BitCoin: First Decentralized Digital Currency
You’ve probably noticed people talking and tweeting endlessly about “Bitcoin” lately, not in India but in America. So I thought why not give a brief info on BitCoins to our Indian Readers, who knows when they come in India.
What is Bitcoin?
Bitcoin is a decentralized, anonymous, digital-only currency that’s lately gotten a lot of public attention. But this isn’t some brand new invention — Bitcoin was originally developed in 2008.
How did this all start?
In 2008, someone using the pseudonym “Satoshi Nakamoto” published a paper describing how Bitcoins could work. Just one year later, they started being traded and mined
Where do Bitcoins come from?
Sure, you can buy Bitcoins with money. But you can also play prospector and “mine” them as well.
You do this by using your computer to hunt for 64-digit numbers. By having your computer repeatedly solve puzzles, you’re competing with other miners to generate the number that the Bitcoin network is looking for. If your computer generates it, you receive 25 Bitcoins.
The Bitcoin system is decentralized and programmed to generate a fixed number of Bitcoins per unit of computing time. Currently, it’s set at 25 Bitcoins for every 10-minute block. In 2140, the total number of Bitcoins in circulation will be capped at 21 million. In other words, the Bitcoin system is self-sustaining, coded to prevent inflation, and encrypted to prevent anyone from disrupting its code.
Here’s a video explaining full on how you can get started mining Bitcoins.
How much are they worth?
When first introduced, they weren’t worth much at all. A single U.S. dollar could buy you 1,309.03 Bitcoins.
That’s hardly the case now, though — at the time of writing, one Bitcoin is worth $200 (Rs.10,000). You can instantly see a Bitcoin’s current value over at Preev.com.
Can I get real cash for my Bitcoins?
Absolutely. You only need to get linked up with a Bitcoin exchange. The most popular one is called Mt.Gox. It currently only takes new members based on an application, but several others are out there. These are your go-to destinations to buy Bitcoins from other people or to turn your digital Bitcoins into real, analog money.
How/why are they anonymous?
Bitcoins are anonymous because they’re built upon a decentralized system. Bitcoins exist entirely on their own because there’s no central infrastructure to shut down.
The anonymity might be an asset to someone looking to buy something they don’t want their name attached to. You’re “identified” by nothing more than your Bitcoin wallet address — a string of randomized letters and numbers. There are absolutely no identifying characteristics beyond that.
Why should you care?
Bitcoin represents a way to transfer money completely anonymously and at no cost.
And since it’s an arbitrary currency with no nationality attached to it, you’re free to exchange it with anyone in the world.
Is this even legal?
The short answer: Yes.
Bitcoins aren’t physical artifacts used to represent value the same way that dollar bills and coins are. The federal government is not currently worried about Bitcoin because it’s not “tender,” i.e., coins or bills that look like they’re manufactured by the government.