The easy answers to the hard questions! WHAT IS BITCOIN?

The easy answers to the hard questions! WHAT IS BITCOIN? Bitcoin is virtual cash that can be used among friends or between customers and merchants – anywhere ordinary money is spent or exchanged. It exists as digital information rather than physical money: Each bitcoin is a string of mathematically generated numbers. This sequence can be printed on a piece of paper or embedded in a coin, as a physical reminder, but it is the number, not the object (as in other currency), that has value

HOW DOES IT WORK? One simple explanation is that there is software for various access points, whether they are a computer or a smart phone. The idea is to transfer digital information between two digital wallets.

After downloading the requisite phone application, users follow the app's instructions. Typically, a merchant has a QR code that can be scanned with a smart phone camera. This is his public address. The user sends Bitcoin, or BTC, using the app instructions. The user's digital wallet then will show fewer BTC and, voilà, the merchant's will show more.

IN THE BEGINNING… Bitcoin emerged in 2008 as the mathematical project of Satoshi Nakamoto, a pseudonym for... ? Essentially, it is a software code set up to generate Bitcoin. A process known as mining actually propagates the new numbers, and when the numbers are used, they are permanently stored in what is called the blockchain. If that sounds confusing, don’t worry. It is.

HOW DO YOU KNOW… The most common question is, “But how do you know how much it’s worth?” It’s like any other marketplace… Where there is a demand, or other extenuating circumstance prices are typically high. Take a look at cigarettes, in New York you would be lucky to get a pack of premium brand smokes for $15, but here in Texas they are only around $7 and in West Virginia, less than $5.00 With no governing authority or central bank in the way there are no set prices or artificial inflations by the random injection of currency into the system. This also means no debilitating fixed exchange fees or excessively high transaction fees.

“But it’s just a computer program, so someone writes a virus and wipes it all out!” Yes and no. While you can certainly be the victim of theft when it comes to Bitcoin, just like cash, It has never happened by hacking the core code. And believe me, they have tried! At this point in time the only real way it could happen is through what is called a 51% attack.

In the most basic of terms a 51% attack would mean someone amasses enough hashing power to comprise 51% or more of the total global hashing power. At that point they could attempt to inject erroneous calculations into the system to “magically” make Bitcoin appear. BUT, all transactions have to be validated by the network, so while this might work for a few seconds, ultimately the foreign coins would be rejected very quickly.

SO HOW DO YOU MAKE BITCOINS The original protocol calls for a top limit of 21 million bitcoins – and the first code allows new bitcoins to be created, or mined, at a rate that halves every four years until 21 million is reached. Miners use computing power to solve mathematical problems and are rewarded with bitcoins as they do. A hash or hash rate is a measurement of that computational power. While 21 million coins doesn’t seem like a lot each coin can be divided To the 8 th decimal meaning you can pay someone with BTC Which allows for a currency well into the trillions which can easily support a global economy.

DO THE RESEARCH Don’t take my word for it. Do a Google search on your own for news related to Bitcoin. You’ll find all you need to know and more. It has recently hit more than $ per coin and was endorsed by the U.S. Congress as a valid form of exchange; by China and retailers around the world! Even Richard Branson will be accepting them for a ride into space!