Yesterday, I finally dove into the currency of bitcoins. Bitcoins, or BTC, are an electronic currency based on an open-source cryptographic protocol that isn’t part of any central authority.
Since their use is entirely digital, all transactions are processed through a computer or smartphone and are verified by servers called bitcoin miners that authorize the transaction by confirming that both parties have the required capabilities for the transaction. This currency is peer-to-peer, so it isn’t monitored or routed by any banking company and is used strictly from one person to another.
There are a finite amount of bitcoins produced every year, and every four years, the amount found is halved until 2140 when the amount will be rounded down to zero. Then, the amount of BTCs in the world will stop at 21 million. Each BTC is calculated to the 8th decimal place so a single BTC can be broken down even further.
Currently, bitcoins are accepted by many venders and merchants globally and it’s becoming more globally accepted as a form of currency. You would have to bring a laptop or smartphone with you, which would allow you to create transactions with vendors or merchants who accept the currency. There are no real overhead fees; however, because the value of bitcoins varies widely, it is considered a high risk asset.
How do you obtain bitcoins, you ask? Well, you can start accepting them in exchange for services or product, but the main way to obtain them is via mining. Essentially you use your computer and some open-source software which will then crunch through the internet solving cryptographic problems, seeking specific blocks which contain bitcoins.
It is pretty hardware intensive and there are computers out there specifically designed to do this, and only this. The faster your machine can get through the sequences, the higher the probability that you will find a block containing a batch of bitcoins. They are found in batches of 25 or 50, and singly, each bitcoin is worth roughly around $109 USD, though the value rises and drops quickly.
Currently, I have a setup with my PC at home that is currently mining for bitcoins in a pool with other machines. A pool is a set up where multiple machines will tackle strings of cryptographic information together, and the payout depends on how much work your machine puts in (or is capable of). It’s a calculation to it that I haven’t fully understood because my ability in math is severely limited!
I can’t begin to describe the entire process for bitcoin mining and or use, but with its growing popularity and the fact that you can have your computer make the currency for you while you’re out is actually a pretty cool feature. I’m not saying that I’m planning on investing a lot of hardware and time into this currency, but I like having a few bitcoins on hand in the event that it becomes a more widely accepted form of payment.