Bitcoins – Basic Surface level exploration
Bitcoins – the currency which has been creating stories and waves across the land and sea. And why not? It has been ages since any revolutionary theory came in financial world. In this article we would go bit deeper and see what it is all about.
In this field there is a thing called cryptocurrency. It is like normal currency with two major differences – it is all digital and independent of any central authority. So, no government regulated agency has direct or indirect intervention in this. Don’t worry, it is all legal!
Next, Bitcoins. Well, Bit+coins. Bit is a normal usage word taken from computer lingo (Bits and Bytes). Bitcoins were the first cryptocurrency which came into existence in year 2009 and since then the craze for using to become rich has gone exponential. As of year 2016, the total value of money supply in Bitcoins has crossed $2.1 Billion.
Method of working? These currencies work on a system of peer-to-peer network in which each transactions get marked by a unique signature from either side. You don’t get any cash or coins in hand if you are dealing completely in Bitcoins. These are in pure sense numbers on you digital wallet. To get the numbers you have to solve math problems – no not like in school, but one that requires heavy amount of computing.
Bitcoin mining is the method to earn Bitcoins. In a general sense, Bitcoins are not earned but discovered out. In an analogous fashion consider a currency coin embedded in an ice block. In order to get the coin, you have to first discover the block and then break the block piece by piece till you reach the coin. Now, substitute the coin currency by Bitcoin and the ice block by mathematical functions. These functions are to be deciphered or decoded in order to reach the coins.
You may be thinking, what’s the competing factor? Doing the above computations requires a good amount of hardware and electricity. In recent past, it was possible to do the bitcoin mining with your computer CPU or high speed video processor card. The playing field has changed and much rapid systems have come to dominate the industry. So, anything less than that, will consume more electric energy than you will earn from it. The higher computing power you can share, the greater will be your share in the reward. The entire Bitcoin network compensates the miners for their efforts directly proportional to the computational power contributed.