoin bitcoin safe bitcoin зарегистрировать е bitcoin poloniex ethereum bitcoin anonymous
raiden ethereum брокеры bitcoin bitcoin trinity обмен ethereum ccminer monero lazy bitcoin ethereum клиент bitcoin dynamics
bitcoin торговать python bitcoin аккаунт bitcoin bitcoin 15 торрент bitcoin сбор bitcoin ethereum web3 bitcoin автоматически bitcoin login tether скачать trezor bitcoin сложность monero bitcoin аккаунт бесплатные bitcoin акции bitcoin сервисы bitcoin config bitcoin
accelerator bitcoin
bitcoin sberbank ethereum rig доходность ethereum bitcoin вложения trade cryptocurrency bitcoin приложения инструкция bitcoin
bitcoin loans bitcoin пополнить lazy bitcoin символ bitcoin putin bitcoin carding bitcoin 33 bitcoin Its ability to perform more transactions per second - scalability.ethereum телеграмм андроид bitcoin bitcoin тинькофф vk bitcoin bitcoinwisdom ethereum bitcoin de bitcoin отзывы bitcoin minergate bitcoin книга bitcoin film вывод monero
dogecoin bitcoin казино ethereum ethereum news bitcoin комиссия rigname ethereum bitcoin create mining bitcoin top tether bitcoin kraken bitcoin money txid bitcoin bitcoin 4000 metropolis ethereum шахта bitcoin okpay bitcoin blocks bitcoin
bitcoin 123 monero обмен bitcoin lurk bitcoin рублях bitcoin игры
monero ico котировки ethereum
депозит bitcoin ethereum core raspberry bitcoin r bitcoin fork bitcoin keystore ethereum my ethereum покупка ethereum
надежность bitcoin bitcoin lucky bitcoin сбор взлом bitcoin tether пополнить the ethereum reddit bitcoin js bitcoin source bitcoin bitcoin conference верификация tether котировка bitcoin обменник bitcoin биржи ethereum bitcoin лохотрон bitcoin fake bitcoin evolution bitcoin redex ethereum стоимость bitcoin instant bitcoin сети ethereum contracts ethereum кошельки bitcoin bloomberg jpmorgan bitcoin bitcoin symbol bitcoin коллектор Bitcoins have no representational similarity whatsoever to US dollars.